I’ll share key facts about the NEM program to help you avoid unexpected costs and secure the best deal when buying a solar home in Greater Palm Springs.
For most people, buying a home with solar sounds like a great way to save on energy bills. However, what they don’t know is there’s a hidden factor that can affect how much you save using this technology in your home. If you’re considering buying a home with solar in the Greater Palm Springs area, the NEM program tied to the system is something you need to understand. Today, I’ll discuss what the NEM program is and why it is important.
What is NEM? NEM stands for Net Energy Metering. It’s a system that determines how the extra energy your solar panels create is credited back to you by the utility company. In simple terms, it’s how much you save when your solar panels send extra energy back to the grid.
There are three versions of NEM: 1.0, 2.0, and 3.0. The version tied to a home’s solar system makes a huge difference in how much you’ll save. Here’s how it works:
Why does NEM matter? Each version of NEM works a little differently. Here’s a quick look at the three versions and how they affect you:
- NEM 1.0: This version was introduced in 1996. If you have this version, you’re credited at the full retail rate for any energy you send back to the grid. This is the most beneficial for homeowners because you get paid the same rate you pay for energy.
- NEM 2.0: This version came in 2017. It introduced a time-of-use system, meaning you pay different rates depending on when you use energy. Energy is most expensive between 3-9 p.m., but you still get credits at the retail rate for any excess energy you send back to the grid.
- NEM 3.0: The newest version, introduced in 2023, changes everything. With NEM 3.0, you’re only credited at a much lower rate for excess energy. Instead of the retail rate, you get credited at a wholesale rate, which is 50-75% lower. This is a big change and less beneficial for homeowners.
What’s the impact of NEM 3.0? NEM 3.0 makes solar less valuable. Since you’re no longer credited at the retail rate, homeowners need to install batteries to store energy for later use. This allows them to use their energy instead of buying it from the grid during expensive hours.
However, there’s a downside to using NEM 3.0. Installing batteries makes solar systems more expensive upfront. While you’ll save money in the long run, the initial cost of solar and batteries is higher.
Why should you ask about NEM? When you buy a home with solar, the NEM version stays with the house for 20 years, no matter who owns it. So, if you inherit a NEM 3.0 system, you’ll need to plan for higher energy costs unless you add batteries. If you see batteries or power walls installed, the system is likely on NEM 2.0 or 3.0. This is a good sign that you’ll need to factor in higher upfront costs.
When buying a home with solar, always ask about the NEM program. Find out if the system is owned, leased, or financed, and make sure you know which NEM version it’s on. This simple question can help you make a smarter decision and avoid unexpected costs. If you’re buying in the Greater Palm Springs area and you have questions, you can call or text me at 760-774-3066 or email me at Will@WillCookRealEstate.com. I will provide you with all the details you need about solar, NEM, and more to make the best decision for your real estate investment.
