The rules and policies around net energy metering (“NEM”) in California are constantly evolving as new guidelines are introduced. NEM refers to the arrangement between utilities and solar customers regarding credits for excess power sent to the grid.
California is currently in its third iteration of this arrangement, called NEM 3.0 (Net Energy Metering 3.0). It is also referred to as Net Billing Tariff (“NBT”). Older policies like NEM 1.0 and 2.0 provided more favorable rates for crediting homeowners' surplus solar power sent to the grid, so retaining that beneficial status is vastly preferable. Previously, homeowners who have gone solar under phased-out NEM agreements have been able to keep their NEM status even when a new version is introduced. However, under NEM 3.0, certain system modifications could trigger a loss of that grandfathered status, forcing a transition to the latest net metering guidelines.
This created a dilemma where solar homeowners hesitated to expand their systems if it meant giving up more beneficial NEM rates. Recent clarifications from the California Solar and Storage Association (CALSSA) have addressed this issue, providing a path for system expansions without risking their existing NEM status.
California has experienced multiple evolutions of net metering policies, each with its own rules. NEM 1.0 and 2.0 were older policies that were more favorable for homeowners in crediting surplus power. NEM 3.0 is the current program, with revised rates and guidelines. Previously, solar owners were grandfathered into the older, more beneficial NEM policies they initially signed up under. However, certain system modifications could potentially trigger a loss of that grandfathered status, forcing a move to the newer NEM 3.0 guidelines.
This created a dilemma where many homeowners wanted to expand their solar capacity but were hesitant to do so if it meant losing their favorable net metering rates. The recent clarification provides a way for homeowners to add solar panels while keeping their existing NEM 1.0 or 2.0 status.
You can make small additions to your existing solar panel system, but a major expansion will switch your status to NEM 3.0. You may be able to add a few panels and remain a NEM 2.0 customer (minor additions up to 1 kW or 10% of your original system size). However, if you need to increase your solar capacity significantly, you could lose your valued NEM 2.0 status.
The recent clarification allows solar homeowners to expand their existing system by adding new panels designated as "non-export." This means the new solar panels can generate electricity for your home's use, but will not send any surplus to the utility grid for credits. Whether you’re thinking of expanding your family, getting an EV, or want to rely on the grid even less, increasing your solar output can be a great idea.
By keeping this new solar capacity separate and “non-exporting,” you can increase your home's renewable energy production without losing your existing NEM 1.0 or 2.0 status. This allows you to use those older, more beneficial net metering policies while boosting your solar output.
Most homeowners choosing to add more solar panels are also adding energy storage systems at the same time to ensure that new system additions are sized correctly and maximize onsite self-consumption. This helps homeowners maximize the value of their new system while allowing their existing system to export as much power as possible for full retail credits.
NEM stands for Net Energy Metering. It’s a billing arrangement between the utility company and solar owners. When your solar panels produce more electricity than you use, the extra is sent to the grid. NEM determines how you are credited for that extra energy. In California, we've had different versions (NEM 1.0, 2.0, and now 3.0), each with its own rules for calculating and applying these credits to your utility bill.
Yes, you can add panels to your existing system. However, how you do this can affect your NEM status. Small additions (up to 1 kW or 10% of your original system size) will not affect your NEM status. Larger expansions can be done using non-exporting panels to preserve your existing NEM status.
Exporting panels send energy to the grid and can earn you NEM credits. Non-exporting panels only produce energy for your home’s use and do not send energy to the grid.
This depends on your energy needs and goals. If you're looking to increase your solar production for self-consumption (e.g., for a growing family or an EV), adding non-exporting panels can be beneficial while preserving your favorable NEM status.
While not strictly necessary, adding a battery system is often recommended when expanding with non-exporting panels. This allows you to store and use the additional energy produced, maximizing the value of your expansion.
Generally, yes. Expansions to existing systems typically qualify for the federal solar tax credit, although you can only claim it on the cost of the additional panels.
Under NEM agreements, excess electricity is sent to the grid, and you receive credits. However, the value of these credits varies depending on your NEM version. This is why maintaining an older, more favorable NEM status can be beneficial.
Whether you're a current solar owner looking to expand or just starting to explore renewable energy, our team of solar experts at Citadel Roofing & Solar can guide you. For homeowners with existing panels looking to increase their solar production, we can evaluate if adding more panels as non-export is a good option for your situation. For those considering a solar energy system, we can design and install a modern system tailored to your home's needs.
Schedule a free consultation with our team today to see how you can maximize your solar potential while following NEM 3.0 solar best practices. We'll help you take full advantage of current policies and incentives to make going solar simple and rewarding.
*NEM regulations are subject to change. Citadel is not responsible for any loss of NEM status.