With the cost of energy rising and many of the natural resources that provide that energy dwindling, many homeowners are seeking alternative energy sources. One increasingly popular option is solar power.
Utilizing one of the most abundant natural energy sources of all, the sun, solar energy can be used to power your home or business, while rendering you energy independent.
In the state of California, customers that install solar, wind, and other onsite power production production facilities, are eligible for the state’s net energy metering program. Net energy metering, or NEM, is the means by which residential and commercial customers who generate their own electricity from solar power can “sell” the energy they don’t use back into the mainstream grid.
When we refer to “selling energy” it is not in terms of being paid money for the energy, but rather the ability to earn credits that can be offset against the electricity bill you receive from your utility company.
NEM is effectively, a special billing arrangement whereby customers with solar systems installed on their rooftops are able to be credited at full retail value for the energy they produce. NEM is the means by which customers earn a return on their investment in terms of solar power. It is NEM that makes it possible for solar customers to drive their bills down to zero.
How Net Energy Metering Works
The actual process of NEM involves using a single, bidirectional meter that spins forward to track the electricity a seller takes from the grid and spins backwards to meter excess energy a solar user produces. At the end of the month, if you’ve used more electricity than you’ve produced, you’ll owe your utility provider for that power.
However, if at the end of the month, you’ve produced more energy than you’ve drawn from the grid, you’ll owe nothing. In fact, your power provider could end up owing you money.
The Annual True-up
One advantage to the current system for net energy metering is that you only have to consider your electric bill once per year. Residential or smaller commercial customers who opt into net energy metering settle their energy bill once annually. This once-per-year “true-up” tallies all the energy a customer has consumed over the past year and measures it against all the energy their solar panels have produced that year.
At the end of the 12-month billing cycle customers “true-up” and the energy credits that have accrued, according to their NEM statement, will be measured against the amount owed in their annual energy bill.
Who is Eligible for Net Energy Metering?
As of March 31, 2015, there are 337,374 residential and commercial accounts enrolled in California’s net energy metering program. To be eligible for NEM, you must be a retail customer of an electric utility in California and generate some or all of your energy from solar or wind power.
Once you have had your solar system installed you must apply for and receive approval from your utility company in order to have your solar system integrated with the electricity grid. If you are already using a solar system to generate power, simply contact your energy provider and request a NEM application.
Net Energy Metering Under Fire
Currently net energy metering as we know it in California and other states could be in jeopardy. Solar energy proponents fear that proposed solar rate hikes from utility companies like PG&E in California could eliminate the bill credits by which rooftop solar customers are credited at full retail rate for the energy they produce.
“To me this is highly disappointing that the utilities would come out with this type of proposal,” said Lyndon Rive, CEO of solar panel installation company, SolarCity. “They know as well as we do that their proposal would kill the industry.”
Rive, like others, has also pointed out the potential contradictions in a state like California, with its aggressive agenda for reducing greenhouse gases, doing anything that could potentially undermine the broader adoption of a sustainable energy source like solar.
The fear amongst solar power proponents like Rive is that without net energy metering, residential customers could be less inclined to go solar. While the current program for net energy metering is set to end some time in 2016-17, solar power proponents like Rive are urging California to keep the current system in place until 2020.
If you’d like to find out how installing solar panels on your roof can help you drive your electric bill down to zero, contact us today for a free quote.