NEM, or Net Energy Metering, has been a driving force behind commercial solar installations since the mid 90’s. It is an agreement whereby the utility companies must pay full retail rates for any excess generation from a solar system that is sent to the grid. This occurs any time the solar system is generating more electricity than is being consumed on site. A brief history and explanation of NEM in California is given here: https://www.cpuc.ca.gov/NEM/
In 2013, a law in California was passed, AB 327 (Pera, 2013) that the CPUC responded to in 2016, adopting a new set of rules for Net Energy Metering. Solar customers no longer got full credit for excess generation. Certain charges were applied to any excess generation to remove some of the benefits of installing a solar system. There are other details as well with NEM 2.0, all of which affect solar economics in a negative way.
This brings us to 2021, and the California Public Utilities Commission is opening up discussions about NEM 3.0. The main feature, as reported early in the process by the initial briefs submitted by PG&E, is to only give half credit for excess generation. This means any attempt to build up credits with PG&E to offset charges, will be hammered downward by 50%.
On a typical solar system, this could raise the system size by 20-30%. Therefore the system cost will increase by at least this much, and the system paybacks will be decreased by this amount. Another challenge will be fitting this additional solar generating capacity on the building. If it doesn’t fit, we will have to use carports or other structures to find the room for the additional solar panels.
How is this going to affect solar in California? Paybacks will be increased, Return On Investment (ROI) will be decreased, and initial cost will be increased. Fortunately, solar is a great investment right now, with CitiGreen’s present proposals having between a 2 and 3 year payback. Increasing this payback will still leave solar as a great investment, especially when combined with available no-money down financing.
What can you do about this upcoming event decreasing the economic benefits of Going Solar? Simply get your system installed before these new changes come into effect. It is just like water rights in California. Those that got here first got the best water rights. Those that came along later got in line behind those first pioneers. With NEM 1.0, when NEM 2.0 came along, the NEM 1.0 customers were all grandfathered in for another 20 years. The same will happen with NEM 2.0. If you get your system installed before the new NEM 3.0 in adopted, your NEM 2.0 status will be grandfathered in for another 20 years.
Along with these changes to NEM, come PG&E’s ongoing battle with their customers regarding rate increases. Since electrical utilities in the United States are all monopolies, the only way to protect yourself against these upcoming rate hikes are with onsite generation with renewables. Of wind, solar and hydro, only solar is a practical source of renewable electricity.
Therefore, the only way to protect yourself from future rate hikes is to install a solar system on your business. The only way to protect yourself from future NEM changes for the worse, is to get your system installed before the new Net Metering 3.0 comes into effect. CitiGreen can answer all of your questions about your rates, upcoming rate changes, NEM, energy management to reduce your bill, as well as a no-obligation free proposal for a solar system on your property.