Net Metering

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NEM Questions & Answers

California’s Net Metering Program

What Is Net Energy Metering?

Net Energy Metering, or NEM, is an agreement between solar customers and their utility company. In San Diego, all customers who install solar enter into this agreement with SDG&E. NEM allows customers to draw electricity from the utility when they are consuming more than their solar panel system is producing (at night or on cloudy days) and send electricity to the utility when their system produces more than they are consuming.

How Does NEM Work?

Customers who produce electricity with their solar panel system enter into an annual billing cycle with SDG&E under the NEM agreement. Each month, SDG&E will track how much electricity is sent back to the utility and drawn from the utility through their smart meter. Customers will get a statement at the end of each month showing their balance of energy sent and received. At the end of the annual billing cycle customers will receive a True-Up bill with the final balance. Depending on how a system is designed, customers can achieve net-zero energy (which is when the system produces enough energy to offset your consumption completely) and only pay SDG&E minimum monthly bill of $10 per month.

Which Rate Structure Is Best For Solar?

While the answer depends on your specific situation, most solar homeowners benefit from switching to the DR-SES rate structure. By default, almost all residential SDG&E customers are on the DR schedule (tiered rate structure). By switching to a time-of-use schedule, most SDG&E customers with solar see better savings under the Net Metering agreement. On a time-of-use schedule, SDG&E is required to credit you at a higher rate for energy sent during the middle of the day. When you draw that energy off at night, SDG&E will charge a lower rate. Several other rate structures exist for owners of electric vehicles, and may bring you even more value for the electricity you produce.

Can I Make Money Selling Electricity To SDG&E?

If a solar customer produces more energy than they consume over the year, the annual True-Up bill will provide a credit of about $0.04/kWh. However, this actually ends up leaving the typical residential or small-medium commercial solar customer selling electricity at a loss to SDG&E. Energy production of a solar PV system tends to cost the customer at least $0.06/kWh (when calculating total system cost versus production over the typical 25-year warranty period). While Net Energy Metering provides great value for customers to offset their own consumption, it is modeled to prevent every homeowner in San Diego from becoming a mini solar farm.

NEM 2.0 (NEM-ST)

On June 29, 2016 SDG&E reached the cap for the original NEM rules. Customers that installed solar systems before that day will continue to operate under the original NEM rules for a period of 20 years from their installation date. Customers that install solar systems after that day will connect under the NEM Successor Tariff (NEM-ST) rules commonly known as NEM 2.0. The differences are very minor:

  • There will be a NEM 2.0 enrollment fee of $132. But don’t worry, Solare Energy will take care of this fee for customers.
  • Non-Bypassable Charges (NBCs) can no longer be offset by solar systems. However, NBCs are only a small fraction of electricity rates (about $0.02/kWh out of average rates of about $0.30/kWh) and would only apply to electricity sent back to the utility. For most NEM 2.0 customers, this means their bills will be the same or $5/month higher than under the original rules.
  • Customers going solar after June 2017 will be put on a mandatory Time of Use (TOU) Rate Plan. However, here at Solare Energy, we put most customers on a TOU rate plan that increases their savings

Net Metering Explained

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SDGE Net Metering Changes