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July 29, 2024Can I Update My Solar System Without Losing My NEM 2.0 Status?
One of the many benefits of going solar is the opportunity to save money. Utilizing solar energy can drastically cut down on your utility bills, especially when paired with a battery. However, the potential savings have been dampened quite a bit by the introduction of a new net energy metering policy, NEM 3.0. NEM 3.0 is the third iteration of the California Public Utilities Commission’s (CPUC) NEM policy. It was put into effect in April of 2023, and has since garnered some criticism for its effects on customer savings. It doesn’t compare favorably to its predecessor, NEM 2.0, and as such, has many people doing whatever they can to avoid changing their metering status to NEM 3.0.
The problem is, making changes to your solar system may automatically trigger a change to NEM 3.0, and immediately affect your financial savings. So the question becomes: is it possible to make changes to your solar system while retaining NEM 2.0 status?
NEM 2.0 vs. NEM 3.0
There are a few differences between NEM 2.0 and NEM 3.0. The one that stands out most is the latter’s substantially lower compensation rate: homeowners earn approximately 75% less in credits than they did under NEM 2.0. The newer model is also based on avoided cost rates, which calculates compensation based on specific avoid energy costs during different hours, days, and months. This results in varied credit values, and in general, rates are significantly lower than utility prices. This means that homeowners earn less credit than they did under NEM 2.0. Lastly, NEM 3.0 emphasizes time-of-use rate plans, which alters electricity costs based on peak and off-peak consumption periods. This means that electricity will cost much more during peak hours.
As you can see, there are many reasons why NEM 3.0 is considered a downgrade from 2.0. As a result, people are hesitant to make any updates to their systems and risk losing their NEM 2.0 status. It’s important to note that there are still ways to take advantage of NEM 3.0. However, many are still interested in holding onto NEM 2.0 for as long as possible, and with good reason.
If you understand the ins and outs of net energy metering, you can find ways to make upgrades to your solar system without having to switch over to NEM 3.0. Let’s take a look at all of the factors involved.
Increasing System Size
It’s not uncommon to want to add to your current solar panel system. Increasing the size of your system is a factor that would generally lead to changing over to NEM 3.0. However, if the change is small enough, it may be possible to remain on NEM 2.0. Minor increases in system size of 10% or lower may be small enough to not trigger the change.
Equipment Upgrades
When it comes to changing out any equipment in your solar system, the main factor to consider is whether or not you are upgrading the system or simply replacing old components. If you are replacing existing components – for example, removing an old panel with a newer one or replacing the inverter – your NEM status likely won’t be affected. However, if you are making upgrades that increase the capacity or productivity of your system – such as upgrading to more efficient panels that increase system capacity, your NEM status could be affected.
Battery Additions
Adding a battery is a common decision made by homeowners as they become more popular, especially in combination with solar panels. Thankfully, adding a battery will not affect your NEM 2.0 status. However, if you make other additions at the same time, such as increasing the size or capacity of your solar system, then your status will be subject to change.
Steps to Ensure Compliance
Before making any changes to your system, it’s best to ensure that anything you do won’t affect your NEM 2.0 status. While CPUC provides basic guidelines, local utilities like PG&E, SCE, and SDG&E may differ in their requirements and regulations. Here’s what you should do before making any decisions:
- Consult Your Utility Provider. Contact your provider and ask any questions about their specific policies to ensure that you won’t lose your NEM 2.0 status.
- Review Interconnection Agreements. Check for any specific details pertaining to system modifications and how they may affect your NEM 2.0 status.
- Submit Documentation. In some cases, your utility may require updated plans, permits, or other documentation in order to move forward with any modifications and ensure compliance with NEM 2.0.
- Contact Solar Professionals. Get in touch with solar installation professionals who understand the ins and outs of local regulations to help navigate the process without affecting your NEM 2.0 status.
Going Solar with Solar Discovery
Solar Discovery is an all-in-one solar, battery, roofing, and services company that can help you navigate the complexities of your solar journey. With a deep understanding of the solar industry, local regulations, and some of the headaches that may come with it, we can help you ensure that you can get the most out of any upgrades to your solar system without jeopardizing your NEM 2.0 status. Get in touch with us today to learn more.
