What to know as a future solar owner under NEM 3
The NEM 2.0 program for solar installations is no longer accepting applications. The next phase, NEM 3.0, will now introduce new opportunities and challenges for residential solar customers.
Sungenia Solar has extensive experience in designing custom solar systems that suit your needs and budget. Our team has also participated in various webinars and meetings to learn the latest techniques and best practices for maximizing the value of solar energy. NEM 3.0 is a new policy that affects how solar customers are compensated for the excess electricity they produce and send back to the grid. It is a complicated issue, but here are some important points for you to consider as a potential solar owner:
- Under the new Net Energy Metering (NEM) 3.0 policy, a solar system that matches the annual electricity consumption of a household will only offset about half of its utility bill.
- Between 7 and 12 years is the typical payback period for a solar-only system.
- Energy can be saved and used later with batteries, which can be helpful and can raise the savings up to 90%.
- When a battery backup is included in the install, it will become a necessary component for more savings and faster pay back times.
- These costs will increase the initial investment for solar customers, leading to longer payback recovery times, meaning most scenarios will require 5-7 years to break even, compared to 2-5 years under the previous NEM 2.0 program.
- There WILL be a residual electricity bill and you will no longer be able to zero out the bill entirely.
Although these NEM 3 updates may seem discouraging in comparison to NEM 2, the upside is break-even times in California are still better than in other parts of the United States, a battery backup will automatically be a part of solar systems, and the ROI is still high.
Under NEM 3
It will now not make sense to sell your extra solar power to the grid anymore. Instead, it will be more financially beneficial to store it in batteries and use it when you need it most, like during the high-usage evening hours. Batteries are no longer just a nice-to-have option for backup power and now are a must-have for every solar system.
Besides fire and building codes that are changing due to batteries, future home designs or modifications should also consider these factors:
- Include batteries and a critical backup load panel when planning the electrical system (current trends show they will likely be a feature in ALL homes).
- It will be necessary to set aside a location or space for these batteries and additional electrical gear (cutoffs, switches, gateways, etc.)
- Important note to remember the required spacing distance from doors, windows, etc., and inter-battery spacing.
- Inside a garage batteries will require designated spots and/or barriers to protect from potential car collisions.
- A heat sensor on the battery will be required to be connected to the house’s smoke and CO detectors or possibly sprinkler systems.
- A 16kW generator is a good working option because it can be incorporated into the backup system and it must have automated capabilities (no portables will be allowed to be installed).
More important considerations and impacts of NEM 3.0:
- For SDG&E solar customers, there is only ONE rate applicable, the EV-TOU-5.
- Although the annual true-up of your bill is still occurring, if a balance is due, it must be paid no matter which month.
- Customers again will need to pay close attention to the time of day and time of year of their electrical usage. It is important to know to avoid the highest cost of electricity and use the lowest cost, such as using different strategies during the summer months versus winter months.
- Currently, the optimal financing period of 8 years is now closer to 12 years or it could even be as long as 20 years.
- Unlike most industry standard 25-year solar warranties, a battery typically has a 10-year warranty, though it might function for longer than a decade. When a battery stops working, it will be up to the customer whether or not to make another financial investment to replace the battery.
Sungenia Solar supports initiatives that aid and promote the growth of solar both in California and throughout the United States of America. Contact us for more information on the solar process, support, or honest advice.
Sungenia’s mission is to make the solar process as simple and honest as possible, provide the best solution, and to make as many happy friends as we can.