Net Metering and NEM 1.0 vs. 2.0

California Net Energy Metering (NEM) is one of the most successful solar incentives the state has to offer.

Under this program, solar customers are allowed to sell their excess clean electricity into the grid in exchange for credits:

• During the day, they feed solar energy into the power network.
• At night, they buy back the electricity they need from the grid.

And at the end of each billing cycle, these customers are only responsible for the “net” difference in electricity bought and sold. As a result, tens of thousands of solar homeowners enjoy $0 utility bills. Some even receive negative statements.

Further boosting the popularity of net energy metering is the fact that:
• Enrollment is free – there are no application fees.
• There are no mandatory time-of-use rate plans.
• You are grandfathered into the program for 20 years – even if net metering changes in the future.

But like all solar incentives, net metering has an end date. When 5% or more of the utility grid runs on residential solar power, the program is supposed to end. So what happens next?

California Introduces Net Energy Metering 2.0

The good news is that net metering isn’t going to end – at least not anytime soon. After much campaigning by environmentalists and solar advocacy groups, the California Public Utilities Commission (CPUC) decided to grant this solar incentive an extension. Once the 5% cap is reached, all future solar customers can enroll in NEM 2.0.

But here’s the bad news:

The newer version doesn’t offer as many financial benefits. Solar customers under NEM 2.0:

• Will have to pay a grid-connection fee ranging anywhere from $75 to $150.
• Must pay non-bypassable charges for the grid power they consume – averaging between $0.02 and $0.03 per kilowatt-hour.
• Will have to pay transmission charges that could go as high as $18 per month.
• Must enroll in mandatory time-of-use pricing that shifts peak demand to portions of the day when solar output isn’t as strong<

And eventually, the retail rate customers receive for their solar electricity will also go down (starting in 2019).

What the New Net Energy Metering Rules Mean for You:

Even with these major changes, going solar is still a great investment. After all, utility rates continue to rise every year. But under the new rules, the ROI of your solar investment won’t be as high – and the payback period won’t be as short. And when NEM version 3.0 launches in 2019, the financial benefits of going solar will be even lower.

However, there is one additional piece of good news.

NEM 1.0 still exists. And provided that you go solar before the 5% cutoff happens, you’ll be grandfathered into the current program for the next 20 years.

But keep in mind that as the deadline approaches, homeowners throughout the state are scrambling to get their PV systems online in time. So even if you start the process soon, you may not make it because of backlogs and delays.

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EPA My Environment: Ojai, CA

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