California net metering 2.0 overview

California net metering: everything you need to know about NEM 2.0

Reading Time: 6 minutes

Net metering in California is part of what makes the Golden State the undisputed leader for solar in the country. In fact, California saw 23,186 megawatts (MW) of solar installed as of the end of 2018, more than five times as much as #2 state North Carolina.

What is California’s net energy metering policy?

Homeowners and businesses can use California’s net metering to receive bill credits for the excess electricity that their solar panels produce, as long as the system is less than 1,000 kilowatts (1 MW). With the help of net metering in CA, electric utility customers who install solar typically save tens of thousands of dollars on their electricity costs over the lifetime of their solar panels. 

California’s first net metering policy set a “cap” for the three investor-owned utilities in the state: Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE). Total solar installations in each utility’s territory were capped at five percent of total peak electricity demand. As a result of explosive solar growth in the Golden State, all three utilities were approaching their caps by the end of 2015. To ensure that solar would continue to succeed, the California Public Utilities Commission (CPUC) created a next-generation program known as “Net Metering 2.0” (NEM 2.0) that extends California net metering benefits for years to come.

environmental solar benefits graphic

NEM 2.0: California’s new net metering policy

The original policy for net metering in California is very simple: for every kilowatt-hour (kWh) of solar electricity you feed into the grid, you get a bill credit for one kWh of utility-generated electricity. When your solar panels produce more than you need, you “bank” the excess to use when your panels don’t produce enough to meet your monthly use. If your system is the right size, net metering makes it possible for you to cover your electricity use for the entire year with solar.

Net Metering 2.0 makes a few minor changes to California’s original net metering policy, but it preserves the key element that makes solar economical for California residents: retail rate bill credits. Homeowners and businesses that enroll in NEM 2.0 will still receive per-kWh credits for their solar electricity that are equal to the value of a kWh of utility electricity. This means that the economics of solar are still very favorable under NEM 2.0.

In addition to preserving retail rate bill credits, the new California net metering program also prohibits many fixed charges for residential customers, including demand charges, grid access charges, installed capacity fees, and standby fees. NEM 2.0 will run until 2019, at which point the CPUC will look at establishing a new program that is designed to account for the benefits of solar in different locations and at different times.

There are three main differences between the original California net metering policy and Net Metering 2.0: time-of-use rates, interconnection fees, and non-bypassable charges. The California Solar Energy Industries Association (CalSEIA) estimates that the combined impact of these changes will be approximately $10/month compared to the original policy.

Time-of-use (TOU) rates 

TOU rates are designed to align your electricity costs with demand across the electric grid. Electricity is most expensive at times of high demand, like late afternoon and early evening, which means that your utility will charge you more per kWh during those “peak hours.” It also means that net metering credits will be worth more for electricity you send back to the grid during peak hours.

Under NEM 2.0, every property owner who installs a solar energy system will automatically be switched to TOU rates for their electric bills. What you pay per kWh will depend on your utility. Solar panel systems operating under NEM 2.0 can be just as economical as traditional net metering with the right system design. In general, TOU rates are highest in the afternoon and evening during the summer, and lowest during nights and weekends in the winter. Property owners with solar systems on NEM 2.0 can maximize net metering credits by locating panels on the west side of the roof so that they capture the late afternoon sun. (Learn more about how roof orientation can impact your solar savings.)

Interconnection fee

Before your solar PV system can send electricity back to the grid, a representative from your city or town will come to your property to inspect the system and sign off on the installation. Under NEM 2.0, residential and small commercial system owners pay a small one-time “interconnection fee” to connect their solar panels to the electric grid. For SDG&E customers, the fee is $132, and PG&E customers will pay $145.

environmental solar benefits graphic

Non-bypassable charges

Non-bypassable charges (NBCs) are per-kilowatt hour charges that are built into utility electric rates. They add up to approximately 2-3 cents per kWh and go towards funding energy efficiency, low-income customer assistance, and other related programs.

In the original net metering policy, system owners did not have to pay NBCs on the electricity that they bought from the utility on a month-to-month basis. Under NEM 2.0, new system owners will have to pay NBCs, but only for the kWh of electricity delivered by the utility. None of the solar electricity generated and used at home will be subject to NBCs.

SDG&E, PG&E, and SCE net metering in California

NEM 2.0 enrollment for PG&E, SCE, and SDG&E customers starts after each utility reaches its original net metering cap or by July 1, 2017 – whichever happens first. As of January 2019, the status for each utility is as follows:

  • SDG&E: Net metering reached its cap in the summer of 2016, which means that new San Diego solar system owners are currently enrolling in net metering 2.0.
  • PG&E: PG&E reached its net metering cap on December 15, 2016. All new PG&E solar customers are being enrolled in NEM 2.0.
  • SCE: The original SCE net metering program reached its cap in summer 2017, and all new solar customers will enroll in NEM 2.0.

Utility customers who installed solar under the original net metering policy will be “grandfathered” in for 20 years from their original enrollment date. After that point, they will also move to NEM 2.0.

Resources for net metering in California 

About net metering in California

Net metering policies: PG&E, SDG&E, and SCE

Three Tips for Solar Shoppers

1. Homeowners who get multiple quotes save 10% or more

As with any big ticket purchase, shopping for a solar panel installation takes a lot of research and consideration, including a thorough review of the companies in your area. A recent report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) recommended that consumers compare as many solar options as possible to avoid paying inflated prices offered by the large installers in the solar industry.

To find the smaller contractors that typically offer lower prices, you’ll need to use an installer network like EnergySage. You can receive free quotes from vetted installers local to you when you register your property on our Solar Marketplace – homeowners who get 3 or more quotes can expect to save $5,000 to $10,000 on their solar panel installation.

2. The biggest installers typically don’t offer the best price

The bigger isn’t always better mantra is one of the main reasons we strongly encourage homeowners to consider all of their solar options, not just the brands large enough to pay for the most advertising. A recent report by the U.S. government found that large installers are $2,000 to $5,000 more expensive than small solar companies. If you have offers from some of the big installers in solar, make sure you compare those bids with quotes from local installers to ensure you don’t overpay for solar.

3. Comparing all your equipment options is just as important

National-scale installers don’t just offer higher prices – they also tend to have fewer solar equipment options, which can have a significant impact on your system’s electricity production. By collecting a diverse array of solar bids, you can compare costs and savings based on the different equipment packages available to you.

There are multiple variables to consider when seeking out the best solar panels on the market. While certain panels will have higher efficiency ratings than others, investing in top-of-the-line solar equipment doesn’t always result in higher savings. The only way to find the “sweet spot” for your property is to evaluate quotes with varying equipment and financing offers.

For any homeowner in the early stage of shopping for solar that would just like a ballpark estimate for an installation, try our Solar Calculator that offers up front cost and long-term savings estimates based on your location and roof type. For those looking to get quotes from local contractors today, check out our quote comparison platform.

environmental solar benefits graphic

15 thoughts on “California net metering: everything you need to know about NEM 2.0

  1. JP

    The fact that you can’t roll over surplus energy credits from one year to the next sucks. I put in solar 9 years ago (December of 2008) and have had an energy credit of between $200 and $350.each year.

    If I had actually consumed this energy, I would have had to pay this fee, but when the credit was displayed on my annual True up period I got less than 4 cents of credit for each kilowatt. So for a credit of $350.00, I got an actual credit of less than $35.00. This is a double standard, rip off and bait and switch tactic by our government bureaucrats!

    On top of that. since I’m grid tied, my monthly meter rental and access charges went from $5/month to $20 month. Another rip off because we were promised by the government bureaucrats that we would be benefiting the state and the environment. Hogwash.

    Now the messaging is – if you have solar, you aren’t paying your fair share. It’s not “fair” that you’re connected to the grid and yet not paying money to the utilities and bureaucrats slush funds because they are losing revenue. So it’s all a scam. It’s electric grid socialism!

    And on top of that we tax payers subsidize all the electric car owners who get “free” electricity to charge their cars. Another scam! Remember there is no such thing as “free”

    Since the passage of SB1 in 2017, now those same electric car owners are being hit with a $100 fee each year when they register their “Zero Emission Vehicles” because they’re not paying their “fair share” of gasoline taxes that can be siphoned off into various slush funds instead of being used to repair our roads.

    The recent gas/car registration fees on SB 1 will put less than 17 cents/dollar to road repair. READ THE FRIGGIN BILL! The rest of the money goes to such things as Intercity and Commuter rail, State Transit Assistance Programs, Public Transit i.e. the Choo Choo train to nowhere (High Speed (sic) Rail), Trade Corridors, University Transportation Research, Parks and Agriculture programs, Unions and pensions, etc. Every organization has their hands in the till!

    So the bottom line is, you will continue to pay more and more for your “free” solar energy. I’m now installing a large battery backup system, so when PG&E and the government bureaucrats come knocking, I’ll be off the grid. Don’t be fooled it’s all a scam.

    The only reason I put in solar was because when I ran the numbers I was paying $400-500/month electric bills. It was half the price/month to pay a loan on my solar. Now that more and more people are going solar and the utilities revenues are dropping, they are looking for ways to recoup the money they’re losing.

    I don’t blame the utilities, they have to make a profit. I blame the bureaucrats with their bait and switch tactics.

    My suggestion: if you’re going solar, go all the way and get off the grid. Then YOU control your electricity.

  2. Linda

    Hi, what happens when Buying a house with fully owned solar? Is the contract with pge grandfathered from the time of original owners installation?

  3. Jean Woo

    Perhaps you should add a section – what if you don’t want Net Metering? Does that mean you don’t interconnec to the grid – hence now you are off the grid?


Leave a Reply

Your email address will not be published. Required fields are marked *