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Report: NEM 3.0 is boosting storage, dragging down panel price in California

In the wake of the state’s new net metering rule, the residential solar market appears to be taking a new approach.

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Published
February 22, 2024
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Man installing rooftop solar panels

Photo credit: Andrew Caballero-Reynolds / AFP via Getty Images)

Man installing rooftop solar panels

Photo credit: Andrew Caballero-Reynolds / AFP via Getty Images)

Despite rampant controversy over California’s net metering tariff, new research indicates that it seems to be doing what it promised: increasing demand for and deployment of storage. 

  • The top line: The latest research from EnergySage, an online solar marketplace that was acquired by Schneider Electric, found that rooftop solar prices were in steady decline in 2023, while demand for storage is steadily ticking up. For instance, the number of residential solar quotes that included battery storage increased by 10% last year alone. Nowhere has that rising interest been more evident than in California, where there’s been a nearly 45% increase in storage attachment since the state’s net billing tariff, or NEM 3.0, went into effect in April.
  • The market grounding: NEM 3.0 essentially means that Californians with solar panels can’t earn as much for power they send to the grid. Many in the solar industry saw the move as the death knell of rooftop solar, in part because it disincentivizes new potential customers. However, while most developers predicted in early 2023 that the regulations would significantly harm the state’s solar industry, nearly 70% said they were planning to invest more heavily in storage sales.
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According to EnergySage survey data, California consumers were broadly disinterested in storage in the first half of 2023. After NEM 3.0, however, interest from Golden State consumers skyrocketed, with four out of five shoppers on the platform requesting storage quotes. The number one reason customers gave for their interest was saving on utility rates, the report found, though self-supply and backup power were close behind.

Image credit: EnergySage

This increasing consumer interest in storage is a trend that EnergySage said is happening beyond California too. During the second half of 2023, 61% of all solar quotes on the platform included a battery — a 10% increase over the first half of the year.

And while storage prices have been increasing relatively steadily since 2020, last year saw a drop in prices, driven in part by a nearly 20% decrease in quoted prices in California.

Image credit: EnergySage

Nearly a quarter of all solar panel systems sold through EnergySage in 2023 included a battery, but the range in types of batteries developers are quoting to customers and ultimately installing have expanded.

The back half of 2023 saw the most diversified marketplace EnergySage has yet reported, led by Enphase Energy and Tesla. Those two brands represented around a third of all storage systems quoted to customers on the platform last year, though Franklin WH is quickly gaining ground, growing from 1% of quotes to 11% over the course of the year.

Image credit: EnergySage

The rise of residential storage systems aligns with a national decrease in solar prices, the research found, which dropped 3.5% in the second half of last year, returning to 2020 levels. Notably, in California, half of all solar quotes were below the national median price of $2.75 per watt — up from 20% in the first half of the year.

The “sharp increase” is driven by companies “seeking to improve solar economics in the state after the sunset of net metering,” the report concluded.

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