I’ve been bombarded with customer questions about the change from Net Metering (NEM) 2 to NEM 3. If you haven’t heard, the California Public Utilities Commission (CPUC) is in the process of effectively eliminating Net Metering. If the preliminary decision by the CPUC goes through, the solar industry — including both new and existing solar customers — will be clobbered.
Here is the current situation in a nutshell. The CPUC decided to add a fixed charge of about $60 per month to the average new solar customer’s electric bill, reduce the daytime reimbursement rate from $0.30 to $0.05 per kwh, and reduce the grandfathering period of all customers (even existing customers) from 20 years to 15 years. They call this NEM 3, but new solar customers are better off effectively disconnecting their solar and battery systems from the grid — not net metering at all.
This poorly-reasoned NEM 3 decision is scheduled to go into effect on May 28, 2022. To compare NEM 2 to NEM 3 we ran the numbers with our financial modeling tools. The result is that paybacks for new solar systems go from about 6 years to 14 years, and paybacks for adding a battery go from approximately 9 years to 12 years.
The CPUC, Governor Newsom and state legislators were lobbied very heavily by … wait for it … PG&E, Southern California Edison, San Diego Gas and Electric, and the International Brotherhood of Electrical Workers. The solar industry advocated strongly for a more balanced NEM decision, and these lobbying efforts are continuing. Although there is a chance that the CPUC will modify their decision, there is no doubt in my mind that whatever the parameters of NEM 3 become, customers will be better off on the current NEM 2 program.
My advice to anyone interested in solar or battery backup is simple: don’t delay, act right away. Because of the inevitable rush to install solar and storage before May 28,2022, reputable contractors will be overbooked. Moreover, battery, inverter, and solar panel supplies are tight. Since there are already significant battery shortages, I recommend that prospective battery customer confirm that their contractor has equipment in stock.
For more background, numbers and impact on what NEM 3 means for solar and battery customers, please tune in to this week’s Energy Show.