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NEM 3.0 Transition Rules - Potential Solar Clients Need to Read This!

10/30/21

  03:11:00 am, by Jim Jenal - Founder & CEO   , 588 words  
Categories: Solar Economics, Residential Solar, Net Metering

NEM 3.0 Transition Rules - Potential Solar Clients Need to Read This!

New solar clients in Southern California Edison territory (along with their counterparts in PG&E or SDG&E territories) will soon find themselves operating under the not yet known, but certainly less advantageous NEM 3.0 rules that has the potential to significantly affect their return on investment.  While NEM 3.0 won’t go into effect for some time, we already have an idea of what clients need to do to secure the benefits of the present NEM rules.  Here’s what we know so far…

NEM 2.0 - the Present State of Play

SCE customer presently operate under NEM 2.0 rules established a number of years ago.  (Municipal utility customers, such as those in PWP or LADWP, are unaffected by any of this, fortunately.)  We wrote extensively about the impact of the NEM 2.0 transition at the time, as this article from 2017 explained: NEM 2.0 is Here - Now What? 

Essentially the NEM 2.0 rules made several changes: they introduced a one-time application fee of $75, they forced solar customers onto a Time-of-Use rate structure (instead of the more solar-friendly tiered rates), and they introduced the concept of non-bypassable charges - components of the rate structure that have to be paid on every kWh imported from the grid, even if it would otherwise be “netted out” thanks to energy exported.

Those changes, while concerning as they marked the first successful effort to chip away at the benefits of net metering, turned out to be relatively mild and the industry surged forward despite them.

NEM 3.0 - Dark Days Ahead?

Now we are in the middle of the process of bringing about NEM 3.0, and it looks far scarier than what we faced in 2017.  For example, one proposal calls for monthly fees on the order of $75 for every residential solar customer (commercial customers would pay far more).  The value of exported energy might drop by as much as 80%!  Payback periods could balloon to as much as 20 years!

(Take a moment to sign the petition to make the new NEM 3.0 rules more favorable to solar system owners!)

However that process turns out, if it is possible to get in under the current rules you will save a lot of money!  Here’s what we know about how the transition period will be handled:

  • If you sign a contract and submit your complete interconnection application to SCE by mid-January you are guaranteed of 20 years under the more favorable NEM 2.0 rules!

  • If you submit between mid-January and April, you will start under NEM 2.0, but the 20-year term is not guaranteed.

  • If you submit after April but before NEM 3.0 is fully up and running, you will start on NEM 2.0 for a set term of years, but you may be forced onto a rate that includes a monthly fee.

  • Applications submitted after August, will likely be completely under NEM 3.0

The uncertainty around all of this is distressing but is out of our hands.

What we can do is to urge folks on the fence about going solar to act before mid-January.  Bear in mind that the project does not need to be completed by mid-January, you simply have to have your completed application submitted by then.  We anticipate quite the rush to get applications in by then, and there is always the concern that a reviewer at SCE might kick back an application and deem it incomplete.  The best way to be safe is to get the application in as soon as possible, thereby avoiding the crunch.

So right now really is the best time for anyone in SCE’s service area to go solar!  Give us a call and let’s get the process started!

 

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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