Burbank Water & Power is Introducing NEM 2.0
Every California utility offers a unique billing rate plan for customers with home solar PV systems. This billing rate plan accounts for the fact that these customers will be both buying and selling energy to the grid. As such, it is referred to as Net Metering, or NEM. The utility designates a rate which solar customers pay for power, as well as a rate that the utility credits homeowners for the power they sell back to the grid.
Burbank Water & Power customers currently enjoy a Net Metering plan that mirrors the Los Angeles Department of Water & Power’s solar credit program, which is among the most generous in the country. LADWP offer one-to-one credit for customers selling energy back to the grid; This means the utility credits homeowners at the same retail price that they pay for energy. BWP placed a size limit on the systems homeowners could install (up to 100% of their historic energy use), to avoid homeowners turning their homes into generators by unnecessarily oversizing their systems. Still, these net meter terms afforded Burbank homeowners the gold standard in credit programs for home solar, making going solar a cost-effective and environmentally friendly options for Burbank homeowners.
BWP has proposed a change to these net metering terms, that if approved by Burbank City Council, could take effect as early as next year. The utility projects changes could take effect “in the March-June time range of 2025”. The new solar net metering billing rate, called NEM 2.0, change the solar credit from the retail rate, to the utility’s “avoided cost of energy”. This avoided cost is determined by BWP’s internal analysis, and will certainly lead to an energy buyback rate lower than the current market-high credits - but how much lower? BWP have yet to release their new rates, but have released this information about how the change could affect the payback period for solar PV systems:
To get a sense of how this change could affect your energy rates with solar, let’s examine how a similar shift to crediting home solar customers at the avoided cost of energy changed solar rates for Southern California Edison customers. SCE implemented their NEM 3.0 rate in April of 2023, causing a seismic shift in California’s home solar market. SCE’s metrics for calculating their avoided cost of energy were opaque, similar to BWP’s, and relied on a complex combination of customer location, time of use, season, and more. The end result, however, was that Southern California Edison reduced the credit they awarded solar customers by a whopping 75%, on average. In some areas, that meant homeowners were credited as little as $0.03 per watt for energy sold back to the grid.
While it is true that homeowners can still see significant savings on their power bill under NEM 3.0, this often requires adding a battery to their home system. Solar batteries cost thousands of dollars, and for larger homes with higher monthly usage, appropriately sized battery solutions can add tens of thousands of dollars to the cost of a home solar system. An analysis by the Lawrence Berkeley National Laboratory unsurprisingly showed a 50% increase in solar battery attachment since the change to NEM 3.0.
Here’s the good news: homeowners who install solar before the new rates take effect will be grandfathered in to the current high solar credit. From the Burbank Water & Power website:
If you’re a Burbank homeowner who’s been curious about solar energy, now is a great time to see if your home is eligible, and how going solar could help you save on electricity. Be sure to ask solar energy consultants you meet with about the coming change to NEM 2.0, and how it could affect your energy spending. Taking advantage of these higher net metering credit rates is a great way to lock in a lower energy rate for decades to come.