Thinking about harnessing the power of the sun in California? With abundant sunshine in the greater Sacramento region and rising utility rates, it’s no wonder more homeowners and businesses are looking into solar panels. But with new utility policies in place—specifically NEM3—how you earn and save with solar has changed. Here’s what you need to know about net export systems and making solar work for you under the latest Net Energy Metering regulations.
Understanding NEM3: California’s Updated Solar Compensation Model
California has long been a leader in solar adoption, but as of April 2023, the state updated its solar policy to Net Energy Metering 3.0 (NEM3). This policy impacts customers of SMUD, PGE, and other utility companies across the state, including Sacramento, Roseville, Elk Grove, and Folsom.
How Did NEM1 and NEM2 Work?
Under the older NEM1 and NEM2 programs, homeowners received nearly full retail rates as a credit for extra electricity their panels exported to the grid. This made solar panel investments extremely attractive and provided fast payback periods.
What’s Different with NEM3?
NEM3 moves away from this retail exchange. Now, you receive credits at the utility’s “hourly avoided cost”—an amount that usually is much less than what you’d pay per kilowatt-hour. This rate also varies throughout the day and year, tending to drop when solar is abundant on the grid (such as sunny afternoons).
How Do Net Export Systems Work Under NEM3?
Your solar panels generate electricity all day. Here’s how your energy flow breaks down:
- Self-Consumption: First, your panels supply your home or business.
- Export to Grid: When generation exceeds your needs, excess electricity is exported to the grid. Under NEM3, you’re credited at hourly avoided costs, not full retail value.
- Buying from Grid: When your solar can’t cover usage (like evenings or cloudy days), you draw (and pay full price) for grid power.
This arrangement is called “net billing”—you pay retail rates for power you use, but receive lower, variable credits for power you export.
Why Timing and Energy Management Matter More Than Ever
Because credits are lowest during peak solar production hours and highest during the evening, the last thing you want is to export most of your energy when rates are low. Smart energy scheduling—like running your dishwasher, EV charger, or laundry during the day—lets you use more of your generated power, maximizing home energy savings.
The Role of Battery Storage with NEM3
Battery storage is becoming the key to unlocking the full value of solar under the new rules. Here’s how batteries help:
Self-Use Over Export
Instead of sending excess midday solar back to the grid for low credits, a battery stores it for later—like during the early evening when Sacramento electricity rates are highest. This reduces reliance on your utility (SMUD, PGE, etc.) and slashes costly peak energy purchases.
Maximizing Home Energy Savings
By storing and using your own solar energy when it’s most valuable, batteries help offset the disadvantage of lower export rates under NEM3. Many Sacramento homeowners are finding that a combination of solar panels and battery storage is the best path for savings and resiliency.
Local Context: Sacramento Area and Utility Differences
Customers in the Sacramento area—whether you’re served by SMUD, PGE, or Roseville Electric—should note that each utility sets slightly different rates and terms. Always check the latest guidelines or ask your local solar installer for details:
- SMUD and PGE have published detailed avoided cost rate sheets, updated seasonally and hourly.
- Net billing means careful system sizing and design is more important than ever to avoid “oversizing” and excess low-value exports.
Ask your installer for a custom analysis based on your home’s usage patterns and local rates to optimize your system for NEM3.
Key Takeaways for Sacramento Solar Shoppers
- NEM3 means lower credits for exported solar electricity.
- Battery storage can dramatically increase your self-consumption and bill savings.
- Smart energy management—using power when your solar panels are producing—boosts your return on investment.
If you’re in Sacramento, Elk Grove, Roseville, or nearby, understanding the nuances of NEM3 is essential to maximize your solar investment.
Ready to Take the Next Step?
Solar policy and electricity rates in California are evolving fast. Get the most out of your solar panels by working with a local expert who knows NEM3, Sacramento electricity rates, and the best ways to pair solar with battery storage for your unique needs. Contact us today for a personalized consultation, solar system design, or a tariff comparison – let’s make your solar journey rewarding under NEM3!
