Defying overwhelming public opposition, state officials voted in late 2022 to make drastic changes to California’s rooftop solar rules (called “net energy metering”). The decision by the California Public Utilities Commission (CPUC) will make it much more expensive to get rooftop solar starting in mid-April 2023. The decision mostly affects those who do not yet have solar, but can affect existing solar users under certain circumstances as well.
- Watch a webinar outlining how these changes can affect you
- Consult our Consumer Guide for tips on finding a solar installer for panels and/or batteries
- Read on for answers to common questions
What is NEM3?
NEM3 is shorthand for the third version of the state’s rooftop solar rules (called “net energy metering”). NEM3 was adopted by the CPUC in late 2022 and will take effect in mid-April 2023. Solar users who got their solar before NEM3 are referred to as NEM1 or NEM2 depending on the year their solar turned on.
How is NEM3 going to be different?
Solar users under NEM3 will get 75% to 80% less from the utility for the extra solar energy they share with the grid. Compensation for that extra energy will go from an average of $.30 / kWh to around $.05 / kWh. NEM3 solar users will also be put on a rate plan with higher evening electricity rates. These changes will extend the payback period for a solar investment from an average of six years to more than ten years. CPUC NEM3 decision
The CPUC’s new rules will not affect NEM1 and NEM2 solar users until your lock-in period expires, unless you add more panels (more on that in the next section).
The NEM1 and NEM2 lock-in period, also known as grandfathering, is for 20 years after the utility turned on your solar system. Here’s two examples:
- Your solar system was turned on in 2019. You will be switched to the new rules (NEM3) in 2039.
- Your solar system turned on in 2003. You will be switched to NEM3 in 2023.
After NEM3 begins, existing solar users who increase their system size by 10% or 1kW, whichever is more, will be forced onto NEM3. You may want to consider adding panels before NEM3 goes into effect in mid-April.
If you want to add panels before NEM3 takes effect, your solar company must submit a correct and complete interconnection application to your utility by April 14th. Construction does not have to be complete by April 14th.
Unlike adding panels, existing solar users can add a battery at any time without affecting their lock-in status.
If your 20 year lock-in period is about to expire, the only way to avoid getting put on NEM3 is to completely remove your current solar system and replace it with a new one.
If you do this, a complete and correct interconnection application must be submitted to the utility by April 14th (construction can be completed after that date). You must remove the old system before submitting an application for a new one.
If you are a NEM1 or NEM2 customer and you sell your home, the new owner will take over the remainder of your lock-in period.
However, this will be different under NEM3, which has a shorter, 9-year lock-in period that is lost when a home is sold.
Yes, if you have the following two things in place by April 14th then your solar system will be put on the current program, NEM2, for 20 years:
- A signed contract with a solar provider.
- You or your solar provider submits a complete and correct interconnection application to your utility.
Construction does not have to be completed by April 14th.
Our Consumer Guide has guidelines for finding a solar company, as well as other resources.
I buy my electricity from a community energy provider or municipal utility. Does the CPUC’s decision affect them?
The CPUC’s decision does affect community choice energy providers, but some may choose to give their customers a higher credit. The CPUC’s decision does not affect locally governed utilities such as LADWP.
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