Net Metering 2.0 in California: Everything
You Need to Know
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Net metering in California is part of what makes the Golden State the undisputed leader for solar in
the country. In fact, California saw 13,241 megawatts (MW) of solar installed as of the end of 2015,
more than five times as much as #2 state
Homeowners and businesses can use California’s net metering policy 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 California, 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.
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. As of
November 2016, PG&E, SCE and SDG&E are still developing their solar TOU rate schedules.
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. PG&E has not yet confirmed its interconnection fee, but it’s expected to be
between $75 and $150.
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, lowincome 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 December 2016, the
status for each utility is as follows:
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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 is expected to reach its cap by summer 2017,
at which point all new solar customers will also enroll in NEM 2.0.