California, Meet Net Metering 2.0

By Noah Ginsburg, OnGrid

California’s major utilities are quickly approaching their 5% net energy metering (NEM) caps, and NEM 2.0 is just around the corner. Depending on how long permitting and installation takes, a San Diego solar customer that signs up for solar today will likely be credited for their solar energy exports under NEM 2.0 rather than traditional NEM.


NEM vs NEM 2.0: What’s the Difference?

In addition to eliminating the one megawatt system size cap on commercial solar installations, NEM 2.0 has three major differences from California’s traditional NEM. Under NEM 2.0, new solar customers have to:

  1. Pay a one time interconnection fee that is estimated to be $75-150
  2. Enroll in a time-of-use rate
  3. Pay non-bypassable charges for all energy delivered by the utility (read on for details)


What Are Non-Bypassable Charges?

Under traditional NEM, a solar customer is billed for net energy consumption over the course of a billing period. The customer can use the grid like a free battery, exporting solar energy to the grid during the day to generate NEM credits that can be redeemed for energy consumed at night or on rainy days. The traditional NEM customer’s monthly electricity costs are not impacted by the amount of solar energy that they consume immediately (self-consumption) vs how much solar energy they export to the grid during the day, generating NEM credits that they consume at night or on a later date.

Under NEM 2.0, a solar customer will have to pay non-bypassable charges (NBCs) for every kilowatt hour of energy that the utility delivers to their property. These NBCs can no longer be offset with solar exports to the grid, which means that a customer who exports a lot of solar energy to the grid during the day and consumes a lot of energy at night will have higher utility electricity costs under NEM 2.0 than they would have under traditional NEM. How much higher? The NBCs are approximately $0.02/kWh for energy delivered by the utility, however the number of kilowatt hours for which the solar customer has to pay NBCs depends on the customer’s individual energy profile; a customer with high self-consumption will see almost no difference in  electricity costs under NEM 2.0 vs traditional NEM. On the other hand a residential customer with low self-consumption (e.g. someone who exports solar energy during the work day and then consumes a lot of energy at night) could see $5-10/month of NBCs added to their monthly electricity costs compared to what their costs would have been under traditional NEM.


NEM 2.0: Is it Bad News?

While NEM 2.0 will deliver some solar customers slightly less savings, its adoption is considered a major success for solar customers, environmental advocates and the solar industry. Just a few months ago, there were fears that NEM 2.0 would allow utilities to levy high fixed charges on solar customers or credit solar energy exports at significantly below retail value (utilities are still challenging the regulators’ decision). Such a decision could have landed California’s solar industry in hard straits. Fortunately, thanks to strong advocacy from consumers, environmentalists, and the solar industry, the California Pubic Utilities Commission adopted rules for NEM 2.0 that will allow California’s rooftop solar industry to continue to grow and thrive.


Will NEM 2.0 Impact Existing Solar Customers?

Nope! The changes to net-metering apply to future solar customers and existing customers are “grandfathered” in under traditional NEM.


How Can I Model Solar Savings With NEM 2.0?

We know of two software options that  help solar professionals model solar savings with NEM 2.0; The OnGrid Tool and Energy Toolbase.

Noah Ginsburg, 3/21/16