What is Net Energy Metering (NEM)?

(Last modified on January 26th, 2022.)

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Net Energy Metering solar production and electricity consumption

When a grid-tied home gets solarized, the utility company in the pertaining jurisdiction needs to be notified of the change. This is done through an application called an interconnection agreement that when processed and approved by the utility, results in the solar home having Net Energy Metering.

While the sun is shining and the panels are producing, the solar will feed any electricity consumption in real time. Electricity produced when there isn’t any consumption, like during the day when you’re at work, will be back-feeding the house meter. Without Net Energy Metering, you wouldn’t be able to receive credits for this excess energy.

Because consumption and solar production generally vary (we produce less solar energy in the winter and consume more in the summer), Net Energy Metering helps solar homes attain a happy medium between the two. The credits a property accumulates for excess solar production can be applied to these higher consumption periods.

NEM Billing

NEM also allows you to choose between two different types of billing. As a solar customer you can choose to receive a yearly “true-up” bill that shows your total consumption and total solar production for the year. If you produced more solar than you consumed electricity, you can choose to roll over your NEM credits to the next year or have your utility company buy them from you. The rate at which utilities buy energy back from solar customers differs by utility, however it is generally at a lower rate than what consumers pay.

Your second option is to continue receiving monthly bills and if you consumed more energy than the solar produced, you’re responsible for paying the difference on a monthly basis.

Battery Back-Up Installation NEM

Solar installations with battery backup can also receive NEM. In this case, excess solar energy first charges the battery and then back-feeds to the grid. The application differs in that it’s more lengthy, has a longer processing time and stipulates that the battery cannot be charged from the grid (utility).

Off-Grid Solar

Off-grid solar does not need NEM since it isn’t connected to the utility grid. The excess solar production in off-grid installations charges the batteries and is then managed by a charge controller.

For more information on Net Energy Metering, solar or battery back-up installations, feel free to contact us or give us a call at (805) 965-9292.

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