Net (Energy) Metering

What is Net Energy Metering?

Net energy metering is a special billing arrangement for customers with renewable energy systems, such as solar electricity systems, that permits customers to get credit for the full retail value of the electricity their system generates. Under net energy metering, the customer's electric meter keeps track of how much excess electricity is generated by the renewable energy system and sent back into the electric utility grid, and how much electricity is consumed by the customer. Over a 12 month period, the customer has to pay only for the net amount of electricity they use from their utility over-and-above the amount of electricity generated by their renewable energy system (in addition to monthly customer transmission, distribution, and meter service charges they incur).

How does Net Energy Metering work?

At any time of the day, a customer's renewable energy system may produce more or less electricity than their home or business needs. When "excess" electricity is produced by the system, it will automatically go through the electric meter into the utility grid to be supplied to other customers. When this occurs the meter runs backwards. At other times of the day, the customer's electric demand may be higher than the renewable energy system is producing, and the customer relies on the additional power needs from the utility.

What is the benefit of Net Energy Metering?

The benefit of net energy metering is the electricity generated by your system will be valued at the full retail electricity rates you pay for solar and small wind generators. This means that your system should save you more money than if you did not have net energy metering.

Am I Eligible?

You are eligible for net energy metering if you are a retail customer of an electric utility in California, you generate at least some of your electricity using solar or wind energy or other qualified generating technologies, and your generating system's peak capacity output is 1,000 kW or less. Your electric generating system must be located on the premise that uses the electricity. To participate, you must apply and receive approval from your utility to have your system interconnected to the electricity utility grid.

How will I be billed under Net Energy Metering?

Under a net energy metering agreement, your utility will continue to read your meter monthly and you will receive a monthly statement indicating the net amount of electricity you consumed or exported to the utility grid during that billing period. If you are a residential or small commercial customer, you have the option of paying the utility for your net consumption monthly, or settling your account every 12 months. Contact your utility for billing options.

What size should my generating system be?

A customer's solar system should be sized to produce no more than their expected annual electricity needs. Although a minimum size is not required, most residential systems range between two and four kilowatts. Your system size will depend on your needs and how much electricity you want to generate. You can also build your system by starting small and expanding over time. As long as your total system output is not greater than one megawatt, this modular approach is allowable.

It is important to keep in mind that the electric rates the utility charges you increase in tiers as you use more and more electricity. A smaller system that satisfies part of your electric needs may be more cost-effective to you because you will be avoiding the higher tier rates, while you are still purchasing the lower cost electricity from the utility for your needs. This will be the case whether your electric meter is the simple, non-time-of-use meter or a more sophisticated time-of-use meter (meters are discussed in more detail below).

Can I use my current electric meter?

Most smaller customers of electric utilities have simple meters that are bi-directional--that is, capable of spinning backwards to record energy flowing from their system to the utility grid--and are currently eligible for net energy metering. The more simple meters are often referred to as non-time-of-use meters because they are incapable of recording when electricity was used. Some utilities may want two meters for net energy metering, one to measure electricity going from the grid to your home or business, and one to measure surplus energy going from your system to the grid.

Time-of-use (TOU) meters are more sophisticated, recording when electricity is used and allowing the utility to charge different rates at different times of the day or week. Currently, TOU meters are optional and not required, but they will be required for recipients of CSI incentives in the future if the California Public Utilities Commission sets TOU rates. Contact your utility for more information.

If my generating system produces more electricity than I need over a 12-month period, is my utility required to buy it from me?

Utilities are not required to purchase any excess electricity you produce at the end of each 12-month period of your net energy metering agreement.

If I still need to purchase electricity from my utility after my generating system is operational, will it cost me more?

No. You may remain on the prior electric rate unless you choose otherwise.

How do I sign up?

If you already have a renewable energy system, you should contact your electric utility and request an application for net energy metering. The utility will outline the requirements for safely connecting your generating system to the grid. If you are or will be participating in a state or utility-sponsored incentive program, the application process will require your system to be interconnected to the utility.