Shining Light on the New Changes in California’s NEM Program3/20/2023
The world of solar energy is always evolving, and California is leading the way with its proposed update to the Net Energy Metering (NEM) program—NEM 3.0. While the program is primarily aimed at residential customers, commercial customers stand to benefit, too.
But this new program doesn't come without its quirks and complexities. From interconnection fees to time-of-use rates, the proposed changes could impact your bottom line in unexpected ways.
We''ll break it all down for you in this blog. Sit back, toss on your sunglasses, and join us as we discuss solar net metering in California.
How Does Net Energy Metering Work?
Net energy metering (NEM) allows solar energy system owners to receive credit on their utility bills for excess electricity their solar panels generate and send to the grid. The credits can offset the cost of electricity used when their solar panels aren't generating power.
What''s New About Solar Net Metering in California?
Under California's NEM 3.0 program, new solar customers would be required to pay a one-time interconnection fee to their utility company. This would cover the cost of connecting their solar system to the grid. The fee would vary depending on the utility company, but it could range from a few hundred to several thousand dollars.
Additionally, new solar customers would also be required to enroll in a time-of-use (TOU) rate plan. TOU plans charge different rates for electricity depending on the time of day and the season, with customers being charged more during peak-demand periods and less during off-peak periods.
The billing mechanism for NEM customers would also change under California''s NEM 3.0 program. Currently, NEM customers receive a credit on their bill for excess energy they send to the grid that''s equal to the retail rate of electricity. Under the proposed changes, NEM customers would receive a credit that's equal to the avoided cost rate of electricity, which is essentially the price that the utility would have paid to generate or purchase the electricity they're receiving from the customer.
Finally, the proposed NEM 3.0 program would extend the size limit for eligible solar systems from 1 MW to 5 MW. This means that larger commercial and industrial customers could install larger solar systems and receive credits for excess energy they send to the grid.
Did you know companies who switch to solar energy often see substantial cost savings? Start a conversation with the experts at Pacifico and discover how large-scale solar illuminates your bottom line.
How Will California''s NEM 3.0 Program Impact Local Businesses?
The proposed changes could have several impacts on commercial solar customers in California, including:
- Interconnection Fees: The new changes come with one-time interconnection fees, which might increase the upfront costs of installing solar panels. On the other hand, the fee could help cover the cost of maintaining and upgrading the grid, which could ultimately benefit all ratepayers.
- Shift Energy Usage: Enrolling new solar customers in TOU plans encourages them to shift their energy usage to off-peak periods, which could help reduce strain on the grid during peak-demand periods. However, TOU plans could also result in higher bills for some customers who use a lot of electricity during peak periods.
- Lower Energy Bills: While changing the billing mechanism might reduce the value of the credits, the avoided cost rate is typically lower than the retail rate of electricity. This could help reduce costs on your energy bill.
- Reduced Carbon Footprints: Extending the size limit for eligible solar systems could encourage more commercial and industrial customers to install larger solar systems, which could help reduce their electricity bills and carbon footprint.
Simply put, the changes proposed to California''s NEM 3.0 program could have a significant impact on the local community. However, it''s important to note that while the limit for eligible solar systems helps create new opportunities for commercial customers—it also brings new challenges to grid operators.
If your business is considering installing new solar panels, consult with a reliable, trustworthy solar provider to understand how the proposed changes could affect your bottom line.
Switching to Solar: Your Brightest Business Decision
California''s utility costs are on the rise, and new indicators seem to suggest solar energy is the future. When you''re ready to set your organization up for success, Pacifico Power will be there to help.
We pride ourselves on being a one-stop shop for commercial businesses looking to leverage the power of solar. Whether you're looking to reduce your energy costs or increase your sustainability, we have the expertise and experience to make it happen.
We believe solar energy should be accessible to everyone, which is why we offer a range of financing options to help make solar more affordable for our clients. Our team can help you navigate the complex world of solar incentives and financing options to find the best solution for your business.
Contact us today to learn more about how we can help your business harness the power of the sun, and let's shine a light on your energy needs.