NEM 3.0: Race to Solar – How CCA’s can Educate their Customers
One of the key goals of Tripepi Smith’s new CommuniCAtor Insights Series is to help community choice aggregators improve communication and increase transparency with customers. To that end, have you been keeping residents and local businesses up to speed on California’s latest solar energy regulations?
On December 15, 2022, the California Public Utilities Commission (CPUC) approved Net Energy Metering (NEM) 3.0, a new policy that will replace NEM 2.0. The updated regulation will take effect on April 13, 2023.
Net energy metering describes a billing system between utility providers and homeowners with solar. Under net metering, solar owners earn credits for the excess electricity their system provides to the grid. Until recently, net metering policies had a one-to-one offset, meaning the price of a kWh supplied to the grid was equal to the price of pulling a kWh off the grid. NEM 3.0 changes this price ratio.
The most notable difference between NEM 2.0 and NEM 3.0 is the value of export rates–which are much lower under NEM 3.0. For new solar customers, NEM 3.0 will reduce compensation for net metering credits, lowering lifetime solar savings by approximately 60 percent. Existing solar customers will not be able to replace or add capacity to their system and also retain their NEM 2.0 status. For a full summary of the policy shift, please visit the CPUC’s website.
We believe it is vital to keep residents and businesses informed about this new regulation, as it may affect them directly. After April 15, the return on investment for solar installations will decrease. Solar-producing homes and commercial entities will earn less for the excess power they supply to the grid. The payback period for solar installations will also increase. It’s a good idea to assess the performance of existing municipal solar resources and add capacity or replace aging equipment prior to the change.
Below are some tips and best practices you can use to keep community members informed about the impacts of NEM 3.0:
- Make sure your CCA operations team is equipped to answer questions about how the new regulation will affect customers.
- Brief frontline staff so that they can be prepared to best serve residents with questions, requests for expedited building permits, etc.
- Create a new page on your CCA’s website explaining NEM 3.0 and how it differs from NEM 2.0.
- Provide links, resources and FAQs so interested parties can learn more.
- Distribute a press release or news article covering the new solar regulation.
While NEM 3.0 introduces higher costs and a reduced return on investment for solar installations, it’s not too late for customers to take action and avoid the financial impacts. Make sure community members are aware that if they file an Interconnection Application before April 13, 2023, they will be eligible to continue with the NEM 2.0 policy as a legacy user and will receive NEM 2.0 policy benefits for up to twenty years. Californians considering installing solar panels at their home or business should make the switch as soon as possible, before April 13, to continue with the more economical NEM 2.0 policy.
Tripepi Smith’s CCA CommuniCAtor Insights series examines aspects of and best practices for communicating the value and impact of CCAs to ensure community messaging is reaching and engaging key audiences to promote their involvement.
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