The economics of solar energy (solar panels) for your home will become less cost effective on 4/14/2023.
How Solar Works – In CA you can put solar panels on your roof, generate electricity with them and sell that electricity to PG&E for about the same price you buy it for. PG&E is always the broker in the middle.
All electricity you use comes from them and all the electricity you generate is sold to them. Unless you have a battery, you will never use any of the electricity you generate. Every month you get a ”token” bill for a few dollars, and once a year your account is ”trued up” with all the pluses (sold) and minuses (used) settled. The key here is that PG&E buys the power, up to the amount you use, at about what it charges you. But that will change on 4/14/2023.
Effective 4/14/2023 the current purchase program, called NEM2, terminates. After 4/14/2023 PG&E will still sell you power at the same price it does now, but it will only buy it back at variable market rates. That means that a lot of the power you generate with your solar system will be sold to them for only about 1/2 of the amount you pay for the power you use. This means the value of having a home solar system will fall for those systems permitted and approved after 4/14/2023.
But the good news is you can get grandfathered for 20 years. The grandfather clause – If you can get your solar system permitted and approved by PG&E before 4/14/2023 you are grandfathered under NEM2 for 20 years from date of permitting. That means you keep the high-rate buyback for 20 years! Everybody who doesn’t make the 4/14/2023 deadline goes to NEM3 which means they pay full price for power but sell at the fluctuating demand rate. What about batteries? – They sound good, and since you can’t use your own solar power in CA, power outages mean no electricity at all even when the sun is shining. An additional battery or two seems like a good idea. Unfortunately, they cost too much, don’t hold much power and have a life of only 3000 to 4000 cycles. They are simply not a cost-effective option. So, unless you have a special power failure need, such as medical equipment, or you just feel like being a Gucci prepper, batteries simply are not cost effective, and most people don’t get them.
What do you need to do? – You need to move very fast to be ready by 4/14/2023. The process is: find a contractor, sign the contract, the contractor submits plans and gets permits from the city, and finally, the PG&E paper work is filed and, “accepted for review”. Once this happens you are grandfathered under NEM2 for 20 years. Since all this takes time, do not delay in starting the process!
Solar research courtesy of Tom McGinley of ConstructionAssistant.com.
If you’d like to talk more about the housing market or know someone buying or selling, please don’t hesitate to reach out. I always appreciate your referrals and would be happy to help!
Leave a Reply