NEM, known as Net Metering Energy is one of the primary incentives for solar. Utility companies that commission (PTO) a solar system are mandated by California State to enroll the property owner into a NEM program. California Public Utility Commission (CPUC) utility customers which include SCE, PG&E, and SDG&E will deduct from the bill energy that’s exported back to the grid from daytime solar generation that exceeds the electrical demand of the property, in return crediting the customer for earning a surplus of kWh energy. The credit will be applied to the bill to offset any demand that was delivered to home during evening hours when solar is not producing energy.
A solar system installation includes what’s called a “smart” meter which is a bi-directional meter that tracks energy being sent to the property and energy that is being delivered to the utility. Under NEM 1.0, a solar customer will continue to receive monthly bills, but only for charges like taxes and fees. On an annual basis, which SCE has termed as a “Relevancy Period”, customers will only be billed for electricity based on their net use for that previous year. The difference at the end of the year can either be a surplus of energy credits or a balance to pay. Customers who already have NEM 1.0 will be allowed to continue with NEM 1.0 for up to 20 years. After 20 years, they will be transitioned to a successor program.
Once NEM 1.0 expires on June 30th, 2017 @ 11:59pm or if the kW cap is not met, the solar application will be automatically transferred to the NEM 2.0. We encourage all CPUC utility customers to get their applications submitted prior to the deadline, if they choose to go with NEM 1.0. This means not waiting last minute. Unlike NEM 1.0 which had no fee, NEM 2.0 will require an interconnection fee of $75 for systems less than 1MW in size. For larger systems over 1MW, the fee is $800.
One of the biggest changes from NEM 1.0 to NEM 2.0 is the mandatory switch to a Time Of Use (TOU) plan. With TOU, the cost per/kWh is based on off-peak, low-peak, and low-peak period of the day and the season. Afternoon hours are considered a high peak, morning low peak, and nights and weekends off-peak. You can learn more about the various TOU rate options available to you here.
Grandfathering of TOU and NEM are two separate benefits. For example, if a resident submits their application on July 1st, 2017 the TOU grandfathering will run through July 1st, 2022 (5 years). The NEM 2.0 grandfathering will run through July 1st. 2022 (20 years).
What if you’re an existing NEM 1.0 customer and you want to expand your generating system? If your system expansion doesn’t exceed the greater of 1kW or 10% of the original interconnected capacity your entire generating system including the expansion can stay on NEM 1.0. If the expansion is greater than 1kW or 10% then the entire generating system will be treated as NEM 2.0.
If you’re planning to go solar before July 2017, we highly encourage you to contact us so we can prepare and submit the application for interconnection before the deadline.
Robert Sarai is the Business Development Manager at LA Solar Group with over 7 years in the real estate industry. He helps property owners discover solar power and assists with their energy goals. He can be contacted directly at 818-946-2320.Linkedin