Net energy metering (NEM) is one of the most advantageous and successful solar energy incentives in California. The program enables property owners who installed a solar system to sell back their surplus clean, renewable energy into the electrical grid and get bill credits. NEM 1.0, California’s first net energy metering policy, placed a cap for SDG&E and SCE. Total solar power systems in the territory of each of these utilities were capped at 5% of total peak electricity demand.
However, there is no generation cap for NEM anymore. California has embraced a different approach to net metering: NEM 2.0, also known as NEM Successor Tariff. Since July 1, 2017, this next generation of net metering policy has applied to all new solar users in SCE territory. The current NEM 2.0 is a bit less favorable and more complicated than NEM 1.0 so it comes as no surprise that you need some clarification.
Here’s what you need to know about NEM 1.0 vs. NEM 2.0 to find out what you’ll be getting from going solar in San Diego, CA.
What is the purpose of NEM 2.0?
The NEM 1.0 tariff set a cap of 5% of the utility’s total aggregate demand and as the three California utility companies approached their cap, the CPUC established a new program – NEM 2.0.
The new tariff was to take effect as soon as each California’s utility had reached its net metering cap or by July 1, 2017, at the latest. When it comes to SCE, NEM 1.0 program reached its cap in the summer of 2017.
NEM 1.0 vs. NEM 2.0: What has changed?
Although the large part of the NEM 1.0 structure remained intact under NEM 2.0, there are some aspects that made a major difference:
- Interconnection Fee: Until the switch, any new SCE solar users didn’t have to pay for connecting to the grid. NEM 2.0 customers now need to pay an interconnection fee, which is at least $75.
- Net energy metering under 1MW: SCE solar customers with generation systems of less than 1MW must also pay the fee for interconnection, but like with the NEM 1.0 regulations, they are not required to pay for future facility upgrades.
- 10-year warranty: SCE customers now have to prove that their solar PV system components are CEC approved and must have a 10-year warranty on the installation and all equipment.
- Time-Of-Use (TOU) Tariff: NEM 2.0 introduced TOU rate schedule, establishing on-peak and off-peak hours. This was the biggest change. NEM 1.0 had the same rate schedule or the rate schedule of choice, allowing all SCE customers to be compensated at full retail credit rates regardless of grid impacts and demand. Under the new tariff, SCE is allowed to set their own TOU schedule according to the demand. Based on their load profile, NEM 2.0 solar consumers are able to choose different rate schedules.
- Non-bypassable charges (NBCs): Under NEM 1.0, solar users didn’t have to pay NBCs on the power they bought from the utility on a monthly basis. In NEM 2.0, all new solar owners need to pay non-bypassable charges but just for each kWh of electricity delivered by the utility, not for the solar power generated at home.
What about SCE customers who installed solar under NEM 1.0?
The former system that SCE used for billing their solar customers still applies to all SCE users who switched to solar before the NEM 2.0 deadline (July 1, 2017). These solar producers have been “grandfathered” in and get to stay on NEM 1.0 for 20 years from their enrollment day.
NEM 1.0 customers will, therefore, continue receiving full retail credit rates for excess power they send back to the electrical grid. After 20 years, they will move to California’s revised net metering policy. For those SCE customers who installed solar on July 1, 2017, or later, NEM 2.0 policy applies.
Become an SCE solar customer: It’s time to be interconnected under NEM 2.0!
In 2020, power companies such as SCE have already raised their energy rates and will keep on doing so. Also, NEM 2.0 is likely to introduce fixed charges sometime in the future for residential customers so lose no time to gain solar independence. Otherwise, you will lose out on green incentives that can save you thousands initially, as well.
If you are thinking about switching to solar, reach out to Action Solar. We are a renowned company in San Diego, CA that specializes in solar panel design and installation. You can trust us with your energy needs!