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  • Writer's pictureJeff Mathias

Does Solar Still Make Sense Under Net Billing Tariff (NBT)?

Updated: Feb 5

There is a great deal of concern over the new NBT schedule and how it will impact solar.

Many believe that it will have a devastating effect on the solar industry because systems will be difficult to justify financially. Under the new NBT users will lose roughly 75% of the value of the power they export to the grid from previous NEM versions. This will virtually eliminate solar-only projects and systems with energy storage systems (ESS) will become the norm in order to make solar financially viable. While these changes will have a big impact on the solar industry, keeping solar viable will primarily be in the system design and teaching solar customers to use power economically, minimizing exports to the grid. Because of general increases from the utility costs of over 50% in 2022-2024 we are still seeing systems that can be justified in 7-10 years, with significant return on investments of solar with ESS.

First a little history on NEM 1 and 2. Under NEM 1 and 2, solar customers who exported power to the grid, received credits at retail rates under NEM 1 or close to retail rates under NEM 2. This allowed us to build solar systems that could not only cover the home's load during the day, but to build it large enough that during the summer when solar is at its peak production, we could export significant amounts of solar to the grid, building credits for the evenings and winter. This design allowed us to easily “zero out” most utility bills by simply building bigger solar systems. Energy Storage Systems (ESS) were sold primarily for backing up homes when the grid/utility was down. From a billing standpoint the way this worked is customers would pay a small monthly fixed fee, say $10-$15, and then true up at the end of the year with three potential options:

1) If the annual credits were less than the annual bill, (minus the small monthly fixed charge) they would pay the utility the difference.

2) If the credits exceeded the utility costs, and the amount of generation was less than the power imported from the utility, the true-up would be $0.00.

3) If the customer over generated and credits exceeded what was owed, the customer would receive a small amount for over generation (usually $0.025-$0.035 per KWH).

NEM 3 summary: Under NEM 3 our designs and justifications are turned on their heads

compared to the older NEMs. This means we will want to use as much daytime power as we can, minimizing the alternative of exporting it to the grid at low rates (exports will be reduced by 75% in most time slots). We will want to use power when our solar systems are producing the most (usually from 10 am – 4 pm). With energy storage systems (ESS) added to solar, we will also be able to charge our ESS with solar during the day (minimizing exports) and use our ESS to cover our evening loads, minimizing imports. With exports receiving just pennies, it will benefit us to use as much of the solar power as we can and to minimize exports. Unlike older NEMs, we cannot economically just add more solar to off-set our costs from our Utility. The new designs will include smaller solar systems, using power during the day (including charging our ESS) when solar export credits are low, and minimize using power by using our ESS during the evenings when costs are high.

Targeted Exporting and Consumption: There are a few times (hours), primarily in September when we will want to maximize exporting to the grid. ESS systems will be designed/programmed to “dump” power to the grid during these timeframes when the export credits can be in excess to $3.00 per KWH. While overall export credits will be reduced significantly under NEM 3, a well designed ESS can take advantage of these windows.

One other big change is how we will pay PG&E for energy with solar. Under PG&E's NEM 1 and 2

we true-up our credits and pay our bills annually (see above, NEM 1 and 2

history). Under NEM 3, PG&E will also true-up annually but require bills to be paid monthly. Under this method it will be important for most customers to pick a summer true-up month, pre-September because If you earn large credits in September and have a true-up in October, any unused credits would be lost. NEM3 customers can contact the PG&E solar hotline at 877-743-4112 to change their true-up month.

Another thing users can do to maximize their systems under NEM 3 is to switch power usage to when your solar is producing the most instead of at night. A few examples include:

1) If you have a well, irrigate when you have excess power from solar.

2) Run dishwashers and wash cloths during daylight hours.

3) Change your pool pumps to filter during daylight hours.

4) If you have electric space heating, pre-heat your home during daylight hours.

5) Like 4 above, if you have AC, pre-cool your home during daylight hours.

6) Set timers on hot tubs to heat and filter during daylight hours.

7) If you are retired or work from home, charge your EVs during the day.

I would also recommend fuel switching, converting to electric appliances away from fossil fuel ones. By electrifying your home, vehicles, and garden tools, you will have more control over when you use power or when batteries are charged.

The bottom line is in almost all cases, it will be better to use our solar power rather than export it to the grid under NEM 3. The funny part of this design is the low export rates will encourage people to use power during peak times, when the utilities need it most and use less power in the evenings when there is often excess power on the grid. As we look into the future, we will see new changes to address these issues.

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