In our last post, we explored the pros and cons of buying your solar panels instead of renting. Buying a solar panel system allows you to save even more money on your power bill than you would by leasing. And some of these additional savings come from a practice known as net energy metering, or NEM.

What Is Net Energy Metering?

Net energy metering refers to a mutually beneficial arrangement between utility companies and customers who own solar panel systems. In California, solar customers receive bill credits for the full retail value of the excess electricity their systems generate. In addition, under net energy metering regulations, customers with solar panel systems are exempt from certain fees, including costs associated with interconnection application fees, studies, and distribution upgrades.

Why Does Net Energy Metering Matter?

While your solar system produces energy constantly throughout the day, your energy needs vary. During the day, when the whole family is away at school or at the office, your home may be using less energy than the solar panel system produces. But in the evening, when all the lights are on and TVs and computers are humming, it’s a different story. And of course, your solar energy system relies on sunlight, so it can’t generate power at night.

Net energy metering allows you to switch—seamlessly and instantaneously—from the power produced by your own solar system to power produced by the utility company.

Here’s the really cool part: when your system is producing more energy that you’re using, the excess energy gets sent back to the grid, and your utility meter actually runs backwards!

You’ll get a statement of your energy use each month so you can see exactly how much energy your solar panel system is generating, and how much (if any) you’re still purchasing from the utility grid.

Your energy credits roll over from month to month, giving you a cushion against periods when your solar panel system isn’t generating electricity—at night and on cloudy days, for example. Best of all, if your solar panel system generates a net energy surplus in a 12-month period, you can receive a payment for the energy. Imagine—you could not only have a zero-dollar power bill, but you could actually get money back from the utility company.

Why Net Energy Metering Savings Might Be Reduced

Solar has been a smashing success, and utility companies are scared. As more and more customers switch to solar, the utilities are worried about reduced profits.

The current net energy metering regulations will expire on July 1, 2017, or once the utility company has reached its NEM program cap, defined as NEM capacity in excess of 5 percent of the utility’s aggregate customer peak demand.

In other words, the faster people switch to solar, the sooner the existing net energy metering agreements will expire. And once they expire, new solar customers will be subject to new regulations (NEM 2.0) that are likely to be less favorable. Existing solar customers, however, can lock in their net energy metering savings for 20 years.

If You’re Thinking About Solar, Now’s the Time to Act

In San Diego, SDG&E is quickly reaching its NEM cap. About two-thirds of the 607 megawatts designated for solar projects has already been installed. Some experts predict that SDG&E could hit the cap by the end of 2015.

Once the cap is reached, new solar customers will be subject to net energy metering regulations 2.0.The problem is, version 2.0 hasn’t been defined yet. Utility companies are lobbying for several changes that will cut into the savings that solar panel owners enjoy. For instance, the utilities no longer want to pay retail rates for excess power generated by solar panel systems. And they want to raise the minimum monthly connection fee.

Here’s the good news—if you act now and install your solar panel system before the cap is reached, you’ll be grandfathered in under the existing net energy metering regulations, and you can lock in those benefits for the next 20 years.

Don’t wait any longer to switch to solar. If you do, you risk missing out on some very big savings.

To learn more about the benefits of a solar panel system for your home, contact us today. We provide a free consultation to answer all of your questions, with absolutely no pressure. Get started now!


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