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Maximizing Solar Savings in San Diego with Net Energy Metering 3.0

Updated: Oct 13, 2023

Solar workers checking solar panels

Solar energy is not just about environmental sustainability but also about financial benefits and energy bills savings. With the recent updates to net energy metering (NEM) policies, specifically NEM 3.0 in San Diego, solar owners can now enjoy even greater returns on investment while contributing to a greener future using clean energy.

What is Net Energy Metering 3.0?

Net energy metering (NEM) is a billing practice that allows solar panel owners the opportunity for credit on any surplus of electricity generated and returned back into the electric grid. These credits can then be used to offset the electricity consumption from the grid during times when the panels are not producing enough electricity, such as at night or on cloudy days. NEM 3.0 is the latest version of this policy, specifically applicable to San Diego, California.

What is Changing in NEM 3.0, or, What's Different from 2.0?

Net Energy Metering (NEM) is a billing system used by utilities to credit rooftop solar owners for the excess electricity they generate and send back to the grid. NEM 2.0 and NEM 3.0 are different versions of this billing system.

The main difference between NEM 3.0 and NEM 2.0 is the compensation structure. Under NEM 2.0, solar owners were credited at the full retail rate for excess energy they generated and sent back to the grid. However, under NEM 3.0, solar owners will be credited at a lower rate, which is yet to be determined.

Another significant change in NEM 3.0 is the implementation of a grid access charge. This is a fixed monthly charge that will be levied on solar owners, regardless of how much energy they consume or how much energy they generate. This charge will help utilities cover the costs of maintaining the grid and ensuring it remains reliable.

NEM 3.0 was proposed by the California Public Utilities Commission (CPUC) in January 2021, and it is expected to be implemented in 2023. On the other hand, NEM 2.0 was implemented in 2016 and has been in use since then.

Overall, NEM 3.0 represents a shift towards a more equitable billing system that balances the needs of solar owners with the costs of maintaining the grid. While it may result in lower credits for solar owners, it will also ensure that the grid remains reliable and accessible to all customers.

House with solar panels in San Diego

How Does NEM 3.0 Benefit Solar Owners?

NEM 3.0 offers several key benefits to solar owners in San Diego, making solar electricity an even more attractive and financially viable option:

  1. Better return on investment: Solar+storage systems provide a better return on investment (ROI) under NEM 3.0. It will be comparable to the current cost of solar power by itself. This is because the state reworked NEM to make the combination more appealing in an effort to promote the installation of energy storage systems. (Plus, batteries offer backup power in case of blackouts.)

  2. Using batteries for lower cost: Customers that invest in a battery storage system have the distinct financial advantage of not having to draw as much power from the grid in the evenings, when time of use charges are higher.

  3. 0 percent additional solar tax: The California Public Utilities Commissions' (CPUC) NEM 3.0 implementation. It was decided that the proposed "solar taxes" on solar panel owners would not be included in the final version of NEM 3.0. what will reduce the taxes paid for this energy.

  4. Longer Credit Expiration Period: NEM 3.0 extends the credit expiration period from 12 months to 24 months, giving solar owners more time to use their credits and further maximize their savings.

What is the current value of solar energy with NEM 3.0 in San Diego?

Spoiler alert: yes, solar is still a highly worthwhile investment in San Diego, especially with the introduction of NEM 3.0. Here's why:

  1. Greater Savings on Electricity Bills: The cost of solar panels has significantly decreased in recent years, making solar energy more affordable and accessible to homeowners and businesses alike. This means that even with changes to NEM 3.0, the savings from generating your own energy with solar panels can still outweigh the costs.

  2. Expanded Opportunities for Businesses: NEM 3.0 extends the benefits of net metering to larger commercial and industrial solar customers, creating new opportunities for businesses to invest in solar power and reap the financial benefits of reduced electricity costs and increased sustainability. This can provide a competitive advantage for businesses in San Diego and enhance their corporate social responsibility initiatives.

  3. Environmental and Social Benefits: Solar power is a clean and renewable source of energy that reduces greenhouse gas emissions, air pollution, and dependence on fossil fuels. By investing in solar power with NEM 3.0, consumers can contribute to a greener and more sustainable future while also supporting local job creation in the solar industry.

Man checking his solar panels on a tablet

How Solar Batteries are Essential under NEM 3.0

Solar batteries are becoming increasingly essential under NEM 3.0 due to changes in the way credits are allocated for excess energy produced by solar panels. Under NEM 2.0, excess energy was credited at the full retail rate, allowing solar owners to receive a 1:1 credit for each kilowatt-hour of energy their system produced beyond their own consumption. This meant that solar owners could effectively use the grid as a virtual battery, sending excess energy to the grid during the day and drawing it back at night without incurring any additional charges.

However, under NEM 3.0, credits for excess energy will be gradually reduced over time, ultimately reaching a rate of around 25% of the retail rate. This means that solar owners will no longer receive the full value for excess energy they produce and will need to find other ways to maximize the value of their solar investment.

One way to do this is by installing a solar battery storage system. By storing excess energy generated during the day, solar owners can use it to power their homes at night, reducing the amount of energy they need to draw from the grid and maximizing their overall savings. In addition, solar batteries can also provide backup power during outages, allowing solar owners to maintain power even when the grid is down.

Overall, the gradual reduction in credits for excess energy under NEM 3.0 makes solar batteries an increasingly essential component of a solar energy system. By allowing solar owners to store and use excess energy efficiently, solar batteries can help to maximize the financial and environmental benefits of solar energy in the face of changing regulatory policies.

Understanding the Return on Investment (ROI) for Solar Projects

When considering the installation of solar panels, it's important to understand the return on investment (ROI) that can be achieved. Solar installations are a long-term investment, and ROI is a key metric that indicates the financial benefits of going solar.

The ROI for a solar project depends on various factors, including the initial cost of installation, the electricity rates, the amount of electricity the panels generate, and the net energy metering policies in place. With NEM 3.0 in San Diego, the ROI for solar projects can be even more favorable due to the higher credits, rollover of unused credits, reduced TOU charges, and longer credit expiration period.

The Financial Benefits of Going Solar

Solar panels in San Diego offer significant financial benefits to solar owners. By generating electricity from the abundant sunlight in the region, solar panels can offset the need to purchase electricity from the grid, resulting in reduced electric bills. Additionally, with NEM 3.0, solar owners can earn credits for the excess electricity they produce and send back to the grid, further offsetting their electricity costs and increasing their savings.

Moreover, solar panels in San Diego can provide a positive return on investment over time. As the cost of electricity continues to rise, solar panels can provide a stable and predictable source of electricity at a fixed cost, reducing the impact of fluctuating energy costs.

Woman analyzing the financial benefits of solar energy

How to Make the Most of NEM 3.0 for Solar Power in San Diego

To fully leverage the benefits of NEM 3.0 and maximize your savings with solar power in San Diego, here are some tips to keep in mind:

  1. Choose the Right Solar Company: Selecting a reputable and experienced solar power provider is crucial to ensure a well-designed and efficient solar only system that can generate optimal energy production. Look for providers who are knowledgeable about NEM 3.0 and can help you navigate the complexities of the policy to maximize your energy bill savings.

  2. Understand Time-of-Use Rates: With NEM 3.0 aligning with the TOU rates structure, it's important to understand the peak and off-peak periods when electricity rates may vary. By timing your solar production to align with the higher retail rate periods, you can maximize your credits for extra electricity solar generation.

  3. Monitor and Manage Your Solar Generation: Keeping track of your solar generation and energy consumption can help you identify patterns and adjust your consumption to optimize your solar credits. Consider investing in solar monitoring tools or working with a solar provider that offers monitoring services to help you stay informed and make informed decisions.

  4. Explore Battery Storage Options: Battery storage can be a valuable addition to your solar panel system, allowing you to store excess power for use during periods of low solar generation or high electricity demand. This can further reduce your reliance on the grid and increase your savings on electricity bills.

  5. Educate Yourself on Solar Incentives: In addition to NEM 3.0, there may be other solar incentives and rebates available in San Diego that can further enhance the financial benefits of solar power. Take the time to research and understand these incentives to ensure you are taking full advantage of all available opportunities.

Conclusion: Solar is Still a Great Investment for San Diego in 2024 and Beyond.

In conclusion, NEM 3.0 brings exciting changes to the net metering policy in San Diego, making solar power an even more attractive and worthwhile investment. With higher retail rate credits, expansion to commercial and industrial customers, and alignment with TOU rates, solar power consumers can benefit from greater savings on the cost of energy and increased sustainability. By choosing the right solar provider, understanding TOU rates, monitoring solar generation, exploring battery storage options, and staying informed about solar and financial incentives, you can make the most of NEM 3.0 and harness the power of solar energy in San Diego.

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