January 12, 2023

NEM 2.0 vs NEM 3.0





NEM 3.0 is Net Energy Metering version 3. NEMA is Net Energy Metering Aggregate. It will become effective on 4/14/23. It replaces the existing NEMA 2.0 program, (Net Energy Metering Agreement version 2)

NEM 3.0 is significantly changing the way PGE pays customers for their excess electricity that comes from a solar system.

The NEM 3.0 is considered a monthly Net Billing Tariff because it focuses more on variable monetary credit amounts for excess power. The NEMA 2.0 is an annual net metering program because it focuses more on KWh credits, (Kilowatt hours). These excess KWh accumulate for 12 fiscal months. The final annual statement is called a true-up statement.

The NEM 3.0 monthly system is predicted to reduce the financial benefit of a residential solar system by 50%-75%. 

Below are some takeaways from the CPUC websites. The narrative in black is from a website. The narrative in red is an interpretation from Top Hat Energy.

NEM 3.0:

1 – Requires Net Billing customers to take service on rates with high differentials between peak and off-peak prices, which will incentivize energy conservation or the use of stored solar energy during the net peak window of 6 p.m. to 9 p.m. when California needs to displace electric grid fossil fuel usage.

The new Time-Of-Use rates will be the most expensive from 6PM to 9PM.

2 – Transitions residential NEM 1.0 and 2.0 customers (except for low-income customers) to the Net Billing Tariff after 15 years of being interconnected to the electric grid, which will incentivize storage adoption and reduce costs paid by other ratepayers by billions of dollars.

The existing solar customers will be changed to NEM 3.0 after their 15 year anniversary, (when your existing solar system is 15 years old). 

3 – Moves residential customers from annual billing to monthly billing to help customers avoid unexpectedly large annual electric bills at the end of their 12-month billing period.

Monthly billing reduces the benefit of annual net metering and reduces the sticker shock caused by the reduced payback and extra monthly costs. There is also one PGE brochure that mentioned an annual true-up statement. Contradictory statements create confusion about NEM 3.0 as a Net Billing system or Annual Net Metering system.

4 – Pays Net Billing customers for the electricity they export to the grid based on its value, determined by the avoided cost to the utility of buying clean energy elsewhere.

CPUC’s definition of “avoided cost” is confusing. We suspect it is the PGE wholesale rate. We found a chart that shows the wholesale rate is variable. Jan 2023 will be $.07054 per KWh.

5 – Charges Net Billing customers for the electricity they receive from the grid based on high differential time-of-use tariffs, creating more benefit for customers who install storage and incentivizing them to store solar energy and shift exports later in the day.

Time-Of-Use is a variable retail rate for electricity from the grid, (usage charge). 

6 – Creates a Grid Participation Charge based on the size of the solar system to ensure that Net Billing customers are paying the same fixed costs of the electric grid as non-Net Billing customers.

Extra monthly charge to NEM 3.0 customers only. The chart shows $6.38/KW DC. A 5000 watt solar system receives a $31.90 monthly charge from PG&E.

7 – Provides a Market Transition Credit so that customers can pay back the cost of a new solar plus storage energy system in less than 10 years, ensuring that the solar industry in California continues to grow and rooftop solar remains economic. The credit will phase out for new customers over four years.

A mysterious discount that will reduce the nasty effects of NEM 3.0. The discount rate reduces each year until it is zero at the end of year 4. We seriously doubt that CPUC can or would create a financial plan the promises a customer’s solar system ROI, (Return On Investment).

The above info was found at the following sites:



Top Hat Energy inc.

Office | 530.223.0753

Web | www.TopHatEnergy.com

Showroom | 2520 Tarmac Rd Redding, CA 96003

Go Solar with Top Hat Energy!