Los Angeles Solar: Get Grandfathered Into NEM 2.0 Now to Maximize Savings

Incentives
Add solar before deadline
Go solar by April 14, 2023

On December 15, 2022, California’s Public Utilities Commission unanimously approved California’s third iteration of net metering, or NEM 3.0. The new tariff reduces net metering compensation rates for new California solar customers by approximately 75%, but existing solar customers, and those who go solar before NEM 3.0 goes into effect (through April 14), will be grandfathered into their original net metering policy. Solar shoppers who submit interconnection applications after April 14, 2023, will be under NEM 3.0 and could miss out on 60% of solar savings, unless battery storage is added to the solar installation. Under NEM 3.0, the California solar industry will shift from one-to-one net metering to net billing, which is much lower in value, as the CPUC establishes a new rate for crediting solar exports based on “avoided cost” rates. Avoided cost rates come out to about 25% of retail electricity rates during specific hours, meaning the value of net metering credits will decrease by around 75% under NEM 3.0.

The reduced net metering credits will significantly impact solar savings, as under NEM 2.0, most homeowners in Los Angeles have a solar payback period of approximately 5-6 years, and under NEM 3.0, that number will shift closer to 9-10 years. Solar-plus-storage installations could offset the decrease in savings, and the payback period for a solar-plus-storage installation will be faster than for a solar-only install. Los Angeles residents considering solar should go solar as soon as possible and lock in more favorable net metering credits.

In conclusion, NEM 3.0 reduces compensation for excess power sent to the electric grid, significantly impacting solar savings and extending the payback period for solar panel systems. However, those who go solar before April 14, 2023, can still lock in the more favorable net metering credits of NEM 2.0 for the next 20 years. Los Angeles residents considering solar installations should take action as soon as possible to ensure they can benefit from the current net metering policy.