Net Energy Metering

What is Net Energy Metering?

Net Energy Metering (NEM) is simply the billing process a homeowner’s utility uses when solar or another renewable energy source is added to their home or business.

Net Energy Metering allows utility customers who generate electricity, to use the electricity anytime, and not necessarily when it is generated. This means that a home or business can use the power generated during the day from a solar panel system and get kWh (kilowatt hour) credits to be used at night or any other time they may need it. Credits are totaled each month by the utility. This means that the credits generated in low usage months may be used in higher usage months. For example, if a home produces an excess 500 kWhs during the month of February, then in June, if the home consumes an excess 500 kWhs, the net metering billing process allows that person to use the credit and have an overall usage of ZERO kWh for the month.

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How Net Energy Metering Works

net energy metering explained

Net Energy Metering is performed on a 12-month billing cycle and there is an annual true-up. Your annual true-up bill depends on when your net metering cycle begins and ends. Typically, the utility will send a statement each month with a projected total if the 12-month cycle ended at that month. These statements will show you how much energy is consumed and how much energy is generated. The amount generated will be subtracted from the amount consumed and that will be your net consumption or generation for that month.

Your utility company determines which Net Metering agreement you fall under. For this blog we’ll focus on the three big public utility companies. SCE (SoCal Edison), PG&E (Pacific Gas & Electric) and SDG&E (San Diego Gas & Electric) in California.

The CPUC (California Public Utility Commission) has ruled that these utilities have the right to move to Net Metering 2.0 once a 5% cap is reached. This means that 5% of the overall power is being generated by solar within that specific utility.

What's the Difference?

What is the difference between net metering 1.0 and net metering 2.0? Net Metering 2.0 will require a grid connection fee ranging from $75-$150. This will be a one-time fee to become a net metering customer. Many solar companies are including this fee in the project cost to make it seamless to customers. NEM 2.0 will require customers to possibly pay transmission charges from $10-$20 per month depending on the territory. They will also be required to pay non-bypassable charges for the power consumed on the grid, averaging between $0.02 - $0.03 per kilowatt hour. Probably the biggest change to NEM 2.0 from 1.0 is the move to Time of Use (TOU) billing. Net metering 2.0 customers will be forced to go to TOU billing which means a higher cost of power during the day and a lower rate at night. For most solar customers, this is ok because the solar generates the most electricity during most expensive rates and, thus,  is offsetting all the higher rate energy during the day. However, in very hot climates, where the major source of power consumption is air conditioning during the day, the solar may not be able to provide all the energy needed, so the excess energy will be bought from the utility at that rate.

The good news is if you live in SCE or PG&E territory you still have time to get Net Metering 1.0. Based on current projection SCE will be reaching the 5% CAP early in 2017. PG&E is a little farther out and not until later in 2017. Either way, there’s no time to waste as solar is not installed in a day. It typically takes 2-3 months from when a contract is signed to get the solar installed, due to permitting review by the jurisdiction. It is imperative that you get started immediately to ensure you’re part of Net Metering 1.0. Once you’re accepted in the Net Metering program, you’re in for 20 years!

"Buy low" and "Sell High"

Well designed solar facilities coupled with the Net Energy Metering policy allows you to "buy low" and "sell high". Don’t waste another minute and call us to find out how you can save money by going solar and get in on Net Energy Metering. Act today, so you can also take advantage of the 30% tax credit while it is still available!