Net Metering 2.0 in California: What You Need to Know About the Program

By Scott Laskey


Last Updated on January 25, 2021 by Scott Laskey
Sep 12

Are you curious about Net Metering 2.0? Do you know what’s changed under the new policies? Are you wondering how the 2.0 program will affect you?

If so, you’re not alone.

According to EnergySage, Californians installed upward of 13,241 megawatts of solar in 2015, nearly five times the amount of the second-place state — Arizona.

Unfortunately, the Net Metering 2.0 structure is far from clear. If you’ve ever wondered how the net metering policy works, or what to make of Net Metering 2.0, here’s a simple breakdown.

What Is Net Metering 2.0?

The Net Metering 2.0 program allows California citizens to receive credits on their utility bills for any excess electricity produced by their solar panels, as long as their systems are under 1,000 kilowatts. As the 2.0 would indicate, this net metering policy is an upgrade to the original.

While the original policy dictated that California residents would get a one kilowatt-hour bill credit for every kilowatt-hour of electricity their residential solar systems put back into the grid, Net Metering 2.0 introduces some slight changes.

Although NEM 2.0 maintains the kWh credit functionality, it outlaws some fixed charges levied against residential customers, including charges to access the grid as well as standby and demand charges. The 2.0 program also lifts the cap on how much of the utility’s grid could be solar power (formerly 5 percent).

The current Net Metering 2.0 program is slated to run until 2019. The pros and cons of the current NEM 2.0 currently ruling can be found on Sage Renew’s site.

5 Things to Know About Net Metering 2.0 in California

If you’re a California resident with a solar power system, here are five things we believe you should know about the current Net Metering system:

  1. Homeowners Must Oversize Their Solar Systems to Get the Best Value

As long as your system is under 1,000 kilowatts, you qualify for the 2.0 energy buyback plan. With that in mind, you’ll want to slightly oversize your system so that you’re putting as much energy back into the grid as possible, without exceeding your yearly consumption by much more than 5-10%. Sandbar Solar has more than 13 years of experience in the solar industry and can help you figure out how large your system can go without violating Net Metering 2.0 guidelines.

What’s more, NEM 2.0 customers must pay non-bypassable charges (NBCs) on the energy they use. These charges help utility groups save some money on decommissioning and can reach $0.02 per kWh of power.

  1. Net Metering 2.0 Includes Time-of-Use Rates

Since the installment of Net Metering 2.0, California participants are subject to time-of-use (TOU) rates. These rates make power more expensive during peak hours (usually between 3-8 pm) and less expensive during the remaining off-peak hours.

Under Net Metering 2.0, residents will receive more money for electricity they create during peak hours and less for any power sent back to the grid during off-peak hours.

This brings us to the next point.

  1. You Don’t Need to Put Solar Panels on the West Side of Your Home

While it’s a common notion that placing panels on the west side of your home will maximize your energy credits, the truth is that solar panels function admirably on ambient light, so placing them wherever they’ll get the most exposure on your roof (as south-facing as possible, and NOT necessarily the west side) is the smartest move.

  1. NEM 2.0 Can be Unpredictable

While utility companies continue to alter their rates according to a vague set of protocols and circumstances, solar should be predictable. Unfortunately, NEM 2.0 uses metrics such as time-of-use charges and other fees to make solar output hard for consumers to predict.

This can make it difficult for homeowners to fully understand the economic impact or benefit of their solar system, and make a smart choice about whether or not to install one. However, by keeping in mind points 1 and 3 above, you will be sure to maximize the benefits.

The Current State of California Net Metering 2.0

Since its introduction, NEM 2.0 has been met with some uncertainty. In addition to offering time-of-use rates and forcing optimized, specific systems, NEM 2.0 may complicate solar energy for residents. If you liked this post and the information it offers, please don’t hesitate to share it with your friends.

We’re the largest residential and commercial solar installer in Santa Cruz County, and our team here at Sandbar Solar & Electric takes real pride in having been a local company for 13 years! You can count on our professional commitment to quality work, ethical solutions, community sponsorship and environmental stewardship.

We’re proud of our reputation for designing and installing the most efficient solar panels available on the Central Coast. We invite you to look through our online portfolio of recent projects. Our work areas include Santa Cruz and Monterey counties as well as San Jose and the Bay Area. Don’t hesitate to give us a call if you have any questions about how you can improve your system.

About the Author

Scott is the founder of Sandbar Solar & Electric. With a Bachelor’s Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.