Net Energy Metering
When you finally get a solar system, many things change. You generate your own electricity, you gain independence from the utility companies, and you gain security in knowing that you are in control of your own costs of electricity. So you’ve got solar on your roof, now what do you expect will change? Aside from the now increasing pile of money you are saving because you made a smart choice, you also will see a different type of utility bill from your utility company. There is now something on your bill called Net Energy Metering. What exactly is this you ask? Let us explain.
What is it?
Net Energy Metering, or the short form known as NEM? This is a common question we get from customers who just got solar and from customers who are looking to get solar and want to understand the benefits of solar. Simply put NEM is the difference in energy from what your solar system produced and the amount of energy your house consumed. Now before we continue let’s clarify what energy and credits are. In this article, Energy, Credits, and kilowatt hours (kWh) can be used interchangeably. Alright, now that we have that out of the way, let’s continue.
When you have solar installed on your roof, you will produce energy by converting the sun’s rays into usable units of energy (kWh). Your home uses kWh for all of its electrical needs. A 1500 watt microwave uses 1.5kWh per hour, while your refrigerator typically uses around 6 kWh a day. And then of course you have your Heating and Air Conditioning that could use a large portion of energy throughout any given day, (ie: 30kWh per day).
Before you had solar, this usage shows up on your utility bill as number of kWh you used in a month. It’s typical to see anywhere between 720kWh and 2600kWh a month. This changes depending on the size of your home, how many people live in your home and the time of year. When your solar system was installed, you most likely had it sized to cover your entire year’s worth of electricity. So how does that look on your utility bill? This is where NEM comes in.
Since your solar system is designed to produce about 100% of your electricity needs, you can look on your specific solar system app on your smartphone to see what the system has produced per day and month. But that is information that the utility company typically doesn’t see. This is because they care about the units of energy they store for you and sell to you. This is where NEM comes in. The simple equation is this:
Solar Production (kWh) – Home Consumption (kWh) = Net Energy Metered (kWh)
This Net Energy is what matters at the end of 12 month billing cycle. The reason it matters at the end of a 12 month billing cycle is because the typical home with a solar system will have some months where the solar system will produce more energy than the home can consume and then there will be some months where the home will consume more energy than the solar system can produce. An example of this is in a hot dessert where the air conditioning is running a lot in the summer months (ie: consuming a lot of kWh) and the winter months nothing is being needed to cool the house. This is why having a 12 month cycle for totaling the Net Energy is crucial because you are now using the utility company as a bank to help keep your credits transferred effectively back and forth when you need them.
To Sum It Up
NEM is important because you want to use NEM to your advantage. When building a solar system, make sure your solar company understands the rate structure that you deal with after you get solar and how the NEM works between you and your utility company. The top solar companies should have your best interests in mind and understand how to utilize the utility company’s NEM plans to best benefit you (the end customer).
Here at Solar Brothers, we make sure we understand who you are, what your goal is, and we work with you to accomplish that goal when you get solar with us. Understanding how to work with your utility company and how to best guide you is part of our everyday process. Whether you are looking for the first time or have done years of research, Solar Brothers is here to help you gain independence with your very own solar system.