How California’s Rooftop Solar Program Will Change in 2023

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What you need to know if you’re thinking about going solar

The California Public Utilities Commission (CPUC) issued a decision on December 15, 2022 that changes the way net energy metering works in California. On April 15, 2023, new solar customers will be enrolled in the new Net Billing Tariff (NBT) where customers will be credited for electricity they export based on its value to the grid. Based on a press release from the CPUC, these changes were made to promote grid reliability, incentivize battery storage, and control electricity costs for all Californians.

What does this mean for existing and future solar customers?

Existing Solar Customers

  • The CPUC’s decision does not impact existing rooftop solar customers.
  • You will maintain your current compensation rates.
  • You will continue to remain on your current NEM tariff for 20 years after your system was connected to the electric grid.
  • You can expand your system by 10% or 1kW without affecting your NEM legacy status.
  • You can replace your panels with like-for-like equipment (same size/rating or less) without affecting your NEM legacy status.
  • You can add a battery to your system anytime without affecting your NEM legacy status.

Future Solar Customers

  • If you submit an application to install rooftop solar to PG&E on or after April 15, 2023, you will be enrolled in the new Net Billing Tariff (NBT). This means customers who sign up for solar before April 15, 2023 can still qualify for NEM 2.0 – see below for steps on how to do this.
  • The CPUC estimates that the average residential customer could still save over $100 a month on their energy bill through NBT.
  • In addition, the CPUC’s decision provides extra electricity bill credits to residential customers who adopt solar or solar paired with battery storage in the next five years. Customers are guaranteed these extra bill credits for nine years. According to the CPUC, these bill credits combined with energy bill savings will allow customers to fully pay off systems in nine years or less.
  • The Inflation Reduction Act increased the federal tax credit for solar systems to 30% and now includes a 30% credit for battery storage.
  • The CPUC expects that NBT will incentivize more customers to couple their solar systems with battery storage so they can store solar electricity produced in the daytime and export it in the evening when the grid needs it the most for reliability. This means adding a battery could help reduce payback periods for new solar customers because exported energy is worth more in the evening. Read more about battery storage on our Backup Power Options page.
  • The State will have millions in funding for upfront incentives for customers with lower incomes to make installing solar and battery storage more affordable. This funding will be available starting July 1, 2023.

The CPUC will publish further details about NBT this spring.

Signing Up for NEM 2.0

Customers who wish to enroll in NEM 2.0 should do so by April 14, 2023. On and after April 15, 2023, you will be enrolled in NBT.

    • Visit PG&E’s website to find the Interconnection Application and learn more about the Standard Net Metering process and requirements. This is where you can create an account for your solar project.
    • Apply before April 15, 2023.
    • Once PG&E receives completed documentation, project approval can take up to 30 business days if there is a high volume of applications.

As long as your completed application is submitted before April 15, 2023, you will qualify for NEM 2.0

Powering Your Home With Solar is Now More Affordable

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With the recently passed Inflation Reduction Act (IRA), more households can lower their energy costs and help combat climate change. New incentives will be available over the next decade to help you choose cleaner and healthier electric home appliances, switch to electric vehicles, and add solar and battery storage to your home.

We will be doing a series of blog posts to share the incentives available from the IRA as they become available. To start off the series, we want to highlight the credits available for the installation of solar and battery storage on you home.

GET 30% OF THE COST OF SOLAR + BATTERY STORAGE BACK ON YOUR TAXES

You can receive a tax credit for installing solar panels and battery storage on your home. Homeowners who install solar and/or battery storage can get up to 30% of the cost back on their tax return and would enjoy perks like cheaper energy bills and becoming more resilient during power outages. If you already have solar, you can get 30% back on the cost of adding a battery starting January 1, 2023.

Solar customers can get the most of out their investment by installing battery storage. Batteries store excess solar energy produced by your panels for use later, including during outages. This allows customers to get more out of their system and pay less for energy from the grid when the sun goes down.

Rewiring American has put together a tool to find out how much money you can get from each IRA incentive. The tool can combine incentives to calculate your future savings.

In addition to making things more affordable for families, the IRA also provides tax incentives for entities like SJCE so that investing in wind, solar, and energy storage becomes even more cost-effective. As residents electrify at home and on the road and SJCE builds more renewable resources, we’ll make great strides in achieving a cleaner and healthier future together.

Follow us on social media to get more information like energy saving tips! @SJCleanEnergy on Twitter, Facebook, Instagram, and LinkedIn.

Power Outage Safety Information

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CPUC Postpones NEM 3.0 Decision After Hearing from Rooftop Solar Customers

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San José Clean Energy (SJCE) and the City of San José see rooftop solar as an important tool that residents and commercial customers can use in the fight against climate change. We are pursuing an aggressive Climate Smart San José goal of becoming the first city in the US to install 1 gigawatt (1,000 megawatts) of rooftop solar by 2040.

In December 2021, the California Public Utilities Commission (CPUC) proposed a new set of rules — known as Net Energy Metering (NEM) 3.0 — for how PG&E and other investor-owned utilities (IOUs) must compensate rooftop solar customers for the energy their panels produce and how much they should pay to access the grid.

The solar industry and most environmental advocates have expressed concerns that the proposed CPUC changes would halt rooftop solar adoption and set California back in achieving its climate goals. Overall, the proposed rules would result in 70-80% lower compensation for energy exported to the grid from solar systems and large IOU charges for rooftop solar customers (~$40-60 per month), lengthening investment payback periods to 16 to 18 years.

In their press release, the CPUC wrote that “NEM must be modernized to incentivize customers to install storage paired with rooftop solar to help California meet its net peak shortfall and ensure grid reliability.” Through the proposed rules, the CPUC asserts it is creating “more accurate price signals that will provide more value to the electric grid.”

We believe that reaching a 100% clean energy, electric future in California will require aggressive deployment of rooftop solar and home energy storage and utility-scale renewable energy paired with short and long-duration storage (learn more about our $1 billion in investments in the latter).

What San José Clean Energy Is Doing About NEM 3.0

We are advocating for our current and future rooftop solar customers to the CPUC as an official party to their Net Energy Metering proceeding. On January 7, SJCE filed comments on the CPUC’s Proposed Decision opposing proposed changes that disincentivize the adoption of rooftop solar and storage, especially among low-income customers and vulnerable communities.

Given the prevalence of solar in San José, we want to make sure our customers are aware of the CPUC’s proposed changes. San José Clean Energy solar customers would be impacted by new NEM 3.0 utility charges because they remain PG&E customers for electric delivery.

Current Status

In early February, the CPUC postponed their vote on the proposed NEM 3.0 rules indefinitely. We will keep our customers updated on the final vote and adopted rules. Once the CPUC adopts new NEM 3.0 rules, they would go into effect one year later.

Who This Impacts

While the changes to solar customer rates, fees, and credits for exported solar power would apply to new rooftop solar customers, the CPUC proposes to decrease the earlier CPUC grandfathering period protecting existing solar customers from 20 years to 15 years. Once an existing solar customer has had their system operating for 15 years, they would be switched to NEM 3.0 compensation rates, TOU rates and monthly IOU charges, with details depending on their customer class and location.

Summary of Proposed Changes

  • PG&E’s average customer compensation for solar production would decrease by 70-80% to about 5 cents per kWh for residential customers. The new compensation rate would be fixed for five years and then change annually and would vary on an hourly and monthly basis and by climate zone, making it difficult to calculate how much savings solar customers could earn from their rooftop solar systems.
  • On top of this, most residential solar customers would have to pay a new monthly IOU “Grid Participation Charge” of $8 per kilowatt (kW)/month, or about $40-$60 per month for the average-sized solar system.
  • Residential customers who move onto NEM 3.0 between 2023 and 2026 could lock in a Market Transition Credit (MTC) for 10 years. The amount of the credit (max $5.25 per kW) would depend on their income level and when they install solar. Over the first four-year period of NEM 3.0, the credit would decrease by 25% each year. So a customer installing solar in 2023 would be eligible for a higher monthly credit than a customer installing solar in 2025. The program sunsets after 2026.
  • Most new residential solar customers would also be put on a new time-of-use rate plan where energy would cost substantially more in the evening, when they are drawing electricity from the grid, to incentivize installation of home energy storage like batteries. This mandatory rate would also include new fixed IOU charges, in addition to the Grid Participation Charge.
  • The CPUC also proposes to create a four-year $600 million equity fund to increase low-income access to solar and storage, though the details are undefined.
  • Existing rooftop solar customers would be eligible for rebates for batteries of $200/kWh, or about $2,600 for the average home system, that are installed between 2023 and 2026. The battery rebate level steps down 25% per year then ends after 2026. To accept the rebate, these customers would immediately be put on NEM 3.0 compensation rates, TOU and utility charges.

More details are in the CPUC’s Proposed Decision.

What You Can Do

The Solar Rights Alliance has put together a list of actions that those who are opposed to the CPUC’s Proposed Decision can take:

  • Sign a petition to Governor Newsom
  • Call the Governor
  • Post on social media
  • Alert your neighbors with solar
  • Give verbal comment to the CPUC
  • Write a letter to your local newspaper