What is the New NEM and How Does It Affect Me?

Author profile image for Nate Lewis, Chief Revenue Officer
  • Nate Lewis
  • Chief Revenue Officer

As California residents, it’s critical to have an understanding of solar energy, net energy metering (NEM), and how they can benefit you—especially while the benefits exist. Because our Coachella Valley solar installation team at Renova Energy cares about our customers and how much they save, we wanted to share an update on what we believe is to come for NEM 3.0, which is predicted to roll out sometime in 2022.

First, Let’s Recap on What NEM Is

NEM refers to a policy that determines how power utility companies can purchase and sell energy from individuals with solar. Another way to look at the NEM is as a solar incentive as it allows solar customers to store energy in the grid. When a solar energy system produces more electricity than the home or business needs, the energy is sent to the grid in an exchange for credits. At times when solar panels are not producing enough to power the home or business, credits are used in order to offset the cost of energy.

So, What is NEM 3.0 and What Came Before It?

Before understanding the NEM 3.0, let’s take a look at the NEM 1.0 and 2.0 to understand the pattern. Firstly, the NEM 1.0 was highly effective in persuading California residents to have solar systems installed—and for good reason! While NEM 2.0 did offer great benefits, it drastically changed in various ways (and not for the better) when compared to NEM 1.0. In fact, NEM 2.0 negatively impacted solar customers in that it required customers to:

  • Pay a one-time interconnection fee
  • Pay non-bypassable charges for each kilowatt-hour (kWh) they consume from the grid
  • Transfer to a time-of-use rate plan

Although the NEM 2.0 is still in place, the NEM 3.0 is expected to roll out as early as 2022. But, the proceedings, which are currently in place by the California Public Utilities Commission, will determine the exact benefits for solar customers.

According to some early indicators, NEM 3.0 is expected to be less advantageous for solar customers. With that said, it is advised that those interested in solar energy take advantage of having solar installed before December 31, 2021, when the CPUC expects to fully adopt the new NEM. It is expected, much like the last time the NEM changed, that individuals who have solar installed while NEM 2.0 is in place will be grandfathered into the NEM 2.0 benefits for quite some time. Just another reason to go solar sooner!

Renova Energy is Here to Help! Don’t Wait.

With new tariffs rolling out each year, it can be difficult to decide if solar is right for your home or business. At Renova Energy, we understand your worries, and we are here to answer all your questions so you can make the best, informed decision based on your circumstances. We will say, however, that taking advantage of a solar energy and battery storage installation while NEM 2.0 is still in effect may be the best decision for most!

Have more questions? Call our Coachella Valley solar experts at Renova Energy and let us guide you towards a cost-effective future!

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