Net Energy Metering (NEM) is a program in California that has been instrumental in driving the growth of rooftop solar in the state. NEM provides credits on electricity bills for homeowners with rooftop solar panels for the excess energy their panels produce. In 2023, the NEM program is undergoing significant changes with the introduction of NEM 3.0, which will have a significant impact on the value of rooftop solar for homeowners in California.
NEM 3.0 replaces the current NEM 2.0 program and will introduce several key changes. The first change is the introduction of a time-of-use (TOU) rate structure, which will bill homeowners based on the time of day when electricity is used. This new rate structure will result in higher prices during peak hours and lower prices during off-peak hours. This change will impact the value of rooftop solar because it will make it more important for homeowners to produce and use their own electricity during peak hours, when electricity is more expensive, in order to receive maximum credits on their electricity bill.
Another change in NEM 3.0 is the introduction of a system size limit. The current NEM program has no limit on the size of a homeowner’s rooftop solar system, but NEM 3.0 will introduce a limit of 3 megawatts for residential systems. This change will impact the value of rooftop solar for homeowners who have larger systems, as they will no longer be able to receive credits on their electricity bill for the excess energy their panels produce. This will make larger rooftop solar systems less financially viable for homeowners, reducing the overall financial benefits of having a rooftop solar system.
The final change in NEM 3.0 is the introduction of a net excess generation (NEG) fee. This fee will be applied to all excess energy produced by a homeowner’s rooftop solar panels that is not used and sent back to the grid. This change will impact the value of rooftop solar because it will reduce the amount of credits homeowners receive on their electricity bill for the excess energy their panels produce. This will make rooftop solar less financially viable for homeowners, reducing the overall financial benefits of having a rooftop solar system.
These changes to the NEM program are happening as part of California’s efforts to promote the growth of renewable energy and reduce its dependence on fossil fuels. The new TOU rate structure and NEG fee are designed to encourage homeowners to produce and use their own electricity during peak hours, when electricity is more expensive, in order to reduce the state’s dependence on electricity from fossil fuel-powered plants. Additionally, the changes are meant to help ensure that the state’s electric grid remains stable as more and more homeowners install rooftop solar panels.
The impact of these changes on the value of rooftop solar for homeowners in California will be significant. The introduction of a TOU rate structure and NEG fee will reduce the overall financial benefits of having a rooftop solar system, making it less attractive for homeowners to install solar panels. Additionally, the system size limit will make larger rooftop solar systems less financially viable for homeowners, further reducing the overall financial benefits of having a rooftop solar system.
Despite these changes, rooftop solar will still be a valuable option for many homeowners in California. The TOU rate structure and NEG fee will encourage homeowners to produce and use their own electricity during peak hours, when electricity is more expensive, resulting in cost savings for homeowners. Additionally, rooftop solar will still provide significant environmental benefits, including reducing greenhouse gas emissions and promoting the growth of renewable energy.
The introduction of NEM 3.0 will have a significant impact on the value of rooftop solar for homeowners in California.
Your deadline to be grandfathered into NEM 2.0 is April 13th.
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