As the world continues to evolve, so does the demand for renewable energy sources. One of the most popular ways to generate clean energy is through rooftop solar.
Rooftop solar is considered an important part of the evolution of our grid. It requires less transmission buildout than traditional, centralized power generation. It is more resilient in events that disrupt the grid and can prevent the development of land compared to a centralized utility-scale-only model.
According to Environment California, if 28.5 GW of solar is deployed through 2045, rooftop solar could prevent the development of 148,000 acres of land versus a centralized utility-scale-only model. That is an area about half the size of Los Angeles that could be preserved.
However, recent changes in California’s energy regulation are expected to impact this well flourishing and blooming industry. California Public Utility Commission adopted NEM3.0 last December which is set to take effect on April 15, 2023. In this article, we’ll examine the implications of the new regulations, how they differ from NEM 2.0, and what solar companies can do to mitigate the impact on their businesses.
First, it’s essential to understand what NEM is and how it works. Net Energy Metering (NEM) is a program that allows customers with solar panels to export excess energy back to the grid, and they receive credits on their energy bills for the energy they export. This reduces their net energy costs and provides an incentive for people to invest in solar panels. Under NEM 2.0, the credit that customers received was the retail rate, which means the same rate they would pay to buy energy from the grid.
NEM 3.0 differs significantly from NEM 2.0. NEM 3.0 moves from the current retail time-of-use-based rates to a far lower rate. The new rate is on average 75% lower than the legacy rate. This change presents a challenge for distributed solar installers as it may lead to a 30% drop in residential solar adoption in 2023, according to ROTH Capital Partners.
Furthermore, customer savings under NEM 3.0 are expected to be 60% lower than they were under NEM 2.0. Also, the payback period will shift closer to 9 to 10 years, up from today’s average of about 5 to 6 years.
While trade organizations like the Solar Energy Industries Association and the California Solar and Storage Association (CALSSA) called for a more gradual phase-down of net metering credit values, the new rules are set to take effect soon.
Hence, customers who really want to go solar, save the environment, and save money must act swiftly. When a customer submits a complete interconnection application, a signed contract, and a single-line diagram well before the sunset date of April 14, 2023, this will allow them to grandfather in for the next 20 years.
Those who adopt solar after the sunset date will be subject to new options under NEM 3.0.
The bottom line, NEM 2.0 represents a significant step forward in the development of solar energy in the United States. It offers customers greater flexibility, better savings, and a higher return on investment, all of which are crucial for those looking to transition to clean energy sources.
So, what are you waiting for? Reach out to your local but reliable Solar Company or reach out to Staten@+1(408)-780-2889