NEM-3: What Changes Are Coming?

In August 2020, for the second time in just four years, the California Public Utilities Commission (CPUC) opened up a new proceeding to change California’s net energy metering (NEM) program. Although no new rules or regulations have been rolled out, a final decision on NEM 3.0 is expected in 2021.

The decision could either drastically and negatively impact Californians looking to go solar or usher in an era of growth. If the CPUC goes with the latter, we could see greater consumer savings and more clean energy throughout the state. If not, this decision may effectively kill the California solar market as we know it.

California’s investor-owned utilities (IOU), PG&E, Southern California Edison, and Sempra Gas Company, which owns San Diego Gas & Electric, jointly filed opening comments. In those comments, the utilities called for drastic cuts to NEM that would harm the ability for consumers to invest in their own solar energy system. Some of the suggested changes include:

• Forcing solar customers onto the new NEM tariff starting in January 2021. In other words, the CPUC will ask consumers to go solar without knowing the terms of their net metering program.
• Removing the 20-year grandfathering for existing customers.
• Reducing the economic value of going solar 50-75% from what it is today.
• We also anticipate more language regarding backup battery storage, which will raise the cost of solar installations.By the time NEM 3.0 starts getting implemented, our energy experts anticipate storage attachment rates will likely escalate further. It would come as no surprise to see future energy storage rates in California to mirror those in the current Hawaiian market, which are upwards of 80% for certain types of customers and applications.

The CPUC laid out a preliminary schedule regarding NEM 3.0 in its original announcement. It estimates that the proceeding will take roughly 15 months in total, starting with a November 2020 prehearing conference. However, the main proceedings, in which parties will submit proposals for the successor tariff, will not begin until Spring 2021.

1. Consumers get some of the best net metering benefits across the country under NEM 2.0
2. These benefits will likely come to an end with the implementation of NEM 3.0

In order to take advantage of this, the first recommendation is to go solar now, if you haven’t already. It is very likely that customers on NEM 2.0 will not see any changes with the new program. Experts speculate that, as before, the CPUC will grandfather older systems in and continue to uphold the original agreements. This means going solar now would most likely allow you to lock in the NEM 2.0 benefits for 20 years.