Net Energy Metering NEM 3.0

Read Time: 5 minutes:

Highlights:

• Net metering policy NEM 3.0 buys solar-generated electricity 75% cheaper than previous net metering policies.

• Net metering under NEM 2.0 policy will remain applicable for customers who sign up before 13rd April 2023.

• The return on investment period for new solar energy systems under NEM 3.0 policy will be around 8-10 years, which will double that of NEM 2.0.

Keywords: Net energy metering, NEM, NEM 1.0, NEM 2.0, NEM 3.0, Solar net metering

1. What is solar net metering?

Solar-generated electricity is indispensable to achieve global decarbonization, but it mitigates the ever-increasing electricity tariffs. Solar energy offsets customers' electricity bills through net energy metering (NEM), which is a process of selling excess electricity back to the grid. Net metering allows users to earn credits when their solar electricity production exceeds their consumption. Except for the few peak hours, the solar owners will always have excess electricity during the sunshine hours, which can be sold to the grid, thus earning substantial savings. 

1. Does it worth investing in solar net metering?

The investment in solar energy for your home or business is steered by the return on investment (ROI) period, solar generating system cost, market conditions, and the governing electricity tariff policies. Net metering gains and flexible tariff policies are the prime motivations to invest in rooftop solar generation. Ideally, there should be a uniform one-to-one price ratio between importing and exporting electricity to the grid. Under uniform tariffs, a single kWh bought from a utility company should be equivalent to the price it buys solar-generated electricity through net metering. This incentive can save hundreds to thousands of electricity bills annually and motivates customers to invest in clean and renewable energy. However, regular amendments and updates in the NEM tariff policies have affected the customers saving incentive.

1. NEM 3.0 will be enforced after 13 April 2023.

The California Public Utilities Commission (CPUC) designs and regulates net metering policies. Once the customer opts for net metering, the tariff policy remains enforced for the average life of the solar energy system, i.e., 20 years. So, the tariffs for solar energy systems already installed either with NEM 1.0 or NEM 2.0 will remain intact for their entire life cycle. Undesirably, net metering is becoming less and less lucrative with every new update in the NEM policy. NEM 3.0 is the latest update approved by CPUC, and it will be enforced on new net-metering customers from 13th April 2023(CPUC). NEM 3.0 still has plenty of incentives for investing in solar generation, but the monthly savings will be significantly lower than those who signed up for NEM 1.0 or NEM 2.0. However, the good news is the customers still have a chance to benefit from net metering with tariff rates under NEM 2.0 if their solar energy installer company places a net metering application by 13-04-2023. After submitting the application, the installer company still has three years to install the solar generating system at the customer's premises. 

1. Why previous net metering NEM 1.0 and NEM 2.0 are better? 

After net metering inception in California in 1996 (ScottMadden) , the CPUC has already rolled out three updates; the latest one is NEM 3.0 (CPUC). The first tariff policy NEM 1.0, was the most beneficial for Californians and boomed the solar industry. The success of NEM 1.0 was applying the same retail rate for importing or exporting electricity to the grid. The idea of the same retail rate motivates the customers to install solar panels on all the available space at their premises. CPUC has committed a NEM update to public utilities if the solar energy systems can reach a 5% of their total power demand. Most of the electric utility companies achieved the target of 5% from solar energy systems in 2016-2017, thus, entitled to switch the tariff to NEM 2.0 (Solarviews).

The NEM 2.0 retained the core policy of selling solar-generated electricity to the grid at the same retail rate. Thus, allowing the customers to offset the exported solar electricity against their total electricity consumption. The main difference between NEM 1.0 and NEM 2.0 is the “Time of Use (ToU)” tariff plans, where the cost of electricity is defined by the time of the day(CPUC). For example, at peak demand hours (afternoon to late evening), the utility company sells at higher rates, while low tariffs are charged during off-peak hours (late night and early morning). Since most of the excess solar energy is available during off-peak hours, the net metering savings are considerably reduced compared to solar systems installed under NEM 1.0. However, NEM 2.0 has boosted the installation of solar energy systems with battery storage to optimize the ROI and long-term savings.

Additionally, in California, solar panels are now installed facing southwest or west to enhance solar irradiation, amplifying electricity production during peak hours. Another significant change in the NEM 2.0 is the implementation of non-by-passable charges, aka (NBC). It is a minor levy in the range of 2-3 cents/kWh being added for importing electricity from the grid. But the minor levy does not apply when exporting solar-generated electricity to the grid. Both ToU and NBC reduces the saving compared to NEM 1.0 users; however, the savings are still significant enough to attract customers to install solar energy systems.

1. What is bad in NEM 3.0? and Should I still invest in solar energy generation at my premises?

CPUC approved NEM 3.0 on 15 December 2022 (CPUC). The crux of NEM 3.0 is reduced tariffs for exporting electricity to the grid with strict ToU and enhanced NBC. For an average residential solar net metering up to 7kW, the average solar-generated electricity price is reduced to 07-08c/kWh, which is almost 75% less than that of NEM 1.0 and NEM (2.0 450c/kWh). The locked-in period is also curtailed from 20 years to 09 years in NEM 3.0(CPUC). Moreover, the customers who sign up for net metering against NEM 3.0 will bear a total NBC amounting to more than $15/month, which is $5/month more under previous NEM policies. All these factors alleviate customer apprehension and also raise the ROI period to 8-10 years, which previously was 4-5 years. But the good news is the customers can still sign up for NEM 2.0 until 13 April 2023. So, ensure your solar installer submits the paperwork before the due date.

Easy Energy Saving Tips - 2023

The sooner, the better!

Read Time: 5 minutes:

Are you concerned about your skyrocketing electricity bills or looking to reduce your monthly budget?

A typical electricity bill in California Bay Area is more than $200/month, which is $20/month more than in other states. But do you know you can lower electricity usage and achieve significant monthly savings by applying simple tips and techniques? So, why pay more for electricity when you can achieve the same quality of living by just managing your lifestyle habits? Keep reading to find the answers. 

Energy efficient home and consumer equipment are a key to achieve optimal electricity usage.

Analyzing, planning and forecasting

1. Your home’s energy efficiency and your lifestyle habits are the main driving factors of your electricity bills. You can analyze which equipment is consuming more electricity and what can be done to optimize its usage. One way to do this is by answering a basic questionnaire about your home equipment and your habits at Home Energy Check-up (PG&E) website. The PG&E analyzes your data and provides personalized suggestions and improvements to make significant savings.

2. Low electricity consumption also entitles customers to more rebates and low electricity rates. Knowing the tariff rate at different time of the day is also essential and let you manage your electricity consumption. Your electricity provider can provide you with the tariff details; for example, the PG&E tariffs are constantly updated at My tariff (PG&E).  

3. Moreover, many electricity companies provide a bill forecasting service Bill forecast. The forested data let you learn how to adjust your routines to reduce future bills. The customer can set monthly consumption goals, and the system alerts the customer beforehand in case of non-compliance with your goals.

Ten Minor Lifestyle Ideas to reduce electricity bills

Simple lifestyle habits can save a lot of electricity. Read the following top ten ideas to control your electricity consumption,

1. Most unused equipment remains in the standby state until someone turns it ON. Always turn off and unplug the electric equipment,

2. Water heaters for showers consume a lot of electricity. One way to regulate it is by timing a shower via music. One can train himself to complete a shower within a few minutes, along with the music playlist.

3. Dirty air-conditioner filters and refrigerator coils consume more electricity. Keep this equipment clean and place it in a spacious area to achieve optimal efficiency. Do not leave the ice buildup in the freezer, and occasionally defrost the excess ice. The refrigerator operating range should be 38-42F, while the freezer should operate within 0-5F.

4. Use full load during laundry and use cold water, as water heating takes 90% of total laundry energy. The laundry dryer can be more efficient by placing a clean towel or a tennis ball in it. Also, a clean lint filter and lint trap increase the dryer efficiency.

5. Don’t let the water run while teeth brushing, shaving, or doing dishes. Instead, use automated taps where possible.

6. Many consumers often run the self-cleaning oven mode for oven housekeeping and maintenance, which consumes a lot of electricity. It is advisable to limit the oven self-cleaning as once in a while job and always run after regular cooking to utilize the pre-existing heat. Also, use glass dishes as they retain heat and cook much faster than other materials. The oven temperature can be reduced by 25F when cooking with glassware.

7. Operate the dishwasher in natural air-dryer mode instead of heating mode. After the final rinse cycle, the dishwasher door can be opened for fast drying. Also, always run the dishwasher at full load to save energy.

8. It is better to watch one TV set for some days a week. This will not only save electricity but also enhance family time and bonding.

9. Fill the gaps beneath the doors and window frames to prevent the indoor air from escaping, thus retaining the indoor temperature longer.

10. Curtains, shades, and blinds prevent the sun from heating the indoor environment and enhance air-conditioner efficiency.

Adapting with the changing weather 

Local weather also influences electricity usage, so adapting to the current temperature and environmental conditions would compensate for the increased electricity cost.

1. Oven increases AC usage on hot days, so use a stove burner, microwave, or grill for cooking during summer. Always use Oven dishwashers during the cooler part of the day during summer.

2. Properly insulate the AC hoses and pipes and install the outdoor AC unit in shades to increase efficiency.

3. House walls and roof insulation significantly impact the electricity cost. Proper home insulation and setting the AC thermostat at 78F make the AC consume only 50% of electricity during its operation. A ceiling fan can further enhance AC utilization during summer.

4. Going for a walk or enjoying the afternoon at the pool reduces the electricity cost and increases social activities.

5. During the hot days, instead of using a laundry dryer, hang the laundry outdoors to save drying energy.

6. Long summer days are ideal for using natural lights where ever possible. Install modern LED lights instead of old incandescent bulbs. Turn off lights in vacant rooms and use candlelit dinners and dim lights.

7. Cooling your premises in the morning is recommended by reducing the preset temperature. As the day progresses, raise the thermostat temperature and operate fans to circulate the pre-cooled air. Similarly, when it's cooler at night, open windows to bring in the cold air and circulate via fans. This procedure raises the efficiency of a central cooling system and saves electricity costs.

8. During the winter, the ideal furnace temperature for the California region is 68F or lower. Never leave the furnace operational when you leave home; instead, lower the temperature to 56F. This may save up to 15% of your heating bill annually.

9. Often heater and fireplace are operated simultaneously for faster heating in winter. Turning-off heaters after reaching the set temperature for energy saving while leaving the fireplace operational is recommended. Thermostat or timer switches can be used to automate the heater operation.

10. Scheduled maintenance and service of the central heating and cooling system ensures trouble-free and optimal operation. The average preventive maintenance and service cost is much less than the repair cost if there is a leakage or malfunction in the heating and cooling system.

The article discusses low-cost tips and techniques to reduce electricity consumption. The first step toward reducing electricity consumption is via analyzing personalized electricity consumption data and modern forecasting techniques. Next, minor lifestyle adaptations focused on energy saving can significantly reduce our electricity bills. Finally, simple tips corresponding to the changing weather also help reduce electricity bills. 

ALL ABOUT THE NEM 3.0

Introduction

On December 15th 2022, the ‘California Public Utilities Commission’ officially approved the NEM 3.0. The latest version of the Net Energy Metering Policy aims to minimize solar export rates and urges Californians to use solar and batteries together.

Now, if you are wondering how NEM 3.0 will affect Californians - read along! 

1. Minimized Solar Export Rates

Usually, all solar owners set out the surplus electricity they generate to the state’s electricity grid. For this, they are paid or compensated in some way.

According to the previous version of the NEM, the value of each kWh a user puts onto the grid is equal to the retail value of electricity. This cuts down their electricity bill as they use electricity from the grid when the sun sets down, but they also put electricity onto the grid during the day. 

However, under NEM 3.0, the export rates are now based on the ‘Avoided cost Calculator’ instead of the retail value. They will vary by each month and each hour, but generally, they are about 75% lower than before. 

1. Removal of Solar Taxes

The Californian Government previously charged ‘Solar Taxes’ from all the users under NEM 2.0, but these were not carried forward in NEM 3.0.

1. Using Solar and Batteries Together

Based on the demand, the export rates are expected to be highest when the sun sets. Thus, using solar with batteries will allow users to store energy and then push it onto the grid during these peak hours. 

However, Californians can still submit an interconnection application till April 13, 2023. Through this, they can register themselves as solar users under the NEM 2.0 for the next 20 years. 

Conclusion

The NEM 3.0 minimises solar export rates, potentially reducing the user’s savings. However, it also promotes the use of solar and batteries together. Nonetheless, it must be highlighted that users registered under NEM 1.0 and NEM 2.0 will not be affected by NEM 3.0.