New California Solar Pricing In Effect April 14, 2023

By Guidant Realty on 3/17/2023

Pricing for rooftop solar energy placed on the grid by California homeowners is about to change, requiring a significantly larger up-front investment for systems to pencil out. Homeowners have until April 13 to retain rights to pricing under the current Net Energy Metering (NEM) 2.0 program. This article summarizes the what, why, and how before NEM 3.0 rolls out statewide on April 14, 2023.

If you are living in California, the impacts of utility charges are difficult to miss, especially of you reside in territories covered by the large providers like PG&E where monthly charges can rival a car payment.  Without wading into the politics, it is safe to say that California has been a leader in the photovoltaic solar industry.  Attractive energy payback rates have been at the core of the booming market, but those rates are about to materially change on April 14, 2023.  This will very-significantly increase up-front system costs under the new program, but you still have time to “hold your place” under the current pricing structure for up to three years if you file the right paperwork by the April 13 deadline.

WHY THE RATES ARE CHANGING:  New solar installations currently fall under the Net Energy Metering 2.0 (NEM 2.0) regulations.  Those regulations dictate that these roof-top generating owners are compensated at 30 cents per kilowatt-hour (kWh).  These rates were established to encourage new installations but ran contrary to the fact that large energy providers could otherwise source energy elsewhere as low as 4 cents per kWh on the open market during the same hours those rooftop solar systems are most heavily producing.  The bottom line is that these NEM 2.0 (and previous NEM 1.0 installations at an even more favorable set of pricing) are being heavily subsidized by forcing energy providers to first buy this expensive rooftop energy before any other.  The unfortunate byproduct of this policy is that non-solar ratepayers are indirectly absorbing these costs as providers spread them across the entire population that are purchasing off of the grid.  The disparity between the costs absorbed by those without solar is arguably much greater than this simple line item, as there are additional grid fees that can’t be passed onto rooftop generators under any NEM program.  With regards to costs, the objective bottom line is that those without solar are becoming a smaller subset, they are typically the less financially secure residents of the state who need the most help, and they are footing a disproportionate share of energy producing costs.

NEM 3.0 DIFFERENCES AND EFFECTS:  While NEM 3.0 does not fully balance the cost-sharing, it is a big step in the right direction.  Under NEM 3.0, the rate payback will change from a static 30 cents per kWh to a variable “time-of-day cost-avoidance” model.  Essentially, the providers will pay a rate for this additional energy that more closely aligns with what they could otherwise source that energy elsewhere.  It also means that roof-top households will receive significantly less for the energy they typically add to the grid during the middle of the day when they aren’t home than the same amount of energy pulled off the grid when they get home from work or school and their rooftop system generation is waning or idle.  The overall blended generation rate under this variable pricing is estimated at 8 cents per kWh, a huge drop from the aforementioned 30 cents.  The financial by-product is that in order to have the system “pencil out”, new installs will need to include battery systems to store that mid-day generation and sell it back to the grid when pricing is much more attractive during peak demand in the evenings.  The addition of the batteries are expected to bring the overall payback period to be similar to the returns under NEM 2.0, but at a much steeper upfront cost.  The upside is that same energy can be held and used during a power outage.  This change is also expected to drive consumer behavior to help solve one of the biggest issues with green energy – the ability to store it and use it later (again, just the facts without additional political commentary).

HOW TO HOLD A SPOT UNDER NEM 2.0 AND INSTALL LATER:  As previously mentioned, homeowners have until April 13 to file paperwork and retain billing rights under NEM 2.0.  That paperwork is a complete interconnection application that typically includes the following:

   • Signed contract
   • Single Line Diagram (SLD)
   • Contractors State License Board (CSLB) disclosure
   • Consumer protection guide
   • Oversizing attestation (if applicable)

  Obviously, Guidant Realty is in the business of helping clients find and sell their homes, not installing rooftop solar.  While we stay closely aligned with upcoming rules and regulations, including helping drive these regulations and laws with a seat on the Board of Directors at the California Association of Realtors who work extensively with regulators and politicians, we ultimately do not have attorneys on staff tracking the final regulations, bills, and their ultimate rules and implications.  If you are interested in holding your spot under NEM 2.0, we highly recommend speaking to a solar installation company who is running a daily business subject to these restrictions.  For more detail, there appears to be a solid online article with much-greater detail at:

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