On April 15th, 2023, a new solar policy in California, NEM 3.0, officially went into effect. This new policy marks a significant change in the way rooftop solar is compensated in the state, shifting from net metering to net energy metering with a 30% reduction in credits.
The core change in NEM 3.0 is to shift from net metering to net energy metering, which allows utilities to pay solar customers a wholesale rate for excess energy sent back to the grid. This incentivizes solar customers to install battery storage systems, which can be charged during the day and discharged during peak evening hours, when energy prices are higher. This will not only lower energy bills for solar customers, but also reduce strain on the grid during the evening peak demand period.
The implementation of NEM 3.0 is expected to trigger a wave of investments in battery storage systems in California, and to accelerate the development of household energy storage systems. According to the California Solar Energy Industries Association, the typical payback period for a solar installation in California has been about six years. With NEM 3.0, this payback period could be extended, but the annual return on investment is expected to remain close to 20%.
This new policy is a part of California's plan to achieve 100% clean energy by 2045, and signals the state's commitment to the transition to a sustainable and clean energy future. It is expected to spur innovation and investment in the solar and energy storage industries, and to help drive down costs for consumers in the long run.