September 15, 2022

Net Energy Metering

Update: The Fight for NEM 2

Net Energy Metering as we know it is currently the second iteration of the agreement, known by many as NEM 2.0. This agreement has allowed California's solar market to flourish, and as a result thousands of households have been able to access and benefit from rooftop solar. These installations directly contribute to the green energy goals of the state, and have established California as a paragon of clean energy. Given the success of the program, it would make sense to continue leveraging a pro-consumer agreement like NEM 2.0 to continue to incentivize solar adoption, but there are some who would like to see this agreement changed.

Namely, utilities would prefer not to compensate consumers as generously for their solar generation, and have essentially proposed a solar tax through their intention to reform the Net Energy Metering agreement. The 3.0 version of this agreement would constitute an undermining of the solar incentive system, and go directly against the stated clean energy goals that California has established for itself. Simply Solar stands strongly against such a change, as we believe that the current agreement, NEM 2.0, is better for the energy adopters who have taken action to support the state in its laudable goals. To change the agreement on them would be a disservice to the very people who are trying to create a brighter future.

A decision on the proposed update to the agreement is expected no later than September 29th, so stay tuned as we continue to monitor the situation.

What is Net Energy Metering?

Net Energy Metering, or NEM, all depends on how much energy your system generates and how much you use on a daily, monthly, and annual basis. When solar systems generate more power than your home needs to operate, the excess energy is sent back into the grid. When more energy is needed than produced, energy from the grid gets fed back into your home as per usual. So, depending on how much electricity your system produces and how much you use, you may end up with either a credit or a charge.

Additionally, if you are part of a ‘time of use’ program, you can export excess energy back to the grid when rates are higher, and consequently use electricity from the grid when rates are lower- such as after the sun has set. When on a time of use plan, you may receive a credit for the month even if you use more than exported. The credits you receive rollover to compensate for the charges you receive in other months.

When your household is a part of NEM, your electric meter keeps track of the amount of electricity you consume, as well as any excess energy you've sent back to the grid. Every month, your utility company will send you a NEM statement letting you know what your charge or credit is for the month. Then, after a 12-month period, you will receive a ‘true-up’ bill, which is a statement covering the past 12-month period. Because of NEM, you are only required to pay for the net amount of electricity used from the grid.

The Benefits of Net Energy Metering

NEM is one of the primary incentives for customers who want to make the switch to solar, on top of the reduced energy bills, enhanced security against grid instability, and of course the increase in property value. The NEM 2.0 agreement allows users to:

  • Eliminate their energy bills
  • Provide credits to their accounts at full retail rates
  • Record performance data for energy generated and consumed

Kinds of Metering

Most homes have bidirectional meters, which are able to send and receive energy, and monitor the amount of energy that is transmitted or received. These meters are most commonly referred to as ‘non-time of use meters’ because they are only capable of recording how much electricity was used, not the time of use. Since these meters do not account for the time of use (TOU), some utility companies will insist that you have two meters in order to be eligible for net energy metering.

Additionally, there is another type of meter commonly referred to as a ‘time of use meter’ which is much more sophisticated. This kind of meter is able to record when electricity is used, allowing utility companies to charge different rates at different times.

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