The original policy for net metering in California is very simple: for every kilowatt-hour (kWh) of solar electricity you feed into the grid, you get a bill credit for one kWh of utility-generated electricity. When your solar panels produce more than you need, you “bank” the excess to use when your panels don’t produce enough to meet your monthly use. If your system is the right size, net metering makes it possible for you to cover your electricity use for the entire year with solar.

Net Metering 2.0 makes a few minor changes to California’s original net metering policy, but it preserves the key element that makes solar economical for California residents: retail rate bill credits. Homeowners and businesses that enroll in NEM 2.0 will still receive per-kWh credits for their solar electricity that are equal to the value of a kWh of utility electricity. This means that the economics of solar are still very favorable under NEM 2.0.

In addition to preserving retail rate bill credits, the new California net metering program also prohibits many fixed charges for residential customers, including demand charges, grid access charges, installed capacity fees, and standby fees. NEM 2.0 will run until 2019, at which point the CPUC will look at establishing a new program that is designed to account for the benefits of solar in different locations and at different times.

There are three main differences between the original California net metering policy and Net Metering 2.0: time-of-use rates, interconnection fees, and non-by-passable charges. The California Solar Energy Industries Association (CalSEIA) estimates that the combined impact of these changes will be approximately $10/month compared to the original policy.