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NEM 2.0 2017-06-12T20:30:42+00:00

What you should know about NEM 2.0

On January 28, 2016 the California Public Utilities Commission (CPUC) adopted NEM 2.0

 Changes from NEM 1.0 to NEM 2.0

1. No new NEM-specific charges: NEM 1.0 infrastructure largely unchanged. There’s no new NEM-specific demand charges, capacity or grid access fees, or monthly netting of energy.

2. Grandfathering: NEM 2.0 customers will be grandfathered on this successor tariff for 20 years from the date of first commercial operation. If you are in an NEM 1.0 service area, you’ll be grandfathered in under NEM 1.0 rules if you go solar prior to NEM 2.0 being implemented in your area.

3. Interconnection Fees: NEM 2.0 customers that have less than 1.0MW in onsite generation will now be required to pay an interconnection fee based on the utility’s actual costs for these interconnections. The fee may be somewhere between $75-$150 depending on the electrical utility and the type of account. NEM 2.0 customers connecting systems less than 1.0 MW will not have to pay study fees and distribution upgrade costs.

4. No maximum system size: NEM 2.0 accounts will not have a maximum generator size. However, for accounts that are larger than 1.0MW, they will be required to pay for full Rule 21 interconnection and facilities upgrade costs.

5. Non-bypassable charges: Non-bypassable charges (NBCs) are required to be paid by NEM 2.0 accounts for all of the energy that they consume. They cannot be offset by energy exported to the grid. There are 4 types of non-bypassable charges:
a. Public Purpose Program Charge
b. Nuclear Decommissioning Charge
c. Competition Transition Charge
d. Department of Water Resources Bond Charges

6. Components and Warranties: NEM 2.0 customers will be required to prove the following in their NEM applications:
a. CEC approved major solar PV system components.
b. 10 -year warranty on all equipment and installation of that equipment

7. Residential TOU rates and fixed charges: For residential customers:
a. Residential customers will be required to use Time of Use rates
b. Fixed charges may be implemented in the future.

8. The future of NEM: NEM 2.0 tariff will be reviewed by the California Public Utilities Commission (CPUC) in 2019 for small commercial and residential customers.

What does this mean?

It’s a big win for the solar PV industry and customers in California. The value of the energy produced by future solar PV systems will have a similar value under current NEM rules. Accounts interconnected under NEM 2.0 will be grandfathered into NEM 2.0 for 20 years from the date of operation. There is also no maximum size for a generating system that can be interconnected.

Rule Changes

Big changes are coming soon in the solar industry in regards to Net Energy Metering (NEM) 2.0! If you go solar now and you are under NEM 1.0 then you will be grandfathered into NEM 2.0 When your utility’s solar consumer base reaches 5% of its total consumer base then they will transition to NEM 2.0 and are expected to do so by late 2016/early 2017. NEM 2.0 will bring interconnection fees and time-of-use rate plans which may lead to increased utility bills if you produce less energy than you use. In 2019 all non-solar customers will switch over to time-of-use rate plans as well. If you are on the fence when it comes to transitioning to solar, be sure to take advantage of the opportunity to invest in a solar upgrade now!

Cost Savings

The cost-savings from going solar are substantial in the long-run. Under NEM 1.0 the savings are even more if you get a solar installation prior to the NEM 2.0 transition. If you live in an NEM 1.0 area and transition to solar prior to the NEM 2.0 transition, you will be grandfathered in under the NEM 1.0 rules. This means that you’ll enjoy no interconnection fees and time of use rates. With the Solar Investment Tax credit, you may enjoy substantial savings of 30% until the credit ends in 2019. No matter what, investing in solar will provide a greater level of energy independence and substantial power savings for you, the consumer!

Other Impacts of NEM 2.0

1. The impacts will vary depending on the utility, tariff, and amount of energy exported by the system. A 2-3 cents per kWh reduction will occur in the value of energy exported to the grid. For customers that do not export a large amount of energy there is not much of an effect. However, the value of PV energy for most customers who do export energy during the Summer months will be reduced.

2. Two other studies are being conducted by the CPUC in regards to the various effects of the NEM tariff. The studies are scheduled to be completed within 2 years.
3. NEM doesn’t address the value of energy produced by renewable energy systems under NEM is highly dependent on utility tariffs- how and how much the utilities charge for electricity. Electrical tariffs are constantly changing as many as 4 times a year which can affect the value of net metered renewable generation of solar PV. Basically, electrical utilities will continue to push for tariff changes that reduce the value of renewable energy generation and NEM 2.0 does not do anything to address this risk.