Over the past six months, we’ve talked a lot about net energy metering (NEM), and how the new NEM 2.0 regulations would affect solar panel customers.

What Is NEM, Exactly?

Here’s a brief refresher: NEM is the term for the billing arrangement where customers with solar panels get credit for the extra energy their systems generate.

Under California’s original net energy metering rules (NEM 1.0), utilities had to reimburse solar customers at full retail rates for the extra energy their solar panels produced. But NEM 1.0 was only applicable until a certain cap is reached or until July 1, 2017—whichever came first.

Back in May, we predicted that SDG&E would hit its cap long before 2017. We thought it would happen in the next couple of months. And we were right.

NEM 2.0 is now in effect for new solar panel customers in the SDG&E service area.

What Makes NEM 2.0 Different

Utility companies like SDG&E weren’t banking on the popularity of solar panel systems. They argued that because so many people were switching to solar, the utility companies were stuck with an unfair share of the bill to maintain the power grid. So, they asked the California Public Utilities Commission (CPUC) to approve additional fees for new solar customers once NEM 1.0 expired. The utility companies also wanted to reduce reimbursement rates for solar customers who generated excess energy and sent it back to the grid.

Luckily, the CPUC ordered utilities to continue reimbursing solar customers at retail rates for excess energy produced. And the CPUC also declined to implement an electricity transmission fee, despite intense lobbying by the utility companies.

While new solar customers will have to pay a bit more in fees under NEM 2.0, the recurring costs for most new residential solar customers should be less than $10 a month.

Key Changes Under NEM 2.0

SDG&E has just released information about NEM 2.0, which it is calling NEM-ST (net energy metering successor tariff). Not exactly a snappy name, so we’ll stick with NEM 2.0.

First, new solar customers will have to pay a one-time, nonrefundable fee of $132 when they apply to connect to the power grid. Customers with systems larger than 1 MW will have to pay an $800 application fee. But since most residential systems are sized at 4 kW, the higher application fee shouldn’t affect residential customers.

Second, when customers apply for the connection, they’ll have to include a statement certifying that both the installation and the equipment have a warranty of at least 10 years. This will be no problem for RC Energy solution customers. We back our products and our installations with the best warranties in the industry.

The third point is what causes some concern. It states that customers will have to pay “non-bypassable” charges on the power that’s delivered to them from the grid. But there are two important things to realize. First, solar customers use the power they generate in real time. So, these non-bypassable charges will only apply when they draw power from the grid—at night, for instance. Second, the charge is approximately 2 cents per kilowatt delivered. Essentially, this is a tax on the storage and delivery of energy. For customers with a 4 kW system, an average size for a residential system, the tax most likely work out to less than $10 a month. It might be $6 or $8, depending on your use.

Finally, under NEM 2.0, new solar customers will be transitioned to Time of Use (TOU) rates. Under TOU billing, customers are charged more for using electricity during peak hours—even if they’re generating the power from their solar panel system. But TOU rates haven’t been rolled out anywhere in SDG&E’s territory yet. SDG&E has said that new solar customers who connect before TOU rates are in place will have the option of staying on their current rate for up to five years after TOU goes into effect.

Good News for Existing Solar Customers

If you’ve already installed solar panels on your home, we have a bit of good news for you. You’re grandfathered in under the NEM 1.0 rules for 20 years after the date of the first connection of your panels to the SDG&E grid. That means you don’t have to worry about non-bypassable charges, and you may not be affected by TOU rates.

What to Do About NEM 2.0

If you’ve been thinking about installing solar panels, don’t let the NEM 2.0 rules deter you. Yes, you will have to pay a one-time interconnection fee, and your monthly fees will be slightly higher. But you’ll still be able to save a lot of money over the life of your solar panel system.

If you have questions about NEM 2.0, get in touch. We offer a free, no-hassle in-home assessment. We’ll be happy to answer all your questions and explain how solar panels—and a whole-home energy solution—can save you money and keep you cool and comfortable all summer long.


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