Since the California Public Utilities Commission (CPUC) approved the Net Billing Tariff, also known as Net Metering 3 (NEM 3), in mid-December, 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% over 20 years. But plainly 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 day to day: 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.
Key takeaways
Installers predict that NEM 3 will negatively impact California’s solar industry.
Many installers plan to expand into other markets or invest more in energy storage as a result of NEM 3.
While only about one-fifth of California installs include a solar battery today, installers predict this to rise significantly after NEM 3 goes into effect.
Demand for solar is sky-high in California right now – get quotes ASAP so your application can be submitted before the April 14th deadline!
Nine out of 10 installers agree: NEM 3 will harm the solar industry in California
The solar industry–and installers specifically–in California are very aware of the solar policy changes associated with NEM 3 and are in alignment on what the impact of the solar policy transition will be on the solar industry in California. 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 future of the solar industry in California than they were a year ago, and over half are less confident 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%.
Solar companies are split on how to adapt: expansion into other markets or other products
Given that nine out of 10 installers believe that NEM 3 will have an adverse impact on 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% 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.
Installers expect a shift in demand for solar paired with batteries
If there is a silver lining to California’s transition to the net billing tariff, it’s that adding a battery to solar makes a lot of economic sense under NEM 3. In fact, 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 that 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 include batteries after the NEM 3 transition. Today, 19% of installs include a battery – after NEM 3, installers anticipate a whopping 71%.
About EnergySage Intel
As the country’s largest online renewable energy marketplace, EnergySage is uniquely positioned to track and analyze trends across the clean energy landscape. This includes consumer demand and trends, as well as real-time pricing, equipment availability and preferences, brand market share, and more for solar, storage, and other clean energy products. To augment this data, EnergySage runs both installer-facing and consumer-facing surveys, allowing us to better understand the rapidly changing market dynamics. Top-tier journalists, government agencies, leading utilities, respected research groups, well-known brands, and many others rely on EnergySage data and insights.
Solar demand remains high as the NEM 3 transition date approaches
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 as well as 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% 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 the existing net metering policy in California, 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.
Go solar with confidence through EnergySage
Regardless of whether you want to shop for solar before or after NEM 3 goes into effect – keep in mind, you can still 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.