NOTE to reader: This blog was written in late 2021 when the announcement of NEM 3.0 was expected in January 2022. The California Public Utility Commission (CPUC) has postponed their decision on NEM 3.0, however we are expecting a decision by the end of 2022. We have left the original dates on this blog, even though they have passed, to maintain the integrity of the blog post. The industry is anticipating that the implementation timelines will be extended accordingly. For more information contact us using our online form.
• The CPUC is expected to issue a NEM 3.0 decision in January 2022 with implementation expected to follow within six months or less.
• Similar to the NEM 1.0 to NEM 2.0 transition, it is anticipated that the interconnection application submittal date will be used to secure eligibility on NEM 2.0.
• Customers that secure NEM 2.0 status will be grandfathered and protected from NEM 3.0 for a period of at least 20 years (based on final decision 16-01-044 issued as part of the NEM 2.0 proceeding).
• It is currently unclear whether utilities will accept preliminary applications, submitted after the system has been contracted but prior to installation, for residential customers. Often with residential customers, the interconnection application is submitted after installation. Because of this uncertainty, it is advised that residential customers get in a contractor’s queue as soon as possible.
• For commercial and agricultural customers, the application can be submitted before the system is installed but must contain a “nearly final system design” and be without deficiencies. This effectively means that customers deemed eligible who secure NEM 2.0 status can install and energize their project after NEM-3 is implemented.
• An installation cutoff point is likely, specifics will be within the CPUC’s final decision. Current installation cutoff date proposals are August 2022 or January 2023.
• To have 100% certainty of securing NEM 2.0 grandfathering, customers are advised to have applications submitted prior to January 2022.
What’s the bottom line?
NEM 3.0 is expected to have a huge impact on the economics of solar + storage projects in California. While the final NEM 3.0 rules are yet to be determined, the inevitable outcome is that the value of solar will get eroded, likely significantly. It’s widely anticipated that there will be a rush of new customers looking to move forward with their project as the NEM 3.0 implementation nears, in order to secure 20-years of grandfathering protections on NEM 2.0.
