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10/23/3035
How to Prepare Your Home Electrical System for an EV Charger
Electric vehicles (EVs) are no longer the future — they’re the present. Whether you drive a Tesla, Rivian, or Chevy Bolt, charging your car at home is the most convenient and cost-effective way to stay powered.
But before you schedule an installation, it’s important to make sure your home’s electrical system can safely handle the extra load. Installing a Level 2 charger (the most common residential choice) requires more than just an outlet — it often needs a dedicated circuit, permit approval, and sometimes a main panel upgrade.
Here’s what every Bay Area homeowner should know before adding an EV charger.
Step 1: Check Your Electrical Panel Capacity
Your electrical panel — also called your main service panel — is the control center for your home’s power. It distributes electricity to all your appliances, outlets, and lighting circuits.
Most modern EV chargers draw between 30 and 50 amps of continuous power. If your home has a 100-amp panel, that’s often not enough to safely support an additional circuit for a Level 2 charger.
Look inside your panel:
If it’s labeled 100A, you may need a 200A main panel upgrade.
If you see an older brand like Federal Pacific or Zinsco, it’s likely time for replacement regardless of charger installation.
At Ally Electric & Solar, our licensed electricians perform a load calculation to determine if your home’s system can handle the added demand.
Step 2: Choose the Right Charger Type
There are two primary residential charger types:
Charger LevelVoltageTypical Charging SpeedCircuit RequiredLevel 1 120V (standard outlet)3–5 miles of range per hourNone (uses standard plug)Level 2 240V (dedicated circuit)25–40 miles of range per hour40A–60A breaker
For daily convenience and faster charging, most homeowners opt for Level 2 chargers — such as the Tesla Wall Connector, ChargePoint Home Flex, or Emporia EV Charger.
These require professional installation and a dedicated 240V circuit, which must comply with California Electrical Code and PG&E interconnection standards.
Step 3: Verify Permitting and Utility Requirements
Installing an EV charger isn’t just about plugging in — it’s an electrical upgrade that requires city permitting and sometimes coordination with PG&E.
Your installer will handle the permit application, inspection scheduling, and PG&E notification (if applicable).
At Ally, we include these services in every installation — ensuring your system passes inspection and qualifies for rebates such as:
PG&E EV Charge Rebate
California Clean Vehicle Rebate (CVRP)
These incentives can help offset installation costs for qualified homeowners.
Step 4: Plan for Future Energy Upgrades
If you’re considering solar panels or a home battery system in the future, it’s smart to plan your EV charger installation with expansion in mind.
A properly sized 200-amp main service panel not only supports your EV charger but also prepares your home for:
Solar PV system integration
Battery backup (e.g., Tesla Powerwall, Enphase IQ Battery, FranklinWH)
Heat pump or induction appliances
By upgrading once, you avoid costly rework later — making your home fully “electrification-ready.”
Step 5: Schedule a Professional Inspection
Before installation, a licensed electrician should evaluate:
Your panel’s amperage rating and available breaker space
Wiring condition and grounding
Distance between the panel and the parking area
Site feasibility for conduit and charger placement
Ally Electric & Solar provides a home inspection to assess all of the above. Once your system is approved, we handle the installation, permitting, and setup — so you can start charging confidently.
Power Your Drive with Ally Electric & Solar
Installing an EV charger is one of the best upgrades you can make for convenience, sustainability, and long-term savings.
At Ally Electric & Solar, we specialize in EV charger installations, main panel upgrades, and solar + battery systems across the Bay Area. Our team handles every step — design, permitting, installation, and PG&E coordination — ensuring your home is safe, efficient, and ready for the road ahead.
Schedule Your Free EV Charger Consultation
Ally Electric & Solar, Inc.
California Licensed Electrical Contractor — License #806465
Serving the Greater San Francisco Bay Area
info@allyelectricandsolar.com
(510) 559-7990
www.allyelectricandsolar.com
Book your free EV charger inspection today and we’ll help you choose the right charger, verify your electrical capacity, and provide a no-obligation quote.
10/02/2025
PG&E NEM 3.0 and Solar Batteries: How California Homeowners Can Maximize Savings in 2025
If you live in Northern California, you’ve probably heard of PG&E’s NEM 3.0 program and the changes it brought to solar customers in 2023. Many homeowners are now asking the same question: Is solar still worth it in 2025?
The short answer is yes — but the way you design your system matters more than ever. Under NEM 3.0, solar plus a battery is the winning combination for lowering bills, improving energy independence, and protecting your home during outages.
In this guide, we’ll break down what changed, how it affects your PG&E bill, and why batteries like the Tesla Powerwall 3, Enphase IQ 10C, and FranklinWH aPower are becoming essential for California homeowners.
What Changed Under PG&E’s NEM 3.0?
Under the previous program (NEM 2.0), homeowners earned near-retail credit for each kilowatt-hour they exported back to the grid. That meant solar panels alone could dramatically cut electricity bills — even without a battery.
With NEM 3.0, the value of exported electricity has been reduced by roughly 75% on average. Instead of being credited at close to the retail rate, exported power is compensated at the “avoided cost” rate, which is based on wholesale electricity prices.
Daytime exports (midday) are worth much less.
Evening energy (4 p.m. – 9 p.m.) is expensive, and that’s when solar panels aren’t producing.
This shift makes it harder to save money with solar panels alone, because you’re sending energy to the grid when it’s cheap and buying energy back when it’s expensive.
Why Batteries Are the Key to Savings
The new rules change the math — but they also highlight the value of solar battery storage. A battery allows you to:
Store excess solar power during the day.
Use it in the evening when PG&E’s rates are highest.
Reduce exports at low daytime rates.
Cut peak demand charges.
In other words, batteries help you keep more of the energy you generate, shifting your savings from export value to self-consumption value.
Even better: batteries provide backup power during blackouts — something many Bay Area homeowners worry about, especially after recent wildfire seasons and earthquakes.
Incentives in 2025: ITC + SGIP
The cost of adding a battery has dropped significantly thanks to federal and state incentives.
Federal Tax Credit (ITC):
The 30% credit applies to solar and batteries through at least 2032.
Stand-alone batteries also qualify (even if you already have solar).
California SGIP (Self-Generation Incentive Program):
Rebates are still available in 2025, especially for homes in fire-threat or outage-prone areas.
Typical savings: $2,000–$5,000 per battery.
Together, these incentives can cut the upfront price of a battery system by 30–40%, making it a financially smart move under NEM 3.0.
Real-World Example: Bay Area Home
Let’s look at a simple case study.
System size: 7 kW solar + 10 kWh battery
Without battery: Home exports most power at midday when rates are low. Monthly bill reduction: ~40%.
With battery: Stored energy offsets evening rates (often $0.40–$0.50/kWh). Monthly bill reduction: ~65–70%.
Over a 10-year span, the homeowner saves thousands more by adding a battery. And during PG&E outages, the battery provides reliable backup for lights, refrigeration, internet, and even essential medical devices.
Choosing the Right Battery: Tesla, Enphase, or FranklinWH?
At Ally Electric & Solar, we install several top battery brands. Each has strengths depending on your home’s needs.
Tesla Powerwall 3
High capacity (~13.5 kWh per unit).
Built for whole-home backup.
Sleek design, widely recognized.
Enphase IQ Battery 10C
Modular — you can add units over time.
Works seamlessly with Enphase microinverters.
Good option for homes starting with a smaller system.
FranklinWH aPower + aGate
Strong load management features.
Robust warranty and growing popularity in California.
Flexible for both new installs and retrofits.
Which is best? It depends on your household usage, backup needs, and budget. Our team helps homeowners compare options with clear side-by-side analysis.
Beyond Savings: Energy Independence and Resilience
While much of the NEM 3.0 discussion is about dollars and cents, the bigger picture is energy independence.
Batteries make you less dependent on PG&E’s shifting rate structures.
You gain peace of mind during outages — whether from wildfires, storms, or earthquakes.
Electrification trends (EVs, heat pumps, induction stoves) mean households will rely even more on electricity. Pairing solar with storage ensures you’re ready for that future.
Final Thoughts
PG&E’s NEM 3.0 has changed the landscape, but it hasn’t made solar a bad investment. It’s simply shifted the smart strategy from solar alone to solar plus battery storage.
With the 30% federal tax credit and SGIP rebates still in place, 2025 is an excellent year to invest. By adding storage, you can:
Maximize bill savings.
Gain resilience during outages.
Future-proof your home for the electrification era.
Call to Action
At Ally Electric & Solar, we specialize in designing solar + battery systems tailored to California homes. Whether you’re considering the Tesla Powerwall 3, Enphase IQ 10C, or FranklinWH aPower, our team can help you choose the right solution for your budget and lifestyle.
Contact us today for a free consultation and see how much you can save under PG&E’s new rules.
9/30/2025
Heat Pumps and Solar PV + Energy Storage: Are They a Good Match?
In recent years, homeowners across California and beyond have been exploring how to cut energy costs and reduce carbon emissions. Two technologies often come up in the same conversation: heat pumps and solar photovoltaic (PV) systems with energy storage (ESS). But how do these solutions relate, and is combining them really the right move for every household?
What Are Heat Pumps?
A heat pump is an electric appliance that can both heat and cool a home by transferring heat rather than generating it directly.
Heating mode: extracts heat from the outside air (even in cold weather) and moves it indoors.
Cooling mode: works like an air conditioner, removing heat from indoors and releasing it outdoors.
Because they move heat instead of producing it, heat pumps can achieve efficiencies of 200%–400%, compared to around 90% efficiency for electric resistance heaters or gas furnaces.
How Much Electricity Do Heat Pumps Use?
Electricity consumption depends on:
System size (measured in tons or BTUs).
Climate zone (mild Bay Area vs. colder mountain regions).
Home insulation and ducting.
On average:
A typical residential heat pump uses 2,000 to 4,000 kWh per year for heating and cooling.
That translates to 15%–30% of a household’s total annual electricity use in California.
In colder climates, usage can be higher, especially if backup resistance heating is needed.
For comparison, the average California household consumes about 6,500–7,000 kWh annually (without electric vehicles or large electrification loads). Adding a heat pump can increase that number by 25%–50%, depending on usage.
Why Pair Heat Pumps With Solar + ESS?
Offset Higher Electricity Demand
Without solar, switching from gas heating to a heat pump can cause a noticeable jump in your electric bill.
A properly sized solar PV system can offset most or all of the added consumption.
Take Advantage of Efficiency
Heat pumps are already efficient compared to gas furnaces or electric resistance heating.
Running them on solar power makes heating and cooling nearly emissions-free.
Resiliency With Storage
Energy storage systems (like Tesla Powerwall or Enphase IQ Battery) allow homes to keep heating or cooling during outages.
In California, where blackouts and Public Safety Power Shutoffs (PSPS) are a concern, this adds peace of mind.
Peak Shaving
Many utilities have time-of-use (TOU) rates, with higher costs in the late afternoon/evening.
Pairing a heat pump with storage lets homeowners shift usage and avoid peak pricing.
Is It Always a Good Solution?
It depends on your situation:
Good fit if:
You live in a region with mild winters (like most of California).
You’re planning to replace aging HVAC equipment or gas furnaces.
You want to reduce reliance on fossil fuels and improve indoor comfort.
You already have or plan to install solar PV with sufficient capacity.
Potential challenges:
In very cold climates, heat pumps may need backup resistance heating, which increases energy use.
Upfront costs for both a heat pump and a solar + storage system can be significant.
System sizing is critical — undersized solar arrays may not cover the added load.
The Bottom Line
Heat pumps and solar PV + ESS are complementary technologies. Heat pumps make homes more energy-efficient and all-electric, while solar plus storage ensures that extra demand is met sustainably and resiliently. For many California homeowners, combining the two is a smart long-term strategy — but the right solution depends on climate, home size, and budget.
Before making the switch, it’s best to consult with both a licensed HVAC contractor and a solar professional who can model your home’s projected energy use and recommend the right system size.
9/24/2025
Earthquakes Remind Us: Why Solar + Battery Systems Are Essential for Bay Area Homes
Just a few days ago, the Bay Area was shaken by a 4.3-magnitude earthquake near Berkeley/Pinole. While this was a moderate event, it served as an important reminder that we live in an earthquake-prone region where power outages can occur at any time. As an electrical engineer working with residential energy systems, I see firsthand how families are left vulnerable when the grid fails — and why solar panels combined with energy storage systems (ESS) are no longer a luxury, but a necessity.
How Earthquakes Affect the Grid
During an earthquake, even a moderate one:
Utility infrastructure is vulnerable. Power lines, substations, and transformers can be damaged, leaving neighborhoods in the dark.
Gas pipelines pose safety risks. This makes electric cooking and heating a safer and more reliable option during emergencies.
Restoration can take days. Depending on the severity, PG&E crews may need hours — even weeks — to restore service to all customers.
For homeowners, that means no lights, no internet, no heating, and no way to safely store food unless they have a backup system.
Why Energy Storage Systems (ESS) Matter
When paired with solar panels, battery storage systems like the Tesla Powerwall 3, Enphase IQ, or FranklinWH aPower give families independence from the grid.
From an engineering perspective, here’s what these systems can provide after an earthquake:
2+ Weeks of Critical Power: A well-sized battery can keep essential loads running — refrigeration, lighting, phone charging, internet routers, and medical equipment — for up to two weeks when managed carefully.
Safe Cooking & Heating: Electric induction cooktops, microwaves, or small space heaters can run off stored solar power, eliminating reliance on gas.
Automatic Isolation from the Grid: Modern ESS units include rapid shutoff and islanding capability, which means when the grid goes down, your home seamlessly switches to backup power.
Recharge Daily with Solar: Unlike a gas generator that needs constant refueling, a solar + battery system recharges every morning — ensuring sustainability for as long as the grid is down.
Real-World Resilience for Bay Area Families
Living in the Bay Area means preparing for the unexpected. With earthquakes, wildfires, and storms becoming more common, resilience isn’t optional — it’s essential.
Families who invest in solar + battery systems are not just saving on monthly utility bills; they are also investing in:
Peace of mind during natural disasters
Energy independence from PG&E’s outages and rate hikes
A cleaner, safer alternative to gas generators
Final Thoughts
The Berkeley/Pinole earthquake is a reminder that the grid is fragile, but your home doesn’t have to be. With solar panels and a properly designed energy storage system, you can keep life moving — cooking meals, heating your home, and staying connected — even when the lights go out across the city.
At Ally Electric and Solar, we specialize in designing and installing solar + battery systems that protect families during outages. If you’d like to learn how to make your home more resilient against earthquakes and other emergencies, contact us today for a free consultation.
9/18/25
How Does the NEM 3.0 Application Work?
When you apply for solar or add a battery in PG&E’s territory, your contractor (like Ally Electric and Solar Inc.) files an Interconnection Application. This is how it works:
Submit Interconnection Application
System details (panels, inverters, batteries) are entered into PG&E’s portal.
Required documents: site plan, single-line diagram, spec sheets.
PG&E Review
PG&E checks that your system complies with Rule 21 interconnection standards.
They confirm system size, safety ratings, and that your main panel can handle the system.
Permission to Operate (PTO)
Once approved and inspected, PG&E issues PTO.
This is the official green light for you to run your solar + storage system and start receiving NEM 3.0 credits.
What Does This Mean for Homeowners?
Under NEM 3.0:
Payback is longer without storage → Solar alone saves less because export credits are lower.
Solar + Battery is the new standard → A battery allows you to store daytime power and use it at night, making your system pay off faster.
Energy Security → Batteries provide backup power during PG&E outages.
How Ally Electric and Solar Inc. Can Help
At Ally Electric and Solar Inc. (Richmond, CA – CSLB #806465), we’ve guided hundreds of Bay Area families through the PG&E application process. We handle:
Preparing and submitting your NEM 3.0 interconnection application.
Designing systems that maximize self-consumption under new rules.
Installing trusted batteries like Tesla Powerwall, Enphase IQ, FranklinWH.
Panel upgrades and permitting for seamless integration.
Take Action Now
The sooner you apply, the sooner you can lock in savings and protect your home from rising PG&E rates.
Contact us today to get started with your NEM 3.0 solar + storage consultation.
510-559-7700
info@allyelectricandsolar.com
www.allyelectricandsolar.com
CSLB License #806465
FQAs
1. If I sell excess energy to PG&E, will PG&E charge me for it?
No — PG&E does not charge you for exporting your excess solar energy. Instead, under NEM 3.0, they give you export credits on your bill. The difference is that these credits are now much lower (around 5–8¢ per kWh) compared to the near-retail credits homeowners received under NEM 2.0. That’s why using your own solar energy or storing it in a battery provides greater savings than sending it back to the grid.
2. Will I still get the 30% Federal Solar Tax Credit under NEM 3.0?
Yes. The 30% Federal Investment Tax Credit (ITC) is completely separate from NEM policies. It applies to both solar and battery systems installed through the end of 2025.
3. Is it still worth going solar under NEM 3.0?
Yes — but the strategy has changed. Solar alone saves less than it used to because export credits are lower. Pairing solar with a battery system allows you to store your extra energy and use it during expensive peak hours, which dramatically improves your savings.
4. Can I keep my old NEM 2.0 plan if I already have solar?
Yes. If your system was approved under NEM 2.0, you are grandfathered into that program for 20 years from your Permission to Operate (PTO) date. However, adding new solar capacity may trigger a new NEM 3.0 review. Adding only a battery (without increasing solar size) usually does not change your NEM 2.0 status.
5. How long does the NEM 3.0 application take?
After submitting your application and documents, PG&E typically takes 2–4 weeks to review. Once the city inspection is complete and passes, PG&E issues your Permission to Operate (PTO).
6. Can I charge my battery from the grid under NEM 3.0?
Yes, depending on the configuration. Systems like Tesla Powerwall and Enphase IQ Battery can be set to allow or prevent grid charging. Most homeowners in PG&E territory choose “solar-only charging” to comply with NEM requirements and maximize savings.
7. What happens if I use more electricity than my solar produces?
You’ll still receive energy from PG&E, and you’ll be billed at normal rates for that extra usage. Your solar + battery system helps reduce this by covering as much of your home’s load as possible.
Can I Oversize a Battery Compared to Solar Under NEM or NBT in California?
Updated: June 24, 2025
Short answer: Yes—for now. But that could change after August 16, 2025.
What Is the 150% Storage Sizing Limit in NEM/NBT?
California’s Net Energy Metering (NEM) and Net Billing Tariff (NBT) programs have long included a rule that limits battery size to no more than 150% of the paired solar system’s nameplate capacity (kW). The original goal was to prevent oversized battery installs using token solar to access NEM benefits like:
Grid upgrade cost exemptions
Avoiding departing load charges
Is This Rule Being Enforced Right Now?
No. The 150% storage cap is on pause — and has been since 2020, when the CPUC suspended it to support wildfire resilience efforts.
The pause was extended in 2023 for two more years.
It currently applies to both NEM and NBT systems.
The rule technically still exists in the tariff but is not being enforced at the moment.
So yes — for now, you can oversize your battery relative to your solar system.
What Happens After August 16, 2025?
The storage sizing cap is scheduled to return on August 16, 2025 unless the CPUC takes further action.
Any interconnection applications submitted on or after that date will be required to conform to the 150% rule.
Projects submitted before August 16 that are free of deficiencies (except the building permit) will not be affected.
Can the Rule Still Be Changed?
Yes — and action is already underway.
The California Solar & Storage Association (CALSSA) filed a petition last year to remove the cap permanently. The CPUC denied it, stating the utilities might propose a better path forward. But after no utility follow-through, CALSSA filed a new compromise petition in June 2025.
If approved, it would:
Eliminate the 150% limit, and
Add limited oversight for unusually large storage projects.
What Should You Do?
If you're planning a solar + battery project with a large storage system, here’s what we recommend:
Submit your interconnection application before August 16, 2025
Ensure it is free of deficiencies other than the final building permit
Work with an experienced contractor who knows the rules
Why Work with Us?
At Ally Electric & Solar, we’re one of the most experienced solar + storage contractors in the Bay Area when it comes to NEM, SGIP, interconnection rules, and battery sizing strategy. We help homeowners and businesses:
Navigate policy changes
Maximize rebates and incentives
Stay fully compliant while planning for resilience
Have Questions? Let’s Talk.
If you're thinking about adding a battery or increasing your energy independence, we’re happy to walk you through your options. Now is the time to act—before the rules change again.
510-559-7700 or email nsaglam@allyelectricandsolar.com to get started.
Unveiling the Power Combo: Solar Energy, Battery Storage, and PG&E NEM 3.0
In the ever-evolving landscape of renewable energy, the convergence of solar power and battery storage has emerged as a game-changer. Pairing solar panels with battery technology offers a compelling solution to harness clean energy and maximize its potential. Adding to this equation, the Pacific Gas and Electric Company (PG&E) Net Energy Metering (NEM) 3.0 program opens up a new chapter for solar adopters. Let’s dive into the synergy of these elements and explore the possibilities they offer.
The Solar Advantage
Solar energy stands as a beacon of sustainability, harvesting power from the sun and converting it into electricity. The beauty of solar lies in its accessibility and scalability. Residential, commercial, and industrial setups can all benefit from solar installations, contributing to reduced carbon footprints and energy independence.
Enhancing Solar with Battery Storage
Integrating battery storage with solar panels addresses the intermittency challenge of solar power. When the sun isn’t shining, batteries step in, storing excess energy generated during peak sunlight hours. This stored energy becomes invaluable during evenings, cloudy days, or grid outages, ensuring a steady supply of clean power round the clock.
Enter PG&E NEM 3.0
PG&E’s Net Energy Metering (NEM) program has been a pivotal incentive for solar adopters. NEM 3.0 introduces changes that further empower consumers. Under this program, solar-equipped households can send excess electricity generated back to the grid and receive credits for it, reducing their energy bills. Additionally, NEM 3.0 offers more equitable compensation and accommodates larger solar systems, making it an attractive option for those considering solar installations.
The Perfect Triad: Solar + Battery + NEM 3.0
The synergy between solar panels, battery storage, and the PG&E NEM 3.0 program creates a trifecta of benefits:
Energy Independence: With solar panels generating electricity and batteries storing excess power, consumers reduce reliance on the grid, fostering energy independence.
Cost Savings: NEM 3.0 credits for surplus energy coupled with stored power from batteries minimize utility bills, providing long-term cost savings.
Resilience and Reliability: Battery backup ensures a reliable power supply during outages or when solar generation is insufficient, enhancing resilience.
Making the Move
For those contemplating the shift to solar with battery storage, several factors come into play. Assessing energy needs, understanding the installation process, available incentives, and evaluating the right battery storage solution are crucial steps.
Consulting with reputable solar and energy storage providers helps navigate this transition smoothly. Professionals can offer tailored solutions, considering individual energy consumption patterns and optimizing the integration of solar panels and batteries.
Embracing the Future
As we march towards a greener future, the amalgamation of solar energy, battery storage, and programs like PG&E NEM 3.0 paves the way for sustainable and efficient energy usage. The power to harness the sun's energy, store it, and utilize it intelligently is no longer a vision but a practical reality.
In the journey towards a cleaner and more sustainable world, each solar panel, every battery storage unit, and each step towards embracing programs like PG&E NEM 3.0 contributes significantly. Embracing this power combo is not just an investment in energy but a commitment towards a better planet for generations to come.
Net Energy Metering NEM 3.0
Read Time: 5 minutes:
Highlights:
Net metering policy NEM 3.0 buys solar-generated electricity 75% cheaper than previous net metering policies.
Net metering under NEM 2.0 policy will remain applicable for customers who sign up before 13rd April 2023.
The return on investment period for new solar energy systems under NEM 3.0 policy will be around 8-10 years, which will double that of NEM 2.0.
Keywords: Net energy metering, NEM, NEM 1.0, NEM 2.0, NEM 3.0, Solar net metering
What is solar net metering?
Solar-generated electricity is indispensable to achieve global decarbonization, but it mitigates the ever-increasing electricity tariffs. Solar energy offsets customers' electricity bills through net energy metering (NEM), which is a process of selling excess electricity back to the grid. Net metering allows users to earn credits when their solar electricity production exceeds their consumption. Except for the few peak hours, the solar owners will always have excess electricity during the sunshine hours, which can be sold to the grid, thus earning substantial savings.
Does it worth investing in solar net metering?
The investment in solar energy for your home or business is steered by the return on investment (ROI) period, solar generating system cost, market conditions, and the governing electricity tariff policies. Net metering gains and flexible tariff policies are the prime motivations to invest in rooftop solar generation. Ideally, there should be a uniform one-to-one price ratio between importing and exporting electricity to the grid. Under uniform tariffs, a single kWh bought from a utility company should be equivalent to the price it buys solar-generated electricity through net metering. This incentive can save hundreds to thousands of electricity bills annually and motivates customers to invest in clean and renewable energy. However, regular amendments and updates in the NEM tariff policies have affected the customers saving incentive.
NEM 3.0 will be enforced after 13 April 2023.
The California Public Utilities Commission (CPUC) designs and regulates net metering policies. Once the customer opts for net metering, the tariff policy remains enforced for the average life of the solar energy system, i.e., 20 years. So, the tariffs for solar energy systems already installed either with NEM 1.0 or NEM 2.0 will remain intact for their entire life cycle. Undesirably, net metering is becoming less and less lucrative with every new update in the NEM policy. NEM 3.0 is the latest update approved by CPUC, and it will be enforced on new net-metering customers from 13th April 2023(CPUC). NEM 3.0 still has plenty of incentives for investing in solar generation, but the monthly savings will be significantly lower than those who signed up for NEM 1.0 or NEM 2.0. However, the good news is the customers still have a chance to benefit from net metering with tariff rates under NEM 2.0 if their solar energy installer company places a net metering application by 13-04-2023. After submitting the application, the installer company still has three years to install the solar generating system at the customer's premises.
Why previous net metering NEM 1.0 and NEM 2.0 are better?
After net metering inception in California in 1996 (ScottMadden) , the CPUC has already rolled out three updates; the latest one is NEM 3.0 (CPUC). The first tariff policy NEM 1.0, was the most beneficial for Californians and boomed the solar industry. The success of NEM 1.0 was applying the same retail rate for importing or exporting electricity to the grid. The idea of the same retail rate motivates the customers to install solar panels on all the available space at their premises. CPUC has committed a NEM update to public utilities if the solar energy systems can reach a 5% of their total power demand. Most of the electric utility companies achieved the target of 5% from solar energy systems in 2016-2017, thus, entitled to switch the tariff to NEM 2.0 (Solarviews).
The NEM 2.0 retained the core policy of selling solar-generated electricity to the grid at the same retail rate. Thus, allowing the customers to offset the exported solar electricity against their total electricity consumption. The main difference between NEM 1.0 and NEM 2.0 is the “Time of Use (ToU)” tariff plans, where the cost of electricity is defined by the time of the day(CPUC). For example, at peak demand hours (afternoon to late evening), the utility company sells at higher rates, while low tariffs are charged during off-peak hours (late night and early morning). Since most of the excess solar energy is available during off-peak hours, the net metering savings are considerably reduced compared to solar systems installed under NEM 1.0. However, NEM 2.0 has boosted the installation of solar energy systems with battery storage to optimize the ROI and long-term savings.
Additionally, in California, solar panels are now installed facing southwest or west to enhance solar irradiation, amplifying electricity production during peak hours. Another significant change in the NEM 2.0 is the implementation of non-by-passable charges, aka (NBC). It is a minor levy in the range of 2-3 cents/kWh being added for importing electricity from the grid. But the minor levy does not apply when exporting solar-generated electricity to the grid. Both ToU and NBC reduces the saving compared to NEM 1.0 users; however, the savings are still significant enough to attract customers to install solar energy systems.
What is bad in NEM 3.0? and Should I still invest in solar energy generation at my premises?
CPUC approved NEM 3.0 on 15 December 2022 (CPUC). The crux of NEM 3.0 is reduced tariffs for exporting electricity to the grid with strict ToU and enhanced NBC. For an average residential solar net metering up to 7kW, the average solar-generated electricity price is reduced to 07-08c/kWh, which is almost 75% less than that of NEM 1.0 and NEM (2.0 450c/kWh). The locked-in period is also curtailed from 20 years to 09 years in NEM 3.0(CPUC). Moreover, the customers who sign up for net metering against NEM 3.0 will bear a total NBC amounting to more than $15/month, which is $5/month more under previous NEM policies. All these factors alleviate customer apprehension and also raise the ROI period to 8-10 years, which previously was 4-5 years. But the good news is the customers can still sign up for NEM 2.0 until 13 April 2023. So, ensure your solar installer submits the paperwork before the due date.