Net Energy Metering has returned to the public consciousness as California residents search for a way to tamp down their rising energy costs, especially as the summer heat continues to drive AC usage and families are still gathered together under one roof using more energy than usual. Thankfully for those who are looking to make a change to their energy expenses, solar has been booming in California as homeowners take advantage of the numerous incentives for solar in the state, including the expanded investment tax credit introduced in the Inflation Reduction Act. The 30% Solar Tax Credit is an excellent incentive to make the switch now, but those interested in solar may not understand why Net Energy Metering is suddenly back in the conversation, or how it could benefit them as they consider switching to solar. Today, let’s explore the reason that NEM is back in the limelight, and how solar companies can help you make the most of it.
Net Energy Metering is the billing program that allows utility customers to distribute the excess energy generated by their solar system to the grid, and to buy back energy from the grid when needed at a special rate. There are a variety of factors to getting net metering to work to your advantage, and it’s important to account for these in the design of your system.
A reputable solar company will ask about your home’s square footage, energy efficiency and usage, and what your expectations for net metering are. Once your system is designed, the installation will include connection to the grid, setting up your net meter, and ensuring you’re equipped to use it to get the maximum savings from the system.
The value of this program used to be greater, but a policy change last year has reduced some of the day to day value of the program. However, there are ways to make Net Energy Metering work for you, with one specific strategy capable of netting you hundreds or even thousands of dollars in savings if you know how to use it.
Navigating the New NEM
The coming changes to NEM apply to customers of PG&E, SCE, and SDG&E. The main update to note is that the export rates for residential solar energy will change from what customers pay for energy to an “Avoided Cost Calculator,” which is complex and varies by both month and hour.
California’s new NEM agreement is perhaps not as straightforward as the previous system of on- and off-peak, which can make understanding net metering even more confusing. Under the new rules, the average export rate you earn for pushing energy back to the grid is about 75% lower. However, the new rates fluctuate down to the hour. California generates plenty of solar energy, but the problem is not having enough of it to use during evening hours when the panels aren’t producing as much. That’s where solar battery storage comes in.
Net Energy Metering in Practice
As an example, the export rate for the peak demand hours in September can reach as high as $3.32 per kWh. If you choose to install battery storage along with your solar panels, you have the power to choose the time you send power back to the grid, rather than relying on the lower rates you can receive for basic daytime generation and grid transfer.
Indeed, the new structure is a boon for those who install battery storage along with their solar panels. With solar battery storage, owners can save up excess electricity during the day, when export rates are lowest, and push it to the grid during the evening and at night when export rates are exponentially higher. You’ll also have the peace of knowing you’ll have backup power for your home in the event of a power outage.
Beyond that, there is an exciting new strategy you can use to make the most of your energy exports. By primarily structuring your battery for self consumption, you can cover your energy costs during the costly summer and winter months. Then, during the window in the fall when energy exports are worth much much more than they usually are, you can set your system to export mode, netting yourself hundreds or even thousands of dollars. This process is known as energy arbitrage, and with the help of an experienced solar company, you can use it to dramatically reduce your system payback period.
An Advocate for Education
The bottom line is that as solar gets a little more complicated, we’re here to keep it simple. As a premier California solar company, Simply Solar is invested in ensuring our customers get the most beneficial net metering configuration for their budget and expectations. We can help you to establish your own solar system designed from the ground up to handle anything from whole home backup to battery arbitrage, all while lowering your monthly energy bill. Schedule an appointment today to learn more, or see for yourself what your home might look like with solar by using our new modeling tool!
