If you are reading this article, chances are you’re considering solar for your home and are trying to understand how changes to net metering will impact your solar savings.
What is net metering?
Net metering is a system that allows solar customers (as well as users of other renewable energy systems like wind turbines, for example) to receive credits on their electric bill for any excess energy their solar systems produce. These credits can then be used to offset electricity purchased from the utility at night or on cloudy/rainy days. Excess summer production can be applied to winter consumption where the solar panels will be less efficient. This arrangement is what makes solar panels economically feasible for homeowners without the use of batteries (themselves a large expense that negatively impacts ROI).
How is net metering 2.0 different from net metering 1.0?
Net metering 1.0 was very straightforward. For every excess kilowatt hour your solar panels produced, you received a kilowatt hour credit on your bill. It was a straight 1-for-1 exchange. Net metering 2.0 includes some changes, but keeps solar economical by preserving credits at the retail rate. The primary difference here is that under the old plan, you got a kWh for each extra you fed back to the grid while under the new plan, you are credited at the retail rate at the time you generated the credit (more on this below).
Here is a high-level overview of the differences:
In addition to this change, net metering 2.0 includes three other revisions:
- Interconnection Fees – new solar systems must now pay a one-time fee to connect to the grid.
- Southern California Edison (SCE) – $75
- San Diego Gas & Electric (SDGE) – $132
- Pacific Gas & Electric (PG&E) – $145
- Non-bypassable Charges – Known as NBCs for short are per kWh charges that are built into electric rates. While not a lot ($0.02 – $0.03/kWh), they fund programs that encourage energy efficiency, subsidized rates for low rate payers, etc. For solar customers, NBCs will be applied to all kWh’s purchased from the utility and cannot be offset with solar credits.
- Time of Use (TOU) – The name pretty much says it all. Electricity will be billed at different rates depending upon the time you use it. It is most expensive in the late afternoon and early evening during peak summertime hours where air conditioners are blasting and least expensive at night, on weekends, and during the winter when overall consumption is lower. Customers with west facing roofs (which produce the most solar electricity during peak times) will see the greatest benefit under time of use along with those who adjust their electricity use off hours to maximize credit capture during high demand times.
If my solar system is currently under NEM 1.0, will I be forced to go to NEM 2.0?
No, you will be grandfathered under your original agreement for 20 years from your PTO (permission to operate) date – e.g. the date you were authorized to activate your solar panels for the first time.
Will my solar savings be better or worse under NEM 2.0?
The good news is that solar is still economically viable under the new program. If you missed NEM 1.0 and have a high electric bill, a solar energy system will still provide a good return on your investment and save you money on your bill, whether those savings are as good as NEM 1.0 are irrelevant since that program is now closed. The current NEM 2.0 is set to expire in 2019 (earlier if the Cap is met), and we can be certain that NEM 3.0 will probably not be as lucrative as NEM 2.0, so if past is prologue, you’d be best served to get grandfathered for 20 years under net metering 2.0 while it’s still available.
At Flex Advisers, we can demonstrate the long-term savings of a solar system for your home under net metering 2.0. Contact us today and let us put solar to work for you.