The NEM 3.0 Shockwave

The recent introduction of Net Energy Metering 3.0 (NEM 3.0) has sent shockwaves through the solar industry in CA. The consequences are significant, with an anticipated loss of 17,000 jobs and an 80% drop in installation rates. So what are some takeaways from the headlines? Read on to find out. 

  • The Current State of the Solar Industry in California

The solar industry is in turmoil as of December 2023. The changes to the Net Metering policy (NEM) dramatically reduced the compensation consumers receive for selling excess energy generation to their utility.  This has created a challenging environment for solar companies and customers. The NEM 3 policy has already caused the loss of 17,000 clean energy jobs in the Golden State. The solar industry has been a major job creator in California over the past decade, and this sudden loss of job opportunities will have ripple effects across the industry. According to CALSSA, 59% of the state’s residential solar + storage contractors expect layoffs and hundreds of solar companies have already closed their doors or left the state. 

  • Residential Energy Storage

NEM 3.0 was approved on December 15, 2022, and took effect on April 15th, 2023. One of the few bright spots was new incentives for energy storage with some particularly valuable payments for discharging power back to the grid during the moments in the summer when demand peaks.  The idea was to increase grid flexibility by increasing the amount of energy storage.  Unfortunately, recent revisions to the NEM 3.0 rules have reduced these payments during the periods of peak demand, making the overall payback for residential solar+storage systems longer than they were under the previous NEM 2 rates.

This means that going solar is now less attractive to most customers.  PG&E and other California utilities are trying to pass additional measures like fixed grid access charges that will further undermine the economics of consumers generating their own electricity.

  • Final Thoughts – 2024 Outlook

NEM 3.0 has already reshaped the solar industry in California flipping us from one of the best to one of the worst solar markets in the country almost overnight.  As the price of modules and batteries continues to decline and the utilities continue to raise their rates, the economics will improve, but we will have to continue to push back against the utility monopolies to protect solar choice.  The industry will need to adapt to keep up with these changes and ensure its survival amidst evolving policy landscapes. For more information on this issue visit CALSSA’s page.

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