Net Energy Metering (NEM) 2.0

We’re committed to remaining a leader in carbon reduction and have supported our customers in adopting rooftop solar for many years. We’ve also invested in utility-scale renewable energy, including solar, and provided important support to the solar industry.

As a result, there’s more than 210 MW of customer-owned rooftop solar in our service area.

We’ve started a public stakeholder process to look at Net Energy Metering (NEM). This process will help us develop a new NEM rate.

The process begins in October 2019 and includes:

  • Engaging with the solar industry, stakeholders and the community.
    • October – January 2020: Technical Working Group sessions to provide input on the components of a study on the value of solar and solar-plus-storage.
    • 2020: Independent third party to conduct value of solar and value of solar-plus-storage studies.
    • Fall 2020: Broader outreach to customer and community stakeholders.
  • Analyzing the costs and benefits related to customer-owned self-generation systems.
  • Addressing issues related to solar energy to support the state’s and SMUD’s carbon reduction goals and provide customer choice in a way that’s financially sustainable over the long term.

Once we complete the public stakeholder process, we will develop a NEM rate structure that’s as fair and equitable as possible to all customers. Rate options will be presented to the SMUD Board of Directors for their vote in mid-2021. The new NEM policies and rates would be effective as early as 2022.


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  • A critical part of the process is to conduct a detailed study of the value of solar and solar-plus-storage. We recognize there are many views on how to approach valuing solar energy and solar-plus-storage.
  • We’ve invited technical experts representing a diverse range of views to form a Technical Working Group to provide input on the components to consider in the valuation study.
  • The Technical Working Group will meet several times between mid-October and January 2020.
  • We’ll engage an independent third party to conduct the valuation study, which we expect to be complete in mid-2020.
  • We’ll begin broader outreach to our customers and community stakeholders once the valuation study is complete.
  • The Technical Working Group, valuation study and customer and community feedback will inform our proposal for a new NEM rate and related policies and programs.
  • Once we complete the public stakeholder process, we will develop and present new NEM rate options to the SMUD Board of Directors for their vote in mid-2021. 
  • The new NEM policies and rates would be effective in 2022.

Throughout this process, the following guiding principles will be followed:

  • Our customers and the needs of our community are at the core of every decision we make.
  • We’re committed to providing the community safe, reliable and environmentally responsible power at among the lowest rates in California.
  • We’re committed to remaining an environmental leader and being 100% net-zero carbon by 2040.
  • We meet today’s needs while continually balancing plans for tomorrow.
  • We are responsive and accountable.
  • We will make timely, accurate information about NEM available to our customers.
  • We will communicate directly with NEM stakeholders and interested parties.
  • We respect that many customers, employees, elected officials and other NEM stakeholders are interested in NEM and would like to know how SMUD is approaching the situation and what decisions are being made.
  • SMUD’s actions must always be consistent with our words.


SMUD’s current rates and compensation for customers who install rooftop solar follow the California Public Utilities Code named “NEM 1.0,” which include paying customers full retail rates for excess generation.

Established in 1996 to encourage the adoption of solar, NEM 1.0 was required to remain in place until total NEM generation capacity reached 5% of SMUD’s peak load. SMUD met the 5% threshold in 2017 and can now adopt a new NEM rate.

SMUD has provided safe, reliable and affordable power to our customers and community for over 70 years. As a community-owned, not-for-profit utility, it’s our obligation to deliver responsible, financially sound and environmentally progressive solutions that provide value to all our customers and community.

We appreciate your interest in this process and look forward to working together with stakeholders to find a solution that’s fair and equitable for everyone.

Final technical working group report

January 30, 2020


January 9, 2020

Meeting minutes


December 12, 2019

Meeting minutes


November 21, 2019

Meeting minutes


November 7, 2019

Meeting minutes


October 18, 2019

Meeting minutes


Back in December 2019, SMUD sent out a Request for Qualifications (RFQ) for companies to submit their qualifications for SMUD's upcoming Value of Solar and Value of Solar + Storage study. SMUD received 11 qualification packages, of which, 6 vendors were invited to submit bids to a Request for Proposal in February 2020. Of the 6 companies invited to bid, only 5 companies submitted proposals. E3 was selected as the successful bidder out of those 5 companies for the following reasons:

  • E3’s bid scored the highest on their technical qualifications and overall bid package.
  • E3 has the highest percentage of SEED (local subcontractor) of all bids submitted.
  • E3 submitted the lowest priced bid.

If you’re not familiar with E3’s experience in Value of Solar and related studies, it is quite expansive.  Please see the below abbreviated list of related work that E3 has performed in this area, including the work for the California Public Utility Commission (CPUC) and California Independent System Operator (CAISO):

  • California Public Utilities Commission (CPUC) Net Energy Metering Successor Tariff Development (NEM 3.0) (2020-ongoing).
  • California Public Utilities Commission (CPUC) Net Energy Metering Successor Tariff Development (NEM 2.0) (2014 – 2015).
  • California Independent System Operator, Extended Day-Ahead Market (EDAM) Feasibility Assessment (2019).
  • California Public Utilities Commission, Avoided Costs (2004 – Present).
  • California Public Utilities Commission Integrated Resource Plan (2018-ongoing).
  • California Self-Generation Incentive Program (SGIP) Advanced Energy Storage Impact Evaluation (2016 – Present).
  • Oregon Resource Value of Solar (2016 – 2018).
  • Nevada Net Energy Metering Update (2016).
  • California Public Utilities Commission, Net Energy Metering Cost-Effectiveness Evaluation (2010) and Net Energy Metering Ratepayer Impacts Evaluation (2013).
  • New York Value of Distributed Energy Resources Proceeding Support (2016 – Present).
  • Full Value Tariff Design and Retail Rate Choices Under New York’s Reforming the Energy Vision (2015 – 2016).
  • South Carolina Office of Regulatory Staff, Net Energy Metering Policy Choices (2014 – 2018).
  • South Carolina Office of Regulatory Staff, Avoided Costs and Value of Solar (2017 – present).
  • The Benefits and Costs of Net Energy Metering in New York (2014 – 2015).
  • NYSERDA Benefit-Cost Analysis Framework for Distributed Solar in New York (2014).
  • PG&E Storage Strategy (2016).
  • Joint California Utility Local Net Benefits Analysis (LNBA) Tool (2016-2017).
  • Cost and Emissions Impacts of Residential Building Electrification in California, Three-Utility Study (2019).
  • University of California Office of the President and Southern California Edison, Clean Energy Optimization Pilot in Support of Zero Net Carbon Goals (2017-Present).
  • New York Power Authority (NYPA), DER Analysis for Project EDGE (2017 – 2018). Investigating the Economic Value of Flexible Solar Power Plant Operation (2018).
  • Cost of Service Study and Rate Design for Umatilla Electric Cooperative (2007 – 2015).
  • Hawaii Electric Light Company (HELCO) Residential Rate Design (2006 – 2007).
  • Over the next several months, SMUD will be working with E3 to perform the Value of Solar and Value of Solar + Storage based on the Technical Working Group's 26 recommendations . To ensure we have a clear and transparent process, a final report from E3 will be posted on this site once the study is complete.

June 2020 update

  • March 13, 2020 – Study kickoff.
  • E3 is analyzing SMUD data using their models* to calculate costs and benefits of the following:
    • Configuration for Solar only
    • Configuration for Solar + storage responding to Time-of-Day rates
    • Configuration for Solar + storage dispatching based on SMUD’s avoided costs.
    • Calculation of many of the 26 value components identified and agreed to by the Technical Working Group.
  • GridSME (local subcontractor to E3) will round out the analysis of the remaining 26 value components, focusing more specifically on load flow analysis and take the lead on several of the specific transmission and distribution value components.
  • August 2020 – Anticipated study completion date.
* Used extensively for other NEM studies including the ongoing CPUC Net Metering Successor Tariff Development (NEM 3.0), and value of solar studies in Oregon, Nevada and New York.

Stay informed

We'll occasionally send out updates on the public stakeholder process, including community meeting dates and when NEM will be discussed by our Board of Directors. To receive these updates, please submit the form below.