Solar Energy rate Plan NEM3: What does it mean?

As of April 15, 2023, all new applications for solar energy will fall in to the NEM3 solar energy utility rate plan. Solar users under NEM3 will get compensated for about $0.08 / kWh for excess energy sent to the grid, an adjusted lower amount than under NEM2. The payback period for a solar investment under NEM 3 is about 10 years.

To maximize homeowner savings, we recommend that anyone who is considering installing a solar electric system, also install battery storage. With battery storage, a system owner can store excess energy to their batteries, and draw from the batteries when the solar stops working and utility grid rates are at peak. Instead of sending excess energy to the grid for $0.08/kWh, and buying energy at peak rates of $0.47/kWh or more, a homeowner generates, stores, and uses their own energy, maximizing savings.

If I already have solar (NEM1 or NEM2), will the new rules (NEM3) affect me?

The CPUC’s new rules will not affect NEM1 and NEM2 solar users until your lock-in period expires, unless you add more panels (more on that in the next section).

The NEM1 and NEM2 lock-in period, also known as grandfathering, is for 20 years after the utility turned on your solar system. Here’s two examples:

  • Your solar system was turned on in 2019. You will be switched to the new rules (NEM3) in 2039.
  • Your solar system turned on in 2003. You will be switched to NEM3 in 2023.

What if I already have solar and want to add more panels?

After NEM3 begins, existing solar users who increase their system size by 10% or 1kW, whichever is more, will be forced onto NEM3. You may want to consider adding panels before NEM3 goes into effect in mid-April.

If you want to add panels before NEM3 takes effect, your solar company must submit a correct and complete interconnection application to your utility by April 14th. Construction does not have to be complete by April 14th.

What if I already have solar and want to add a battery?

Unlike adding panels, existing solar users can add a battery at any time without affecting their rate plan or lock-in status.

What if I have solar and sell my home?

If you are a NEM1 or NEM2 customer and you sell your home, the new owner will take over the remainder of your lock-in period.

However, this will be different under NEM3, which has a shorter, 9-year lock-in period that is lost when a home is sold.

I buy my electricity from a community energy provider or municipal utility. Does the CPUC’s decision affect them?

No. The CPUC’s decision does affect community choice energy providers, but some may choose to give their customers a higher credit. The CPUC’s decision does not affect locally governed utilities such as LADWP.

Solar PLUS Battery Storage. The New Norm.

Solar PLUS Battery Storage. The New Norm.

Solar and Battery Storage. The New Norm.

In the last month or so, we’ve seen an increase in interest for residential battery storage. There are several reasons for that. First and foremost, our energy rates keep increasing. Peak demand rates are hovering in the 40¢ range. Second, battery storage is now affordable and reliable. It is an investment in energy security that pays for itself.

The deregulation of Diablo Canyon will certainly increase the need to bring more energy online, including solar. All of that additional solar capacity will necessitate storage.

Why is battery storage so important? Simple. At some point in the near future, we will be able to generate more energy than we need from solar energy systems during the day. But at night, we will still need utility-supplied energy. Unless we are able to store excess solar generated energy during the day for use at night.

As a homeowner, battery storage gives you more control of your energy use and costs, especially if you have solar. With solar plus battery storage, you are that much closer to being truly energy independent. Plus, you have back-up power in the event that grid power fails.

For a homeowner who does not have solar, the battery saves money by peak shaving. The battery is charged via grid-supplied energy when energy rates are lowest, and then drawn from when energy rates are highest. The result keeps the homeowner in a lower tier of energy rates.

Our estimate is that every new solar install will come with battery storage beginning in early 2018. Currently we are taking reservations for the Tesla Powerwall as we recently became Certified Installers for the Tesla Powerwall. Some state rebates are also still available. Call Solarponics at (805) 466-5595 for more information.