California’s NEM 3.0 Policy: What Commercial Solar Customers Need to Know

NEM 3.0 in California: Opportunities for Commercial Ventures

In April 2023, the third revision to the California Public Utilities Commission’s net energy metering policy went into effect in SCE, PG&E and SDG&E service territories. And with that revision came sweeping changes to how California businesses, schools, universities and municipalities are compensated when investing in solar and storage.

Here’s a brief look at what those changes mean and how your business can leverage battery energy storage systems to generate more savings on your next solar project.

Understanding NEM 3.0

What is NEM 3.0?

Net energy metering (NEM) policies provide savings for utility customers who generate their own solar energy, allowing them to sell their system’s excess solar electricity back to the grid.

Under California’s previous NEM 2.0 policy, utility customers were compensated at the retail rate for their excess solar production or solar exports. This helped to offset future electricity bills and created a strong case for organizations to invest in onsite solar.

Under the current NEM 3.0 policy, California shifted from a net metering to a net billing structure.
Instead of receiving compensation for surplus solar production at the retail rate, organizations now receive compensation for the excess production at a rate that varies depending on the time and day the solar was exported back to the grid– a move that significantly reduces the value of solar exports by up to 75% of the retail rate.

Impacts of NEM 3.0 on Californian Commercial Ventures

Energy Storage Solutions

Absolutely. California utility customers can generate significant savings by pairing onsite solar with a battery energy storage system.

Instead of selling excess solar back to the utility – at the new much lower variable rate – organizations can now store their surplus solar in a battery energy storage system.

By storing low-cost energy in the in the batteries and unloading that stored energy during peak periods of higher electricity rates, your organization can considerably reduce its energy bills, take advantage of time-of-use rates and enhance its energy independence and reliability.

And with all of California’s investor-owned utilities significantly raising electricity rates within the past year, evaluating solar + storage now under NEM 3.0 can result in generating greater annual savings than if you installed solar alone, allowing you to save even more money over the life of your system.

Make the Most NEM 3.0 Updates in California

Here are a few additional benefits of pairing solar and storage under NEM 3.0:

  • Increased energy savings
    Commercial solar energy storage is your organization’s best defense against costly and fluctuating peak energy charges. By storing low-cost energy and delivering it during peak periods of higher electricity rates, your organization saves on overall energy costs and avoids peak usage penalties.
  • Reduced carbon footprint
    A solar + storage system has no direct emissions. It’s energy efficient. It recycles electricity. Pairing solar + storage is a win-win for your sustainability goals, helping you lower your carbon footprint considerably more than just by installing solar alone.
  • Predictable payments
    When financed as a power purchase agreement (PPA), your business can purchase power generated at a fixed rate, shifting your solar + storage project from a costly capital expenditure to a predictable operating expense for the life of your agreement.
  • Opportunities for grid services participation
    By investing in a solar + storage system, your business may be eligible to generate additional revenue through participation in programs such as Demand Side Grid Support (DSGS), Demand Response Auction Mechanism (DRAM) and Emergency Load Reduction Program (ELRP Group B).

Get Expert Recommendations

Want to find out how your business can leverage solar + storage to generate savings?

Let’s chat! To find out if solar + storage is the best fit for your organization, fill out the contact form below to schedule a quick 30-minute consultation with one of our solar experts. To find out if solar + storage is the best fit for your organization.