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Market Spotlight: 

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CALIFORNIA

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Welcome! Here you will find market highlights, pricing, requirements, and other market-specific information about California

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CALIFORNIA
Net Metering Information

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Net Metering Information

​California

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  • High Electricity Costs: Some of the highest utility rates in the country.

  • Excellent Solar Production: Abundant sunshine.

  • Strong Incentives: Includes state rebates and tax credits, along with time-of-use rate benefits for solar owners.

  • NEM 3.0: New policies focus on maximizing savings with storage systems.

 

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Net Metering:
California operates under Net Energy Metering (NEM 3.0), which includes time-of-use rates and reduced compensation for excess energy. Homeowners are credited for excess electricity sent to the grid at a reduced rate based on the time of day, which means solar customers are encouraged to consume more of their generated energy during peak production hours to maximize savings.

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Eligibility:

  • Systems up to 1 MW are eligible for net metering.

  • Residential customers typically install systems ranging from 5 to 10 kW.

 

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Credit Rollovers:

  • Excess generation is credited at a reduced rate based on time-of-use, and credits roll over month-to-month.

  • Any excess energy credits can be used to offset future bills but may not be as valuable under NEM 3.0.

 

 

Best Setup Strategy for Residential Systems:

  • Time-of-Use Awareness: Design your system with battery storage to maximize energy savings, especially during peak times when energy is more expensive.

  • Battery Storage: With NEM 3.0's lower export rates, installing a battery system allows you to store excess energy for use during the evening or during peak energy pricing periods.

  • Smart Energy Usage: Shift household energy usage to daytime hours to take full advantage of the power your system produces when rates are favorable.

What is the Net Metering Policy in California?

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Under NEM-3.0, customers receive 75% to 80% less from the utility for the energy they send to the grid during the day. instead of getting compensated for the full retail value of electricity delivered to the electric grid, solar users will only receive a fraction of the retail value of electricity that they share with the grid.

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What is Net Billing?

Net Billing is an arrangement with the utility in which the customer is paid for the electricity they export to the grid based on a value determined by the avoided cost to the utility of buying clean energy elsewhere. In other words, the utility does not offer a 1:1 credit based on their retail rate but the wholesale rate that they could pay to other clean energy suppliers.

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What is NEM 3.0?

NEM 3.0 went into effect on April 14th 2023, becoming the active program for Net Metering in California. See below for common questions about this decision and the latest information available.

Here's an article from February 20th with an overview of NEM 3.0 and retaining value for solar customers.

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NEM 3.0 FAQ

See NEM 3.0 FAQ for more details about the questions below, and a list of Frequently Asked Questions for homeowners considering going solar before NEM 3.0 begins.

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What is NEM 3.0?

The method utilities use to calculate the excess solar power their customers deliver to the electric grid during the day is called “net energy metering” (NEM) or simply, “net metering.” The rules that determine how solar customers are compensated are approved by each state’s Public Utilities Commission (PUC). In late 2022, the California PUC voted to adopt the state's third NEM policy (after NEM-1 and NEM-2) which we call NEM 3.0.

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How is NEM 3.0 different?

Compared to NEM-1 and NEM-2, which both provided solar customers a 1:1 credit for the excess power they delivered to the electric grid during the day, NEM 3.0 will offer a significantly lower credit. Under NEM-3.0, customers will receive 75% to 80% less from the utility for the energy they send to the grid during the day. instead of getting compensated for the full retail value of electricity delivered to the electric grid, solar users will only receive a fraction of the retail value of electricity that they share with the grid.

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When does NEM 3.0 go into effect?

The new net metering rules go into effect on April 14th, 2023 which means the last day to qualify for NEM-2 by submitting a complete interconnection application is April 13th, 2023.

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What does NEM 3.0 mean for existing solar customers?

Homeowners who already have solar in California, or who qualify for NEM-2 before the new rules take effect on April 14th, 2023, are locked into NEM-1 or NEM-2 for 20 years from the date their solar system is turned on. Customers who are nearing the end of the 20-year period will be switched to NEM 3.0.

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What does NEM 3.0 Mean for future solar customers?

The new net metering rules under NEM 3.0 will have a significant impact on the financial savings that homeowners enjoy from going solar, and in order to see the full benefits of going solar, future customers will most likely require battery storage solutions.

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What is changing between NEM-2 and NEM 3.0?

The California Public Utilities Commission made history by voting in favor of terminating NEM-2 and installing a new program called NEM 3.0. Here are some key differences:

 NEM-2NEM 3.0

Net Metering (Export) Rates: Export rates are 1:1 with time-of-use (TOU) rates. This means that if rates are $0.30 cents per kWh in the afternoon, that is the value of NEM credits you get for exporting 1 kWh of power to the grid at that time in the afternoon.Export rates change hourly with different sets of rates on weekdays and weekends, all of which change monthly. Rates are, on average, 75% lower than NEM-2 for PG&E and SCE and 86% lower for SDG&E.

Grandfathering Homeowners are grandfathered into NEM-2 for a period of 20 years from PTO and this is fully transferable through the sale or transfer of the home and solar property.

Homeowners are grandfathered into NEM 3.0 for 9 years for new solar customers and this can only be transferred to a spouse or partner.

Time-of-Use Rates Customers are required to be on any Time of Use (TOU) rate.

Customers are required to be on "electrification" TOU rates (SDG&E EV-TOU-5, SCE TOU-D-PRIME, or PG&E E-ELEC) for grid consumption only. Export rates will be calculated separately, based on the avoided cost rate.

Virtual Net Metering

Net Metering Aggregation (NEMA) and Virtual Net Metering (VNEM) rates will be available on NEM-2 with 9 years of grandfathering after the sunset window is over.

 

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CALIFORNIA
Rebates And Incentives

CALIFORNIA
Rebates And Incentives

Are there any statewide incentives or rebates in California?

There are currently no state incentives for solar in California. You can find up-to-date information about available rebates related to renewable energy and efficiency projects here: https://programs.dsireusa.org/system/program/ca.

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Are there any utility or municipality rebates in California?

Yes! Below are details about the following utility-based solar incentives:

Self-Generation Incentive Program (SGIP)

The Self-Generation Incentive Program (SGIP) is a California Public Utilities Commission (CPUC) program that offers rebates for installing energy storage technology in your home. These storage technologies include battery storage systems that can function in the event of a power outage.

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Who is eligible for SGIP rebates?

Any residential customer of Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), Southern California Gas Company (SoCalGas), or San Diego Gas & Electric (SDG&E) is eligible for a General Market SGIP rebate of approximately $250/kilowatt-hour, which means the rebate covers approximately 25 percent of the cost of an average energy storage system.

In addition to this General Market rebate, there are two additional categories of higher SGIP rebates for residential customers: Equity and Equity Resiliency. (See the pamphlet below for details about these additional rebate categories).

For more information, see the SGIP pamphlet attached: 

SGIP Pamphlet

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