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The Delayed Decision on Net Energy Metering (NEM 3.0)

The Delayed Decision on Net Energy Metering (NEM 3.0)

The final decision on the new net energy metering (NEM 3.0) program, that was originally expected at the end of 2021, has recently been delayed further into 2022. Potential changes to net metering have been in the works since 2020, as investor-owned utilities argued to the California Public Utilities Commission (CPUC) that current NEM export compensation rates impact communities who don’t have solar – this reasoning has since been debunked as a niche figure supported by bad math.

Many different factors can be attributed to this decision being delayed for so long; like additional program changes, increased industry resistance and a commissioner reassignment. However, as of the beginning of February, the CPUC’s vote on the current proposed decision of NEM 3 seems to be on the docket for February 24, 2022*.

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.

Instead of being actively metered, excess solar energy is sold to the grid at a wholesale price. California IOUs will treat all solar energy generators as large-scale energy producers, providing a dollar value based on the avoided cost calculators (ACC) in the final NEM decision. 

Each utility offers their own payment schedules for seasonal, weekday and weekend rate structures, but the overall value of solar energy for any installation within an IOU service area seems to have been reduced by about 75%.

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.

The Solar Industry Fights Back

Thanks to the California Solar & Storage Association, CALSSA, solar industry competitors have banded together to form the Solar Rights Alliance to fight against proposed changes that would hurt the industry and advocate for compromise with the utilities. Delivering over 120,000 written public comments directly to the CPUC before the initial proposed decision was announced on December 10, 2021.

Since then, the battle has continued on – organized rallies in early January had almost 3,000 solar industry workers with banners and signs marching toward CPUC headquarters in Los Angeles and San Fransisco to show their discontent.

This overwhelming support for rooftop solar continued during a CPUC meeting on January 27, when the public comment period lasted more than 7 hours which resulted in 329 comments against the current proposed decision and only 4 supporting the utility’s position on NEM.

“This proposed decision completely reverses California’s progress on clean energy and green jobs, the thousands of hard working men and women who provide clean, reliable energy for millions of consumers came out here today to fight for their jobs, for affordable and clean energy, and for their state to get back on track as a solar leader.”
California Solar & Storage Association Logo
Bernadette Del Chiaro
Executive Director of California Solar & Storage Association

The Path Forward is Uncertain

With so much opposition to the proposed decision in its current form, there is no certainty that NEM 3 will pass as it is currently written. What was originally thought to be going towards a vote back in December has changed drastically, and the contents of the new Net Energy Metering program (NEM 3) wont be completely clear until a proposed decision is voted on and approved.

Hopes are hinging on how the CPUC reacts to this significant outcry from solar stakeholders across the state. Many elements of the proposed decision up in the air in addition to how export compensation will change. One significant adjustment was retroactively reducing the benefit length of NEM 2 customers by 5 years, meaning customers who signed up for the program to last 20 years would only see 15 years of benefits until they are automatically swapped to NEM 3.

Currently for residential solar users, a proposed “grid participation charge” is paired with minor energy storage incentives that are said to offset that charge but residential industry experts are in agreement that this is still not enough to support the growth of residential solar as California expects to meet sustainability goals. Working against more state goals, the current proposed decision doesn’t support upcoming additions to California building code the California Energy Commission (CEC) looks to implement for 2023.

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Client Testimonial: Kelemen Company

Corporate Business Park in Irvine, CA has created significant electricity cost savings through commercial solar installed across the 5-building business park.

Client Testimonial: Tice Gardner & Fujimoto LLP

See how this CPA firm saved on electricity and gained valuable tax credits through commercial solar that they used to keep cash in the businesses.






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