NEM 3.0 is a new set of rules for net energy metering in California that will take effect in 2023. The new rules will gradually reduce the credit rate that solar customers receive for any excess energy they generate, from the current retail rate to the wholesale rate over a period of five years. The new rules will also introduce a fixed monthly charge for solar customers, regardless of how much energy they use from the grid.
So, how will NEM 3.0 affect solar installers? Firstly, the reduction in the credit rate could make solar less financially attractive to customers, which could lead to a slowdown in the growth of solar installations. Additionally, the fixed monthly charge could make solar less competitive compared to traditional grid energy, which could further reduce demand for solar installations.
Given the potential impacts of NEM 3.0 on solar installations, what should solar installers do to prepare for it? Here are a few key steps they can take:
- Reduce soft costs – protect and grow margins: Solar installers should consider using streamlined cloud-based end-to-end business management or ERP software to streamline their operations and cut soft costs. By doing so, they can increase productivity, reduce errors and delays, manage cashflow in real-time, and ultimately protect and grow margins, helping them remain competitive in an increasingly crowded market.
- Educate customers: Solar installers should educate their customers about the changes coming with NEM 3.0 with focus on long-term value. The increase in costs for electricity will only go upward while the need for energy will also follow-suit, especially given the demand and direction of EVs. It would still benefit the customers to focus on effectively thinking about their energy needs connected to the value and impact of solar that is tailored to their needs.
- Focus on efficiency: With the reduction in the credit rate, solar installers should focus on improving the efficiency of their installations to maximize the amount of energy they generate. This can help offset the reduction in credit rate and make solar more financially attractive to customers.
- Continue to offer energy storage solutions: With the fixed monthly charge, solar installers should also consider continuing to offer energy storage solutions to their customers. The demand for storage is based on needs which will only continue to increase with the use of EVs and other demands on electricity. Energy storage can help customers reduce their reliance on the grid and offset the fixed monthly charge, making solar more competitive.
- Stay up-to-date: Solar installers should stay up-to-date with the latest developments related to NEM 3.0, including any potential changes or updates to the rules. This will help them adjust their strategies and offerings accordingly.
NEM 3.0 represents a significant change to net energy metering in California and will have important implications for solar installers.
Blu Banyan’s SolarSuccess platform is built for solar installers to help them overcome the challenges posed by NEM 3.0 and beyond. SolarSuccess is a end-to-end business management cloud-based SaaS platform that is native to Oracle’s NetSuite, and is tailored for Solar Installers to scale and grow their business.
If you would like to learn more about how SolarSuccess can optimize your solar business, explore the modules or schedule a 15 minute chat with our team.
