California’s Net Metering Change, May Slow Solar, but Accelerate Battery Storage

April 16, 2023


After much discussion, the California Public Utilities Commissionunanimously voted on Dec. 15, 2022 to revise the net metering policy in California. The revision, which goes into effect on April 15, decreases the value of solar energy credits by 75% and should encourage customers to purchase solar battery storage with their solar system.

The state is working toward a clean energy future, but many residents say the new policy, referred to as Net Energy Metering 3.0, does not promote the state’s goals, instead discouraging the adoption of solarand making it less affordable. 

Solar companies are also opposed to the new ruling. 

“Net metering is the foundation of saving money with solar and without it, most low-income households would never be able to afford a personal power option for their home,” said Greg Butterfield, CEO of solar installer Lumio. “Owning one’s own power vs. renting from the utility locks them into a fixed, lower payment than their grid bill. Once the system is paid for and the investment recouped, that household’s power would be essentially free.” Electricity costs typically increase year to year, and have seen particularly high jumps in the last couple of years.

The CPUC says that NEM 3.0 will increase grid reliability (PDF) and provide more solar opportunities for low-income homes through new incentives and bill credits. Though the decision has been made, solar activists are pushing for a rehearing.

Net metering allows you to save money on electricity. The process allows you to send excess energy back to the grid in return for credits on your next utility bill. Credits are especially helpful during times of lower solar panel production, like at night or during the winter. A solar system that covers your home’s energy needs reduces your reliance on the electricity grid. 

California is a leader in the solar industry, but this is not the first time there’s been opposition to the state changing its net metering policy. When the decision for NEM 2.0 took place in 2016, the number of solar installations declined initially but eventually ramped back up and reached record-breaking numbers in 2022. The CPUC expects a similar experience once the new policy takes effect.

The NEM 2.0 decision brought three key changes to the original policy, including interconnection fees, monthly charges and time-of-use energy plans. Interconnection fees are a one-time fee paid to the utility company ranging from $75 to $145. For utility scale installations greater than one megawatt, the fee is $800. The monthly charges are determined by the kilowatt-hours consumed from the grid and fund low-income and energy efficiency programs.

NEM 2.0 required solar owners to switch to time-of-use energy plans. Typically, time-of-use rates are higher when demand is also high. For example, rates are highest from 4 to 9 p.m., when many residents are home and using electricity. Overnight from 12 a.m. to 6 a.m., energy use is lower because people are sleeping, so rates are also lower. 

Time-of-use energy plans help you save money if you are strategic with electricity use. You can use cheaper electricity by charging electric vehicles or running your dishwasher and other appliances during off-peak hours. Also, you can use stored solar energy to steer clear of grid electricity during peak hours. 


One Response to “California’s Net Metering Change, May Slow Solar, but Accelerate Battery Storage”

  1. rhymeswithgoalie Says:

    Subsidies for rooftop solar to date have done their part in promoting consumption and awareness of solar power.

    We’re past that stage now, and I’m for shifting away from subsidizing the Haves who already have the advantage of owning a roof in the first place, to the general consumer on the grid. It’s a more equitable use of government budget to support RE.

    I see this transition as analogous to moving out of the initial luxury model EV phase to the plug-ins targeting the hoi polloi.

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