What is Net Metering (NEM)?

Net Metering, also known as NEM, is a concept where a solar power customer benefits from unused energy that is generated from their solar system. Any unused solar energy, from the results of producing more energy than your using, is sent back to the power grid. The power grid stores the excess solar energy produced at a later time. The benefit for customers is that their meter spins back and they gain credit for NEM. The customer is typically compensated for the extra energy their system produced that did not use. The amount for compensation varies per location.

The NEM Process occurs if the amount of electricity produced by the customer’s solar power system exceeds the amount the customer uses. This extra amount of energy is rerouted and exported to the utility’s electric grid. A net meter measures this difference between the energy a customer produces and utilizes to find the net balance. The amount of energy utilized by the customer at the end of a monthly billing cycle determines the amount for compensation.

The benefits of having net metering mainly are ultimately the financial asset return. NEM allows energy-producing customers to manage their energy needs and receive compensation if their production exceeds their electricity needs. As a customer participates in the NEM and surplus energy feeds back into the grid, they remain eligible for any further compensation-based incentives by an electric utility.

Any excess of energy produced is imputed as a credit at the customer’s monthly utility bill. These credits can cover future utility costs as their excess energy is stored in the power grid. Customers can lock in low utility rates throughout the year. NEM allows customers to lock in low utility rates and credits customers for the excess unused electricity that was stored for a later date.

There are a variety of sources to learn more about NEM and compensation from electric utility companies. The current California NEM program, adopted by the California Public Utilities Commission (CPUC) on January 28, 2016, is available to customers of PG&E, SCE, and SDG&E. Contact you current electric utility to learn more about their compensation program with your solar energy system.

UPDATES on NEM – The NEM program is currently shifting into ‘NEM 3.0’ as rules for how solar customers are compensated are updated. The CPUC stated that there will be shifts in the NEM program in the future to make further modifications regarding one-time fees, time-of-use rates, and charges that support public purpose programs. New changes do not affect customers who already had solar.

The value of solar energy provides benefits to the customer and their electricity system as a whole. Act now and save on your upcoming utility bill. The solar process can be confusing but it doesn’t have to be. Visit www.engage.solar to learn more about how to get started.