What Exactly is Net Energy Metering (NEM?)

Author profile image for Nate Lewis, Chief Revenue Officer
  • Nate Lewis
  • Chief Revenue Officer

The owner of a solar system is an energy generator, and will produce more or less electricity than he/she will use at a given time. The system only generates power during daylight hours, making the customer rely on additional power from the utility when the system is not producing.  

Solar owners may be wondering, “Who monitors the energy generated and the energy consumed?” and “Who calculates the costs in the difference?”

What is Net Energy Metering and How Does It Work?

Net Energy Metering is a billing arrangement made between the owner of the solar system and the utility company.  Under the Net Energy Metering Agreement, the utility for each customer will monitor the amount of electricity consumed from or supplied to the grid and will send you a statement summarizing that data each month.

Each month you will either owe the utility or the utility will owe you. This debt or credit is reconciled annually (every 12 months) at which time you will need to pay if you have a balance owed. 

Customers who have generated net surplus energy after that 12-month billing period will be given a value for the excess kWh at a special rate. Solar customers then have options on how they would like to be compensated, including a payout or rolling-over the credit to the following billing cycle. However, the rate at which customers are paid is likely much less than the retail cost of electricity, so for most consumers it makes sense to keep it on their bill as a credit in case more energy is used the following year than you produce.

If you are purchasing a solar system in the Coachella Valley, Renova Energy can provide you with an estimate, explain how net metering works, and how it will affect your overall costs!

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