Solar Net Energy Metering Explained (NEM)
Solar 101 Learning Series with Intern Liz
Hello! For the next few weeks I will be going over some of the solar topics that I’ve learned as an intern.
This week, I will go over Net Energy Metering (NEM), what it is, how it affects you, and what’s the current situation on it.
First, I will explain my take on it, then I’ll go over what I found while doing research.
NEM is a way to pay back solar owners for the energy that they do not use. Here’s how this works:
- Solar is connected to the local energy grid.
- The energy that the solar on a house produces goes into the grid.
- The solar energy produced will either cover what the house uses and they’ll have a surplus, or they’ll use more than they produced and have to use energy from the utility company.
- If they produce a surplus, the utility company can sell what they gain.
- They then will pay the solar owner for their energy that was provided, because of NEM.
For this information, I used multiple sources; 3 articles and 4 videos. The newest version of the NEM program is called, “NEM 2.0”.
- PG&E, SCE, and SDG&E customers are eligible.
- After 5% of the utility customers have gone solar, the utility company switched from NEM 1.0 to NEM 2.0
- California Municipal Utilities like SMUD follow their own NEM rules.
- It covers all forms of clean energy, along with fuel cells. (see more details in the CPUC’s article)
- This allows the producers of the energy to get paid (at retail rate in bill credits) for their surplus produced, if the system is under 1 MW.
- These retail rates go off of the “peak” and “off-peak” system.
- You’re charged on a yearly basis, rather than a monthly bases.
- There are some set charges involved; a non-bypassable charge that’s fixed for each kWh, and a one-time inter-connection fee.
- The surplus is added up and tacked onto your bill as a credit, rather than a charge.
- You use these credits when you are taking energy from the utility company.
- If you start NEM 2.0 now, you won’t lose your benefits for 20 years because of grandfathering.
- The next NEM bill (NEM 3.0) will most likely decrease the benefits for homeowners.
- There are 4 other programs that get more specialized for certain situations.
How NEM Works
- Your solar energy goes back to the utility company
- They sell it at retail rates
- What they sell gets put on your bill as a credit
- After one year the difference is calculated, you either pay for what you ended up taking or not paying.
Heard of AB 1139? It tried to take away NEM! Utility companies were trying to gain EVEN MORE profit by not paying back the owners putting energy into the grid. Fortunately, it was not successful.
Harry from SEG showing our support at the Capitol!
Overall, I feel that I had a pretty good understanding of NEM based off of what Harry from SEG taught me; NEM pays you back for your clean energy that you provide for other homes to use.
What I Learned
- It’s not just solar that qualifies, which is awesome!
- There are other charges involved
- There’s other specialized programs within this one.
- The solar owner gets paid through the energy bill, not other forms such as checks.
I hope that I got to teach you guys something new! If you have further comments feel free to let us know on our Facebook page, this article will be posted on there :)
I’d love to hear if there’s any information I missed, or what you guys think about AB 1139.