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  • Writer's picturePacific Sun Technologies

NEM 2.0: What You Should Know

The California Public Utilities Commission (CPUC) voted 3-2 on January 28th to adopt a modified Proposed Decision (PD) for the Net Energy Metering (NEM) successor tariff, known as NEM 2.0. This Final Decision adopts nearly all of the Proposed Decision, leaving most of the existing NEM 1.0 regulations intact. There were two substantive changes from the PD to the Final Decision: the Non-bypassable Charges (NBCs) were defined for the NEM 2.0 tariff and incentives for disadvantaged communities has been removed and will be addressed in the next phase of the NEM proceeding.

NEM 2.0

Here are the changes from NEM 1.0 to NEM 2.0 adopted by the CPUC:

  1. No new NEM-specific charges: NEM 2.0 largely leaves in place the existing NEM 1.0 structure. There are no new NEM-specific demand charges, capacity or grid access fees, or monthly netting of energy.

  2. Grandfathering: NEM 2.0 customers will have their accounts grandfathered on this successor tariff for 20 years from the date of first commercial operation.

  3. Interconnection fees: NEM 2.0 customers with onsite generation systems of less than 1.0 MW will now be required to pay “a reasonable fee” for interconnection, based on the utility company’s actual costs for these interconnections. We anticipate this fee will be in the range of $75-$150 depending on the electrical utility and account type. As with the current NEM regulations, NEM 2.0 customers connecting systems less than 1.0 MW will not be required to pay study fees and distribution upgrade costs.

  4. No maximum system size: There is no maximum generator size for NEM 2.0 accounts. However, accounts larger than 1.0 MW will be required to pay for full Rule 21 interconnection and facilities upgrade costs.

  5. Non-bypassable charges: NEM 2.0 accounts are required to pay non-bypassable charges (NBCs) for all energy they consume. These NBCs cannot be offset by energy exported to the grid. Non-bypassable charges for NEM 2.0 are specifically defined as:

  • Public Purpose Program Charge

  • Nuclear Decommissioning Charge

  • Competition Transition Charge

  • Department of Water Resources Bond Charges

  1. Components and warranties: NEM 2.0 customers will be required to prove the following in their NEM applications:

  • Major solar PV system components must be CEC approved

  • A 10-year warranty on all equipment and the installation of that equipment

  1. Residential TOU rates and fixed charges: For residential customers, NEM 2.0 introduces the following:

  • Residential customers will be required to use TOU rates (when available).

  • Fixed charges may be introduced in the future.

  1. The future of NEM: The NEM 2.0 tariff described in this decision will be reviewed by the Commission in 2019 for small commercial and residential customers.

What This Final Decision Means

This is a big win for the solar PV industry and customers in California. On the positive side, the value of energy produced by future PV systems w