Net Metering in California: A Complete Guide [2024]
If you own a solar panel system or are considering installing one, you may be wondering, “How does net metering in California work, and how can I benefit from it?”
These questions are critical now that NEM 3.0 has passed and been implemented, which changed the landscape of solar power in California.
We explain what net metering is and how it can benefit you, and we also provide a breakdown of recent changes to California net metering laws.
Key Takeaways
California’s net metering allows solar panel owners to send excess energy back to the grid in exchange for bill credits, efficiently utilizing all generated solar power and reducing annual energy costs.
The introduction of NEM 3.0 in April 2023 has reduced the rates for surplus energy sent back to the grid, encouraging the adoption of solar battery backup systems to maximize solar savings.
Systems installed under NEM 1.0 and 2.0 are grandfathered for 20 years from installation. New solar installations are subject to NEM 3.0’s terms, but those who applied before April 14, 2023, can still benefit from NEM 2.0’s more favorable conditions.
California Net Metering Explained
During the day, your solar panels collect more energy than you need, and with net metering, excess energy is sent to the electricity grid.
Net metering ensures that all of the energy generated by your solar panels gets used, and you receive credits on your electric bill for the energy you send back to the grid.
The way net metering is handled differs from state to state, but as a leading solar energy state, California’s policies have historically offered some of the largest benefits to its residents.
It’s worth noting that NEM 3.0, which went into effect on April 15, 2023, reduced those rates.
Under NEM 3.0, customers who generate surplus energy and send it back to the grid will receive about 5.7 cents in bill credit per kWh. This represents a significant decrease from previous bill credit rates.
Fortunately, solar customers can easily offset some of those rate cuts and improve solar savings by installing solar battery backup systems with their new PV systems.
A battery storage system allows solar customers to retain the excess energy they create, and avoid peak time-of-use rates.
The Benefits Of Net Metering
While the biggest beneficiaries of net metering are typically those who have home solar systems, net metering can also provide benefits for utility companies, individuals who don’t have solar panels, and the environment.
The benefits of net metering programs include the following:
Efficiency. Thanks to NEM programs, the extra power PV owners create doesn’t go to waste. Instead, it goes back to the grid to power homes and businesses nearby.
Reduction of energy loss. With NEM programs, utility companies that receive solar energy from rooftop systems can reduce the energy loss associated with long-distance electricity transmission.
Reduced production of greenhouse gasses. Solar energy is cleaner and more eco-friendly than traditional energy, so programs that invest in it help reduce greenhouse gas emissions and help protect our natural resources.
Carryover credits. Under California’s net metering laws, solar customers can carry the solar credits they generate by producing excess power over from month to month for 12 months.
For individual consumers, NEM programs make it possible to reduce your annual energy costs even more than you already are when you use solar panels to generate power for your home.
How Net Metering Credits Are Applied
One of the biggest benefits of the California net metering system is that it doesn’t operate on a month-by-month basis.
Your solar panels will generate the most power during the summer and during the day. However, at night and in the winter, you’re likely to need to draw from the main electricity grid. With California’s net metering system, your credits carry over from month to month.
This means that you can use credits from your solar panel’s overproduction in the summer to help pay for the cost of powering your home during the winter.
Qualifying for Net Metering
For most homeowners, qualifying for net metering is very simple. You just need to have an eligible home solar panel system that is connected to an electric company’s grid.
Along with being available for individual home solar systems, net metering may also be available for multi-tenant properties through virtual net metering. For example, if you live in a condo or apartment building, individuals in the community may be able to reduce their electric bills based on energy from solar panels used at the property.
California Net Metering Changes
In 2016, California made some changes to the state’s net metering policies and regulations, and the updated regulations were referred to as NEM 2.0. NEM 2.0 was open for new applications from 2017 through April 14, 2023. Those changes affected people who had new solar systems installed in that timeframe. Individuals who had a system installed prior to the changes were grandfathered into the NEM 1.0 policies for 20 years from the date of installation.
Since then, the California Public Utilities Commission (CPUC) has changed California’s net energy metering (NEM) program for the second time in four years.
The updated program is known as NEM 3.0. The changes went into effect on April 15, 2023, and changed many things about the prior program, most notably by implementing reduced export rates.
Because NEM 3.0 is not retroactive, though, customers who submitted a completed interconnection application before the April 14th deadline and install their system within 3 years will be grandfathered into the NEM 2.0 program for 20 years from the date of installation.
Take Advantage Of Solar Energy Savings Today
If you enjoyed learning about net metering in California or found our list helpful, consider sharing it with your friends or family. We’re also happy to answer any questions that you might have that the list didn’t answer.
As one of the leading Santa Cruz solar companies, Sandbar Solar provides reliable solar panel installation services to homes and businesses in Santa Cruz and Monterey counties as well as San Jose and many other regions in the San Francisco Bay Area.
We take pride in being locally owned and operated since 2004, and we have a reputation for designing and installing the area’s most efficient solar panel systems. When you do business with us, you can count on quality work and a focus on environmental stewardship.
While NEM 3.0 has created some large changes in the solar industry, installing a solar PV system with battery storage is still the best way to avoid future rate increases, ensure energy reliability, and save money on your electrical bills.
For more information about how you can save money and the environment by switching to solar, call us at (831) 469-8888 or send us an email. We’re happy to answer any questions that you might have.
