⚡️ NEM 3.0 in California

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🗓 Every Monday morning, we distill what matters in renewable energy and electrification across business, tech, and policy — all in a 5-minute read.

This week’s newsletter includes:

• NEM 3.0 goes into effect, putting California solar adoption at risk

• US clean energy backlog jumps 40% to an unprecedented 2 terawatts

• $90m for sustainable smart building technology

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THE BRIEF

• Starting from April 15, 2023, California's three largest utility companies will implement a new policy called Net Energy Metering (NEM) 3.0, which will change the current net-metering policy to a net-billing structure.

• The new policy will see most Californians earning 75% less for excess solar power they send back to the grid, which will reduce the utility bill savings from new solar installations and extend the period owners take to recoup installation costs.

• The new net-billing system will decelerate residential solar installations in California, but crates opportunities for battery installations, virtual power plants, and microgrids.

DEEP DIVE

Starting April 15, 2023, California's three largest utility companies will implement a new policy called Net Energy Metering (NEM) 3.0, which will change the current net-metering policy to a net-billing structure. The policy will see most Californians earning 75% less for excess solar power they send back to the grid.

The change has been widely criticized by solar companies, environmental-justice groups, and other advocates who fear it will decimate the thriving rooftop solar industry. The new net-billing system will decelerate residential solar installations in California, but most solar companies say their primary response will be to invest more in selling batteries. Batteries can improve the economics of rooftop solar under California's new solar regime.

Renova Energy CEO Vincent Battaglia plans to adjust the pricing of the company's rooftop solar systems so that customers don't face a nine-year payback under the new net metering system being proposed by California's public utilities commission. Instead, he wants to reduce the payback period to seven years. The company also plans to double down on selling batteries alongside new solar systems so that solar power generated during off-peak hours can be stored and used later during peak hours when demand is high. This move aligns with the state's goal of achieving net-zero carbon by 2045.

Several other companies, including SunPower, Tesla, and LG Energy Solutions, are also looking at ways to adapt to the new net metering system. SolarEdge, a solar technology company, offers a DC optimizer and battery system that can help customers maximize self-consumption, thereby avoiding high utility bill rates based on time-of-use rates. The system also avoids clipping losses and does not burden main panels in a home.

With demand for solar installations increasing before the NEM 3.0 change, SolarEdge is well-prepared to meet the demand with its multi-gigawatt-hour battery facility in Mexico and Kokam, one of the largest lithium-ion battery suppliers in South Korea. SolarEdge's components will remain the same, and the company is working closely with installers to explain the benefits of its products. Speed-of-installation is another benefit that will enable one-a-day or even two-a-day project installations.

DIVE DEEPER

• California plans to cut incentives for home solar

• California is a rooftop solar giant. New rules could change that.

• SolarEdge’s solution of DC-coupled batteries offers a way to self-consume and protect power

• How California’s new rooftop solar rules will affect you

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