What Is It?
Net Energy Metering (NEM) all depends on how much energy your system generates and how much you use on a daily, monthly and annual basis. When solar systems generate more power than needed the excess energy is put back into the grid. When more energy is needed than produced, energy from the grid gets fed back into your home. So, depending on how much electricity your system produces and how much you use you may end up with either a credit or a charge.
Additionally, if you are part of a ‘time of use’ program you can export excess energy back to the grid when rates are higher, and consequently use electricity from the grid when rates are lower- such as nighttime. When on a time of use plan, you may receive a credit for the month even if you use more than exported. The credits you receive rollover to compensate for the charges you receive in other months.
When households are part of NEM their electric meter keeps track of the amount of electricity consumed, and excess energy sent back to the grid. Every month your utility company will send you a NEM statement letting you know what your charge or credit is for the month. Then after a 12-month period, you will receive a ‘true-up’ bill, this is a statement of the past 12-month period, you are only required to pay for the net amount of electricity used from the grid.
Benefits of Net Energy Metering
NEM is your gateway to enhancing the rate of return on your solar investment.
- Allows customers to eliminate their bills.
- Credits customer accounts at full retail rates.
- Records energy generated and consumed, providing customers with annual performance data.
Most homes have bidirectional meters that can go in either direction, this allows energy to flow from their system into the grid and records it. These meters are most commonly referred to as ‘non-time of use meters’, this is because they are only capable of recording how much electricity was used, not time of use. Since these meters do not account for the time of use (TOU), some utility companies will insist that you have two meters to be eligible for net energy metering.
Additionally, there is another type of meter commonly referred to as a ‘time of use meter’, these are much more sophisticated and record when the electricity is used. This allows utility companies to charge different rates at different times.