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Net Energy Metering

Net energy metering is becoming a hot topic in southern California solar.  We get a lot of questions about it here at Precision Solar. Many people don’t understand what net energy metering is, and what it means for them as potential solar customers.  If you’re seriously considering getting solar in 2016 this article is a must read for you!  We’re going to focus on the core of our customers, who reside mostly in SDG&E territory in southern California.  If you live anywhere in California and you’re wondering what all the fuss about net energy metering is, this is a good read for you too.

What is Net Energy Metering?

Net energy metering, often referred to as NEM, is the current arrangement utilities have with solar customers who remain hooked up to the grid.  Since the vast majority of people purchasing solar systems do remain tied to the grid, net energy metering effects nearly all solar customers.

Net energy metering allows solar customers to feed all the extra energy they produce during the day on to the grid. Then at night they are able to pull that energy back, unit for unit, for no additional charge.  NEM also allows you to bank excess energy your solar system produces during the bright summer months, and draw it back during the winter months.  In effect, net energy metering allows you to take advantage of summer’s bright, sunny days to balance out shortfalls in the winter, and effectively zero out your bill for the entire year.

The “net” in net energy metering really means you’re able to use any extra energy you feed to the grid later on.  Net energy metering allows you to use the electrical grid as your own personal battery where you “bank” the extra energy you make.  That “net” also means there’s no additional charge tacked on your bill for using the grid like this.

Net energy metering is great for homeowners with solar.  It gives them a free place to put the energy they don’t need now, so they can use it later.  The flexibility of net energy metering means nothing is wasted, and it’s made solar a great option.  The typical solar system usually pays for itself in 4 to 7 years!  This makes solar one of the best investments a home owner can make.

Net Energy Metering is Coming to an End!

In the last year there’s been a lot of talk about the net energy metering arrangement coming to an end.  In 2013, Assembly bill 327 was passed in California. It put a cap on the current net energy metering arrangement.  The cap is basically 5% of each utility’s total power output. Essentially, once enough customers in a utility’s area havegone solar to equal 5% of the utility’s output, they no longer have to offer net energy metering to future solar customers.  For each utility, this cap is counting down, as people in the know race to get in under the current net energy metering scheme before the cap is reached.  For SDG&E customers the total cap is 617 megawatts, and about 80% of that is already spoken for!

Should you worry about this?  There has been a big scare, and people in the know have been pushing to get their systems installed asap to ensure they will make it in to the current net metering arrangement before the cap is reached.

What you Need to Know

Here are the 4 biggest things you need to know about the future of net energy metering:

  1. As far as SDG&E Customers are concerned, it looks like the cap will not actually be reached until May-June of 2016.  It does take some time from the moment you decide on a solar provider, to when you are scheduled, permitted, installed, and actually hooked up.  Keep in mind, your solar project is not considered eligible for net metering until it is completely finished, and given permission to operate by SDG&E.  It’s a process that can take 1-3 months depending on who you work with.  If you want to be safe and get in on the current net metering structure, you should really be signed up no later than March-April.
  2. Last years scare, to be installed by the end of 2015, was justified when even the experts weren’t sure what the future of net energy metering would be.  The California Public Utilities Commission just released their Proposed Decision (PD) for the future arrangement between California utilities and solar customers.  Some are calling it net energy metering 2.0, or NEM 2.0.  People have been justifiably concerned that the utilities would be able to lobby the CPUC to insure the new arrangement is disastrous for solar, or at the very least, robs solar of some of it’s value. This has already happened in states like Nevada and Arizona. Now that the proposed decision has been released, it looks like a big victory for solar.  Will it be as good as it is now? Maybe not quite, but it honestly does not look bad.  Whether you’ve raced to make it into NEM 1.0, or you’re going to wait for NEM 2.0, solar continues to be a bright option.
  3. The current arrangement is hugely beneficial to those who go solar.  The current net energy metering scheme has helped to make solar a great investment.  It’s also helped to put California in the lead for residential solar panel installation, bringing a much needed boom to our economy.
  4. Those who get systems installed and given permission to operate before the net energy metering cap is reached, and those who already have their systems in place, will be “grand fathered” into the current net metering arrangement for 20 years.
  5. Those who have their systems turned on after the current net metering cap expires, and I’m guessing that’s June for SDG&E customers, will be underneath the new net metering arrangement.

In a future blog I’ll be going over the CPUC’s new proposal for NEM 2.0.  This proposal looks like a big victory for solar. Until next time, thanks for reading and have a great day!


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