There Has Never Been a Better Time to Go Solar!

With the passing of NEM 3.0 and the increase in the Federal Income Tax Credit, going solar sooner is better!

Let’s Start With the Tax Benefits

In August 2022, the federal government passed the Inflation Reduction Act, which included an increase to the Federal Income Tax Credit (ITC) to 30% through 2032. This means that when you install a home solar system, you can claim credit on your federal income taxes for 30% of the cost of the system. This credit decreases to 26% for systems installed in 2033 and drops to 22% for systems installed in 2034. The tax credit expires completely for residential solar systems in 2035, unless the federal government renews it.

What About NEM 3.0?

Net Energy Metering 3.0, or NEM 3.0, is the name of the new program scheduled to take effect after April 13, 2023. What does this mean for the future of rooftop solar and ratepayers in California? Under Southern California Edison’s approved rate structure, solar owners under NEM 3.0 will earn around 75% less than customers in NEM 2.0 for the excess electricity pushed onto the grid. But here’s some good news: Current solar owners will remain under their existing net metering policy, meaning if you purchase a solar system for your home or business before the April 13 deadline, you will enjoy the benefits of NEM 2.0 savings for 20 years. Californians can be grandfathered into NEM 2.0 by receiving approval on an Interconnection Application for their system by April 13, 2023.

What If I Miss the Deadline?

It’s still better to go solar sooner. SCE included “adders” to their NEM 3.0 customer rates for the first five years of the program. This means you’ll receive an additional 4 cents per kWh on top of the existing rates, and these adders decrease by 20% every year, meaning you’ll want to take advantage of them as soon as possible. SCE also must update its billing system to accommodate the NEM 3.0 changes, but that project is expected to take one year to complete. In the meantime, customers who sign up under NEM 3.0 will be compensated at NEM 2.0 rates until the billing system is updated!

Basically, in 2023, installing solar sooner is better. Electric rates are only going to continue rising fast, so make sure you do everything you can to earn all those solar savings.


To learn more about the benefits of solar, reach out to one of our certified Energy Consultants today!

By Published On: January 12, 2023

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