Why California’s Newly Elected State Legislators Should Make NEM 4.0 a Priority in 2024

As California ushers in a new class of state legislators following the 2024 elections, the state faces mounting challenges and opportunities in its clean energy transition. One of the most pressing issues is how to make solar energy more accessible and equitable while maintaining grid stability. The state’s previous versions of Net Energy Metering (NEM) programs—NEM 1.0, NEM 2.0, and NEM 3.0—each offered benefits but ultimately left room for improvement in balancing consumer savings, grid reliability, and support for California’s climate goals. This is where our proposed NEM 4.0 shines.

NEM 4.0 takes the best features of prior versions and combines them into a cohesive, consumer-friendly program that benefits homeowners, renters, disadvantaged communities, and California’s electrical grid. As new lawmakers, you have a unique opportunity to review and establish NEM 4.0 as the policy that leads California into the next phase of renewable energy—promoting both a greener future and economic savings for constituents. Here’s why you should make this innovative program a legislative priority in 2024.

1. Enhanced Consumer Savings and Economic Benefits

With California’s rising cost of living and unpredictable energy bills, legislators have a responsibility to support policies that directly benefit consumers. NEM 4.0 reinstates full retail rate credits for excess solar energy fed back to the grid, maximizing the financial returns for solar users. This approach not only empowers more Californians to invest in solar but also enhances affordability, which resonates with voters across income levels.

Additionally, NEM 4.0’s structured Time-of-Use (TOU) rates reduce the penalty of peak charges, helping those who can’t fully shift energy use to non-peak hours. This makes NEM 4.0 attractive to a wider range of households and increases the adoption rate of renewable energy, all while generating economic benefits that help local economies thrive.

2. Incentivizing Battery Storage for Greater Grid Stability

One of the key strengths of NEM 4.0 is its incentivization of battery storage. With increased adoption of solar-powered battery systems, homeowners can store excess solar energy and use it during peak hours, relieving stress on the grid and enhancing energy reliability. NEM 4.0 provides rebates on battery installations, especially for low- and middle-income households, and offers additional compensation for battery-stored energy exported to the grid during peak demand periods.

This forward-looking approach aligns with California’s commitment to maintaining a reliable, renewable-powered grid while balancing consumer demand. By encouraging storage alongside solar, NEM 4.0 allows consumers to harness solar energy when they need it most, fostering a more resilient and self-sufficient energy landscape.

3. Supporting Accessibility for All Californians

To date, NEM policies have benefited homeowners, yet renters, low-income families, and those in disadvantaged communities have often been left behind. NEM 4.0 addresses this by offering:

Enhanced rebates for low-income households.
Community solar options that allow renters and multi-family units to participate in the clean energy economy.
Shared solar credits that enable people who don’t own property to reap the financial benefits of solar energy, increasing affordability and fostering participation.

This makes NEM 4.0 a uniquely accessible program that advances for all, a priority that aligns with California’s mission to ensure fair access to clean energy for all. As legislators, supporting NEM 4.0 would position you as leaders committed to championing policies that bridge economic divides and empower every Californian.

4. Minimal Grid Charges to Fund a Clean Energy Future

NEM 4.0 also introduces a fair, minimal “environmental grid fee.” By applying non-bypassable charges only on grid-drawn energy at modest rates, NEM 4.0 balances the needs of solar users with the need to fund grid maintenance and renewable energy infrastructure. Additionally, a small, fixed fee supports infrastructure improvements, ensuring California can maintain a robust and clean grid while allowing solar adopters to save substantially.

This balanced approach prevents the grid from being disproportionately subsidized by non-solar users while offering predictability in costs for solar users. Legislators can promote a program that builds long-term grid stability without burdening constituents.

5. Streamlined Enrollment and Faster Approvals for Solar Adoption

The NEM 4.0 proposal offers streamlined processes for applying and connecting new solar systems to the grid, enhancing accessibility and reducing consumer frustrations over bureaucratic delays. By enforcing interconnection timelines and capping interconnection fees, NEM 4.0 prioritizes consumer convenience, making it easier than ever for Californians to join the solar movement.

Speeding up solar adoption benefits legislators, too, by boosting clean energy usage across districts. Accelerated solar adoption aligns with California’s ambitious climate goals while fostering a more environmentally conscious community—a win-win for legislators and constituents alike.

6. Reinforcing California’s Climate Leadership on a National Scale

As one of the nation’s environmental leaders, California’s policies often serve as models for other states. By passing NEM 4.0, legislators would showcase California’s commitment to both clean energy and consumer empowerment, setting a new standard for responsible, inclusive energy policy. With NEM 4.0, California can inspire other states to adopt similar models that prioritize both consumer interests and environmental stewardship.

Summary: NEM 4.0 as a Legislative Priority

The transition to NEM 4.0 represents more than just an energy policy upgrade; it is an opportunity to align California’s solar and storage industry with the values of affordability and sustainability. By adopting NEM 4.0, California’s newly elected legislators would make a powerful statement about the future they envision for the state—a future where renewable energy is accessible, economically rewarding, and supportive of a clean energy infrastructure.

As newly elected officials in 2024, you have the power to champion a policy that builds on the best of California’s solar programs. With NEM 4.0, you can empower your constituents, safeguard California’s energy reliability, and continue to lead the nation in the race toward a greener future.

Draft Bill: California Net Energy Metering (NEM) 4.0 Act

California State Assembly
Introduced by Assembly Member [Name]

Title:
An Act to Amend the Public Utilities Code to Implement Net Energy Metering 4.0, Supporting Renewable Energy Growth, Battery Storage, and Consumer Affordability in California

SECTION 1: FINDINGS AND DECLARATIONS

The Legislature finds and declares:

California is committed to promoting clean and renewable energy sources to meet its environmental and economic goals.
Net Energy Metering (NEM) policies have played a crucial role in California’s transition toward renewable energy but require updates to improve accessibility and grid stability.
NEM 4.0 will support solar adoption while promoting battery storage, fair access, and equitable financial benefits across income levels, contributing to California’s leadership in sustainable energy.

SECTION 2: AMENDMENT TO PUBLIC UTILITIES CODE – NET ENERGY METERING 4.0

Article 1. Definitions

“NEM Customer” means any utility customer enrolled in Net Energy Metering 4.0 under an investor-owned utility (IOU) in California.
“Excess Generation” means energy produced by a customer’s renewable energy system that exceeds their usage and is exported to the grid.
“Battery Storage System” means any energy storage device that stores electricity generated by the renewable system, with the capability of exporting energy back to the grid.
“Community Solar Program” means a state-certified program that enables renters and those unable to install solar to participate and receive credits for solar energy.

Article 2. NEM 4.0 Program Provisions

Section 2.1: Full Retail Rate Credits for Excess Generation

(a) Full Retail Rate Compensation
NEM customers shall receive compensation at full retail rates for excess generation exported to the grid.

(b) Time-of-Use Rate Modifications
Time-of-Use (TOU) rates shall be modified under NEM 4.0 to offer reduced peak-hour penalties for customers who cannot shift usage to non-peak hours, ensuring fair access and savings for all.

Section 2.2: Battery Storage Incentives

(a) Battery Rebates for NEM Customers
The California Public Utilities Commission (CPUC) shall establish and administer rebates for battery storage systems installed by NEM customers, with increased incentives for low- and middle-income households.

(b) Enhanced Export Rates for Battery-Stored Energy During Peak
NEM 4.0 customers shall receive enhanced export rates for energy discharged from battery storage systems during peak demand hours to support grid stability and incentivize energy storage adoption.

Section 2.3: Fair Non-bypassable Charges

(a) Non-bypassable Charges Only for Grid Usage
Non-bypassable charges shall be applied only to energy drawn from the grid and shall not apply to self-generated and consumed energy from renewable systems.

(b) Fixed Environmental Grid Fee
All NEM customers shall contribute to a fixed environmental grid fee, supporting renewable infrastructure investments, at a rate set annually by the CPUC, not to exceed $10 per month for residential customers.

Section 2.4: Access for Low-Income and Disadvantaged Communities

(a) Increased Rebates for Low-Income Households
The CPUC shall expand rebate programs under NEM 4.0, providing increased funding and rebates to low-income households seeking to install renewable energy systems.

(b) Community Solar Participation and Shared Credits
NEM 4.0 shall support and expand Community Solar Programs, allowing renters and residents in multi-family housing to participate and receive credits for generated solar energy, calculated at retail rates.

Section 2.5: Streamlined Enrollment and Interconnection

(a) Interconnection Fee Waivers
The CPUC shall establish fee waivers for low-income applicants and capped interconnection fees for all NEM 4.0 participants to remove financial barriers to program enrollment.

(b) Streamlined Interconnection Approval Timeline
IOUs shall implement a maximum interconnection timeline of 30 days for NEM 4.0 applications to ensure faster access to renewable energy benefits.

Section 2.6: Grandfathering and Program Stability

(a) 25-Year Grandfathering Period
All NEM 4.0 participants shall be grandfathered into the program for a period of 25 years from their enrollment date, ensuring long-term stability for consumer savings and investment security.

(b) Application of New Policies Only to New Customers
Existing NEM 1.0, 2.0, and 3.0 participants shall remain unaffected by the new provisions unless they opt into NEM 4.0 voluntarily.

SECTION 3: CPUC REPORTING AND OVERSIGHT

The CPUC shall prepare an annual report on the impact and adoption rates of NEM 4.0, including:

Total number of participants by income level.
Effects on grid stability, measured by peak-hour grid demand reduction.
Financial and environmental impact on non-participating ratepayers.
Community Solar Program participation rates and benefits delivered to disadvantaged communities.

SECTION 4: IMPLEMENTATION AND TIMELINE

NEM 4.0 shall take effect on January 1, 2025, with applications accepted beginning no later than March 1, 2025.
All IOUs shall update billing systems, rates, and processes to comply with NEM 4.0 provisions by the effective date.

SECTION 5: SEVERABILITY

If any section of this Act or its application to any person or circumstance is held invalid, the remainder of the Act and its application to other persons or circumstances shall not be affected.

End of Act

Explanation for Legislators and Stakeholders:
NEM 4.0 aims to combine the best features of previous NEM programs—maximizing consumer financial benefits while supporting California’s renewable energy goals.

Through retail rate compensation, battery storage incentives, and expanded access for low-income communities, NEM 4.0 aligns with California’s commitment to clean energy and grid stability.

This Act encourages lawmakers to invest in job creation, and in California’s clean energy future, ensuring consumer savings, resilient infrastructure, and accessible renewable energy for all.