What do solar installers in California think of NEM 3.0?

Since the California Public Utilities Commission (CPUC) approved the Net Billing Tariff, also known as Net Metering 3 (NEM 3), in mid-December 2022, the industry has primarily focused on how the new policy will affect solar shoppers in California (and for good reason): it reduces solar savings by more than 60 percent over 20 years. But, absent from existing articles and thought pieces about the consequences of the NEM 3 decision is the perspective of the people whose livelihoods will be impacted daily: solar installers in California.

With that in mind, EnergySage surveyed three dozen solar installers in California to gauge their sentiments around NEM 3, how the policy has already affected the solar industry in California, their forecasts for how the industry will change moving forward, and how they plan to adapt to the new solar climate in California after the mid-April transition to NEM 3.

California's solar industry, and installers specifically, are aware of the solar policy changes associated with NEM 3 and the transition's impact on the solar industry in the Golden State. Nine out of 10 solar installers in California say that NEM 3 will harm the solar industry in California, including seven out of 10 who say it will significantly harm the solar industry.

Additionally, a third of installers say that they are much less confident in the solar industry's future in California than they were a year ago, and over half are less secure overall. Comparatively, in the six surveys we've run since 2016 when we first started fielding our annual Installer Survey, the percentage of installers in California who expressed a decrease in confidence in the solar industry never exceeded 40 percent.

Given that nine out of 10 installers believe that NEM 3 will hurt the industry in California, we also asked solar companies how they plan to adapt to the new reality for solar in the state after April 15, 2023.

After the NEM 3 transition, two-thirds of installers plan to invest more in energy storage sales, while two-fifths say they plan to expand into new states. Interestingly, although only 17 percent say they plan to scale back or stop serving the California market after NEM 3, a quarter of survey respondents say they plan to slow down hiring in response to the new solar policy.

If there is a silver lining to California's transition to the net billing tariff, adding a battery to solar makes more economic sense under NEM 3. EnergySage’s analysis shows that after NEM 3 goes into effect, the payback period for a solar-plus-storage installation will be faster than for standalone solar, even after accounting for the added cost of a battery. That means the average homeowner will save tens of thousands of dollars more with a battery than without one under NEM 3.

With that in mind, we asked installers what percentage of their solar installations include batteries now and what percentage they anticipate will consist of batteries after the NEM 3 transition. Today, 19 percent of installs have a battery – after NEM 3, installers expect a whopping 71 percent.

If you’re interested in solar in California right now, it’s important to be aware of both the current state of the market in California and the timeline for the transition from higher solar savings under NEM 2 to NEM 3. According to our survey, solar installers in California are witnessing a significant increase in demand for solar prior to the net metering transition date in mid-April, with survey respondents saying homeowner demand is up 64 percent on average year over year.

Given the compressed timeline to take advantage of higher solar savings prior to the NEM 3 transition date, this uptick in demand makes a lot of sense. In order to lock in higher solar savings rates under California's existing net metering policy, solar shoppers have to submit a completed net metering application by April 14th at 5 pm Pacific. While your solar installation doesn’t need to be complete by this date (you have three years to get it installed), if you want to lock in higher savings rates under NEM 2, you’ll want to start the process ASAP. By mid-April, you’ll need to complete a number of steps: gather solar quotes, select an installer and sign a contract, schedule a physical or virtual site visit, and help your installer submit the required documentation.

Regardless of whether you want to shop for solar before or after NEM 3 goes into effect, remember you can save a lot by going solar under NEM 3, especially if you pair solar with a battery – EnergySage is here to help. For rooftop solar, visit the EnergySage Marketplace to receive custom quotes from our network of vetted installers. And, as the solar industry continues to evolve in California, keep an eye on our Community Solar Marketplace as well – we expect community solar to take off in California in the next couple of years, which is a great way to save with solar without having to install any equipment at your home.