January 26, 2021

Net Energy Metering: A Solar Incentive For Homeowners

You may know about the solar tax credit, you may know that solar energy increases the equity of your home, but have you ever heard of Net Energy Metering? Net Energy Metering, or NEM for short, is a program that adds additional value to any solar installation.

With the help of programs like Net Energy Metering, homeowners have the ability to sell the excess energy generated by their solar system back into the energy grid. In turn, other homeowners and businesses can use this power. As the system owner, you'll be able to benefit from this export process, and pay off your system at a much faster rate than ever before!

How Net Energy Metering Works

When you decide to install solar for your home or business, you are essentially entering an agreement with the utility grid provider. In Northern California's case, that utility is PG&E. The solar system tied to your utility meter tracks the power generated from your solar panel system. The power that you don’t use is then exported back into the power grid, and the utility compensates you for this exchange with financial credits on your electricity bill. At other times of the day, when your system is generating less power than needed, you can “buy back” the additional energy your home needs at cheaper market rates.

“When your solar power system generates more electricity than you use over the course of a month, your utility bill will receive a credit based on the net number of kilowatt-hours you gave back to the grid. If you produce less electricity than you use in a given month, you must buy electricity from your utility to make up the difference. In these instances, you would pay for the electricity you use, minus any excess electricity your solar panels generated.” -Energy Sage

The Net Energy Metering program has helped homeowners combat the Time of Use cost spike, by feeding back the energy they have sold to the grid at a lower rate utilizing their “energy credits”.

What Is Net Energy Metering

What is Time of Use?

Peak times of use in California currently range from around 4:00PM to 9:00PM. What this means is the cost of power from PG&E during this window of time is actually more expensive than it is during other parts of the day. This is traditionally the time of day when families are returning from work or school, and winding down with their various appliances. This widespread usage leads to spikes in grid reliance, and as a result the utility charges more for power utilized in this time.

The utility company needs residential excess power so that it can transfer that excess energy to help keep high-demand commercial properties operational all across America. 

With programs like Net Energy Metering, you can benefit and pay back your solar system that much faster. However, utilities are not in favor of the value this program provides, so there has been much talk around producing a new Net Energy Metering agreement to reduce the return on investment of solar. We advise our customers to take advantage of NEM and get their solar systems up and running as soon as possible, in order to be grandfathered in to the current agreement.

Reach out to our expert solar consultants today to learn more about solar programs like Net Energy Metering and take advantage of the extra savings!

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