The adoption of residential solar systems paired with battery energy storage systems (BESS) in California has surged under the state's new net energy metering 3.0 (NEM 3.0) scheme. According to data from the US Energy Information Administration (EIA), approximately 9% of all residential solar systems eligible for NEM 3.0 in California are now paired with a BESS. Between October 2023 and April 2024, over 40,000 new systems were installed, contributing 232MW of energy storage capacity.
The EIA reported that over 50% of the photovoltaic (PV) systems installed in April were paired with BESS, up from just over 20% in October 2023 when the new net metering rules took effect. The NEM 3.0 changes introduced a variable compensation rate for residents selling power generated from their PV systems back to the grid and reduced the base rate of repayment for self-generated solar power. This incentivized the adoption of residential BESS, enabling residents to sell power to the grid when demand is highest and power is most valuable, typically in the evening when PV systems produce less.
While the new net metering scheme has increased residential battery installations, it has also led to a decline in the rate of solar adoption. The Californian residential PV sector experienced a spike in installations in Q3 2023 as people rushed to install systems under the old NEM 2.0 scheme, which the California Public Utilities Commission (CPUC) allowed to be grandfathered in under a 20-year contract. In Q3 2023, 83,376 net metering solar PV systems were installed, compared with 46,631 new systems in Q1 2024. The EIA noted that around 99.5% of the small-scale solar PV in California is net-metered.
At the time of NEM 3.0's implementation, the California Solar and Storage Association (CALSSA) warned that the state could lose up to 17,000 solar sector jobs due to the new scheme. Despite the slowed growth in California's residential PV sector, it continues to expand. The EIA stated that the state now has over 12GW of net-metering connected residential PV systems under 1MW in size.
California has long been affected by the “duck curve” phenomenon, resulting from the state's significant solar PV capacity. The disparity between power generation during the day when the sun is strongest and the early morning and evening places considerable stress on the grid. Increased BESS capacity and the ability to deploy solar power more gradually could potentially alleviate this issue.
