The Impacts of Potential Changes to Net Energy Metering (NEM 3.0)
October 14, 2021
How Property Owners & Developers Capitalize on Commercial Solar
December 14, 2021Agricultural Solar is Under Threat by Net Metering Changes – NEM 3
Potential Changes To Net Energy Metering Threaten Agricultural Solar
California’s agricultural industry is one of the most popular adopters of solar technology due to extremely high average electricity bills. Crop growers use large pump systems to push around water for irrigation – causing huge spikes in electricity usage for growers. On-farm agricultural solar PV systems drastically offsets the costs incurred by irrigation primarily using Net Energy Metering.
California growers yet to adopt this technology and considering going solar are now under threat from potential changes to the net energy metering program that will reduce the value of credits received for solar energy shared with the utility and add major monthly fees for interconnection.
How Does Net Energy Metering Currently Work? (NEM 2)
Originally, net energy metering 2.0 (NEM 2) allowed businesses with agricultural solar to export over-produced solar energy, sending the extra solar energy back to the utility to be used elsewhere. The solar energy is exchanged for energy-credits currently near the actual usage rates.
These credits are then used various times throughout irrigation periods to offset the high electricity usage needed to run pumps.
How Will Net Energy Metering Work Going Forward? (NEM 3)
With the new proposed NEM 3.0, solar users will receive a fraction of the credit value they would under the current program. They will also incur a monthly fee for interconnection with the grid. This fee could be upwards of $3,000 per month.
Utilities have been lobbying the California Public Utilities Commission (CPUC) to change the net energy metering program, a vote and decision is expected in December 2021.
The proposed changes in NEM 3 are uncertain until the decision is made, but two things are clear;
- Payback rates on all solar systems will increase,
- The value of solar energy exported back to the grid will decrease.
Agricultural utility customers often use energy differently than industry counterparts, unique electricity load-profiles, and varying times of use create problems that solar can help solve.
There's Still Time to Earn "Grandfather" Status for the Old Program (NEM 2)
While the new program faces detrimental changes, there is still time to apply for the current iteration of net energy metering (NEM 2). NEM Applications must be tentatively approved by December 31, 2021 to ensure “grandfather” status into the current, more lucrative program.
Revel Energy has helped many different agribusinesses take control of how they pay for energy with agricultural solar to create savings and positive cash flow. Contact us today to start a net energy metering 2 application for your business before the potential changes of NEM 3.
NEM 3 Proposed Decision (Update: December 16th, 2021)
While not final or approved, the CPUC voted to push forward with a proposed decision that, if approved, would have extreme adverse consequences for the solar industry in California. Currently in a period of review receiving public comments, the current proposed decision doesn’t look great for any prospective residential or commercial solar adopters.
This decision-making process has been shrouded in uncertainty from the beginning, but what is certain is that the investor-owned utilities are looking to change export compensation rates without considering any transition period for the industry to adapt.
Revel Energy believes there is a 70% chance that this proposed decision will be the final.
Time is ticking on this proposed decision and even policy experts following the process are unsure what the coming weeks will bring. Thankfully, there is still some time to secure the current iteration of this program (NEM 2) before whatever changes proposed are approved. Don’t hesitate to reach out, we’ve helped many businesses lock in the value that NEM 2 provides, contact us today!
December 2022 Update: NEM 3 Passed As Net Billing
The final decision on the new net energy metering (NEM 3.0) program, that was originally expected at the end of 2021, ultimately passed in a 5-0 vote under a new tariff named “Net Billing” in December 2022.
This new approach rewards excess solar generation with wholesale-value electricity rates rather than retail rates. This reduction in investment value has pushed many to lock in NEM 2 before it goes away.
The deadline to grandfather into the previous program requires a completed NEM application before April 2023. Learn more about new net billing rules here.
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