1. California Public Utilities Commission enacted NEM 3.0, significantly reducing compensation for behind-the-meter solar PV systems.
2. Analysis by Berkeley Lab shows increase in PV installations with NEM before closure, rise in storage attachment rates under NBT, and higher TPO rates.
3. Shift towards smaller PV systems, increased concentration of installer market, and more installations in less affluent zip codes under NBT.
The California Public Utilities Commission implemented a new net billing tariff (NBT) structure in December 2022, known as “NEM 3.0”, which reduced compensation for behind-the-meter solar PV systems. Despite this change, the California solar market has continued to evolve over the past year. PV installations remained steady, but there was a significant increase in the attachment of storage systems. Prices for PV+storage systems rose by 17% under NBT, and there was a shift towards adoption in less affluent zip codes.
A surprising trend was the increase in third-party ownership (TPO) rates under NBT, reversing a previous decline. Additionally, PV systems under NBT were smaller in size, likely due to lower compensation for grid exports. The market became more concentrated, with the top 5 installers accounting for 51% of the market. These changes cannot all be solely attributed to NBT, as other factors also played a role.
The impact of NBT on the California residential PV market has been significant, and further changes are expected as the transition to this new compensation structure continues. As the NEM backlog clears and a “new normal” is established, the full effects of NBT on the market will become more apparent.