For many California homeowners, solar has been on their roof for so long that it has simply become part of the house. Maybe you installed solar 15, 18, or even 20 years ago. Your electric bills have been relatively low, the system has continued producing, and you probably have not thought much about the net metering agreement that made those savings possible. That is starting to change.
Some of California’s earliest solar customers are now reaching the end of their 20-year net metering grandfathering period. As more systems reach that milestone, homeowners are going to face an important question: What happens to my solar after my NEM grandfathering expires?
The short answer is that your solar panels do not suddenly stop working. However, the way the utility values the electricity your system sends to the grid can change significantly. For many homeowners, this means it is time to reevaluate the entire solar system and determine whether adding battery storage, expanding the solar system, or replacing an aging system makes the most financial sense. Here is what California homeowners need to know.
What Is NEM Grandfathering?
California’s older Net Energy Metering programs allowed homeowners with solar to receive credits for excess electricity sent back to the utility grid. For homeowners who installed solar under NEM 1.0 or NEM 2.0, the original system generally received a 20-year legacy period beginning from the date the system received Permission to Operate from the utility.
That 20-year period was extremely valuable. It allowed homeowners to operate under the net metering rules that existed when their solar system was originally approved instead of immediately being moved onto newer solar billing programs whenever utility rules changed. But that protection does not last forever. Once the original 20-year grandfathering period ends, the homeowner can be transitioned to the current solar billing structure applicable to that utility. For PG&E customers, that currently means the Solar Billing Plan, also known as the Net Billing Tariff.
Why Does This Matter So Much?
The biggest difference is how the utility values electricity that your solar system sends back to the grid. Under traditional net metering, particularly NEM 1.0, the grid essentially acted much more like a financial battery. Imagine your solar system produces more electricity than your house needs at noon.
Instead of wasting that electricity, it flows through your utility meter and onto the electrical grid. Under the older net metering structure, that exported electricity could generate valuable credits on your account. Then, later that evening, your solar system stops producing. Your home begins pulling electricity back from the utility.
The credits generated by your excess daytime solar could help offset electricity consumed at another time. This arrangement made solar without battery storage extremely effective. You could produce excess electricity during the middle of the day and receive valuable utility credits that helped offset electricity purchased from the grid later. Under California’s newer Net Billing Tariff, that equation changes.
What Changes Under Net Billing?
Under the newer Solar Billing Plan, the value of electricity sent to the grid depends much more heavily on when that electricity is exported. The utility does not simply treat every exported kilowatt hour the same as every kilowatt hour you purchase later. That means the electricity your solar system produces may be much more valuable when you use it inside your own home than when you immediately send it back to the grid.
This changes the strategy behind solar. The goal is no longer simply: Produce as much solar electricity as possible. Instead, the goal becomes: Produce the electricity, use what you need, store the excess, and use that stored energy later when solar production decreases. That is exactly why battery storage has become such an important part of modern California solar.
Your Roof Can Become Your Own Power Plant
Think about your solar system this way. During the middle of a sunny day, your home might only be consuming 2 kW while your solar system is producing 8 kW. That leaves approximately 6 kW of excess production. With an older net metering agreement, exporting that excess electricity could create significant value through utility credits. Once you transition to net billing, sending all of that excess electricity directly to the grid may not provide the same financial benefit.
A battery gives you another option. Instead of immediately exporting those 6 kW, the system can charge the battery. Later, when the sun begins setting and solar production falls, your home can begin pulling electricity from the battery instead of purchasing as much electricity from the utility. That is called self-consumption, and it becomes increasingly important once the economics of exporting solar change.
What Should You Do When Your NEM Grandfathering Is About to Expire?
There is no single answer for every home.
The first thing we recommend is evaluating 3 things:
- How much electricity your home currently consumes
- How much electricity your existing solar system actually produces
- The condition and age of the existing solar equipment
Once you know those 3 things, the right path usually becomes much clearer. There are generally 3 situations we see.
Scenario 1: Your Existing Solar Produces Enough Electricity
This is the easiest situation. Let’s say your household consumes approximately 12,000 kWh per year and your existing solar system is still producing around 12,000 to 14,000 kWh per year. Your system is still doing its job. In this situation, you may not need additional solar panels. The problem is simply that the way your utility values the electricity moving between your house and the grid is changing.
This is where battery storage can make a lot of sense. Instead of replacing a perfectly functional solar system, you can potentially add battery storage and configure the system to capture excess daytime production. Your solar powers the home first. Excess solar charges the batteries. Then the batteries can power the home later in the day and into the evening.
The objective is to consume more of the electricity you generate instead of relying on the grid to provide the same economic exchange that existed under your older NEM agreement. For a homeowner with a properly sized existing solar system, adding battery storage may be the simplest solution.
Scenario 2: Your Existing Solar System Is Too Small
This is probably going to be the more common situation. A lot can change in 20 years. Maybe you installed solar when you had 2 people living in the house and now you have a family of 5. Maybe you added a swimming pool. Maybe you purchased an electric vehicle. Maybe you added another air conditioner. Maybe you built an addition. Or maybe you simply use significantly more electricity today than you did when the solar system was designed.
If your home now consumes 16,000 kWh annually but your old solar system only produces 9,000 kWh, adding batteries alone does not solve the underlying problem. A battery does not create electricity. It only stores electricity. If the solar system is not producing enough energy to begin with, you need to address the production shortage. If you have available roof space, one solution can be adding additional solar panels along with battery storage. The existing solar can continue producing while the additional panels help make up the shortage. The battery system can then capture excess production and make that electricity available later. This gives you a modern solar and storage strategy without necessarily removing every existing panel.
Scenario 3: Your Roof Is Full and Your Solar System Is 20 Years Old
This is where replacement starts making a lot more sense. Solar technology has changed tremendously over the last 20 years. Older solar panels were often significantly lower wattage than the panels being installed today. That means an older solar system may require considerably more roof area to produce the same amount of electricity that a modern system can generate using fewer panels.
For example, imagine a roof covered with older 200-watt panels. 20 panels would provide approximately 4 kW of nameplate solar capacity. If those same 20 roof locations could accommodate modern 440-watt panels, the nameplate capacity would be approximately 8.8 kW.
That is more than twice the nameplate capacity in roughly the same number of panel locations.
Actual production will depend on roof orientation, shading, equipment, climate, system design and other factors, but the improvement in power density can be substantial. This is important when roof space is limited. If the old system does not produce enough electricity and there is nowhere to install additional panels, removing the old system and replacing it with modern equipment may be the better long-term solution.
Remember That the Equipment Is Also 20 Years Old
There is another factor homeowners sometimes overlook. If your NEM grandfathering is expiring because your solar installation is approaching 20 years old, your equipment is also approaching 20 years old. The panels have spent 2 decades exposed to heat, rain, wind, dust and daily temperature changes.
Your inverter may already have been replaced once. Some older equipment may no longer be manufactured. Monitoring equipment may be outdated or no longer communicating. Replacement components can become harder to find. The roof underneath the system may also need to be evaluated. This does not mean every 20-year-old solar system should automatically be removed. Some older systems continue to perform very well. But before investing thousands of dollars into batteries and upgrades around a 20-year-old system, it is worth having the existing equipment professionally evaluated.
Sometimes Starting Over Is the Better Investment
Suppose your 20-year-old system is substantially undersized for your current electricity consumption. Your roof is already full. Your inverter is nearing the end of its useful life. Your panels have degraded. And you are about to spend significant money trying to modify the system for a completely different utility billing environment. At some point, continuing to invest in the old system stops making financial sense. Removing the existing equipment can free the roof for a properly designed modern solar and battery system.
A new system can be designed around how your home uses electricity today, not how it used electricity 20 years ago. That is an important distinction. Your energy profile today may look nothing like it did when the original salesperson designed your system.
Do Not Guess Based on the Number of Panels
One of the biggest mistakes homeowners can make is looking at the roof and assuming the system is large enough because there are a lot of panels. Panel count does not tell the whole story. 20 old panels could represent a relatively small system. 20 modern high wattage panels could represent a dramatically larger system.
Instead, look at actual data:
- How many kWh did your house consume during the previous 12 months?
- How many kWh did the solar system produce?
- How much electricity was imported from the grid?
- How much was exported?
- When does your home consume the most electricity?
- How much excess solar is available during the day?
Those numbers tell us much more than simply counting panels.
Start Planning Before Your 20 Years Are Up
Ideally, homeowners should not wait until after the transition occurs to start thinking about this.
If you know your solar system is approaching its 20-year anniversary, find your original Permission to Operate date and determine when your legacy period is expected to end. Then have the system evaluated. Look at your electric bills. Review your annual consumption. Pull your solar production history if monitoring is still available. Check the age and condition of your inverter. Evaluate the panels. Determine how much roof space is available.
Then decide whether the best path is:
- Keep the existing solar and add batteries
- Keep the existing solar, add additional panels and add batteries
- Remove the aging system and replace it with modern solar and battery storage
There is no reason to automatically replace a system that is still producing enough electricity. At the same time, there is usually little benefit in pouring money into an aging and undersized system simply because it is already installed.
The End of NEM Grandfathering Does Not Mean the End of Solar Savings
For homeowners who have enjoyed NEM 1.0 or NEM 2.0 for many years, moving to a newer billing structure can understandably feel like a major change. But the solution is not to abandon solar. It is to change the way the system is designed and operated. Older net metering programs made exporting solar electricity extremely valuable. Modern net billing puts greater emphasis on using the electricity you produce yourself.
That is why battery storage has become such an important part of modern solar design. If your existing system produces enough electricity, adding batteries may be all you need. If the system is undersized and you have additional roof space, adding solar panels and batteries may make more sense. And if the system is undersized, the roof is already full, and the equipment is approaching 20 years old, replacing the older system with modern high wattage panels and battery storage may provide the strongest long-term solution. The important thing is to evaluate the system before making that decision.
At Supreme Solar and Electric, we can inspect an existing solar system, review its production, compare it with the home’s current electricity consumption, evaluate the condition of the equipment, and determine which path makes the most sense. A solar system designed 20 years ago solved a 20-year-old energy problem. As your original NEM grandfathering period comes to an end, it may be time to design the system around the way your home uses electricity today.
Request a solar energy system inspection from the Fresno solar experts at Supreme Solar.