In a recent webinar, Stem’s experts – Sara Harvey, Senior Product Marketing Analyst and Vlad Miklyukh, Senior Product Manager – delved into the intricacies of California’s NEM 3.0 tariff and its effects on solar and storage projects. The discussion focused on analyzing the tariff’s impact, optimizing solar plus storage solutions, and using advanced modeling technology to accurately assess project viability. This blog post serves as a recap of the key insights shared during the webinar, providing a comprehensive overview for those interested in California’s evolving solar market.
Understanding the NEM 3.0 Tariff
The NEM 3.0 tariff, also known as Net Energy Metering 3.0, was designed to promote on-site solar consumption and strategic export during specific periods of grid demand. With fluctuating export compensation rates ranging from zero to $3 per kilowatt hour, the tariff presents a complex system that varies by month and hour. Notably, NEM 3.0 can significantly reduce compensation for solar export, with projections showing up to a 75% decrease in solar savings.
Impacts on Solar Projects
The webinar highlighted the varying impacts of the NEM 3.0 tariff on different system sizes and load profiles, such as industrial, large warehouse, big box, and school profiles. Generally, commercial and industrial (C&I) projects experience less impact compared to residential projects due to higher consumption needs resulting in less export. However, the analysis demonstrated that solar-only C&I projects are negatively affected, with the disparity between NEM 2.0 and NEM 3.0 tariffs increasing as the PV system size grows.
The Role of Storage
Adding energy storage to solar projects can help mitigate the negative impacts of the NEM 3.0 tariff and improve overall system savings. Stem’s AI-driven approach, powered by the Athena® Analyzer™ tool, enables precise modeling and simulation of solar plus storage solutions. By effectively optimizing battery dispatch schedules, storage systems can balance solar self-consumption and strategic export during high-rate periods. This allows solar energy to be captured and used during low-rate periods, maximizing both savings and storage value.
Findings from Analysis
Stem’s analysis, driven by Athena Analyzer, evaluated the impacts of the NEM 3.0 tariff on solar plus storage projects across different load profiles. The results indicated a decrease in solar savings across all scenarios when transitioning from NEM 2.0 to NEM 3.0. However, the addition of storage with export capability significantly recovered the lost savings, especially in C&I settings. While the warehouse load profile exhibited a lower recovery rate, it still recuperated a considerable portion. Optimizing the battery for export, with solar charging to balance usage during high-rate periods, maximizes storage savings.
The Value of Accurate Modeling
Accurately modeling and simulating the return on investment (ROI) for solar plus storage projects under the NEM 3.0 tariff is crucial in mitigating risks and ensuring profitability. Stem’s Athena Analyzer empowers customers to precisely model various scenarios, comparing system performance under different tariffs and with different battery sizes. Through the platform, project managers can gain valuable insights into project savings, revenue distribution, and overall financial projections.
The shift to California’s NEM 3.0 tariff has far-reaching implications for solar and storage projects in the state. While the tariff can significantly reduce solar savings, the addition of storage can offset these losses and produce substantial savings. Through sophisticated modeling and analysis provided by Stem’s Athena Analyzer, project managers and stakeholders can gain valuable insights into optimizing solar plus storage solutions and maximizing the financial potential of their projects. By understanding the dynamics of the NEM 3.0 tariff, industry players can navigate the evolving landscape of California’s solar market with confidence.
Want to learn more about NEM 3.0 tariff analysis and the future of solar plus storage projects in California?
- Watch our webinar on-demand for in-depth information and Q&A
- Download our whitepaper, “Designing California Solar + Storage Projects for Maximum ROI Under NEM 3.0”
- And if you’re part of Stem’s Partner Program, take our NEM 3.0 course in Stem University