The #1 Reason You Need to Go Solar Now
Ever heard the term Net Energy Metering (NEM)? If you’re considering a switch to solar, you need to understand NEM 1.0, the cap that San Diego Gas & Electric (SDG&E) is imposing, and the implications to your solar benefits. Your goal should be to get your solar system installed as soon as possible and grandfather today’s benefits for the next 20 years.
Here’s what you need to know:
Net Energy Metering 101
Electricity is a use-it-or-lose-it resource. Once created, it has to be used or it is wasted. This is one reason why it is difficult for utility companies to meet the electricity needs of its customers without generating excess electricity and thus wasting money.
A home solar system faces the same challenge. Your system will generate electricity during sun hours of the day. This amount of electricity is significant – ideally more than your family will use and so unused electricity is redistributed back onto the grid to be consumed by other customers. However, your meter will give you a “credit” for this excess electricity generation. During non-sun hours and nighttime – when your solar panels are not generating electricity – your home will eat into the “credit” you created when using electricity from the grid (utility-provided).
Month-to-month, the credit rolls over. Your solar energy system may generate a ton of excess electricity in spring and summer during the plentifulsun-hour days, and that credit will carry you through the fall and winter when your system may perform less efficiently because of cloudy days. That’s great, that’s what a system designed to offset 100% energy usage should do.
NEM allows for this giving and taking of electricity “credit.” At the end of one billing year on NEM, solar customers have to settle all payments with the utility and the month-to-month rollover of excess electricity ends. This is referred to as a “True-up.” Any excess electricity generation that your solar energy system created (electricity that your home did not use at the end of the billing period of one year) will be purchased by the utility at a wholesale rate in accordance with Assembly Bill 920 – which at the time I wrote this – is less than 4 cents per kilowatt hour.
Right now, NEM 1.0 has an approximate $5 minimal fee that all solar customers have to pay each month. If the utility owes a solar customer money at the “True-up” for excess generation, this approximate $60/year minimal charge will be deducted from that amount.
Whew. Did you get all that?
So why does Net Energy Metering matter for homeowners considering solar? Because the current Net Energy Metering program has limited space, and that cap is quickly approaching.
Without getting too technical, the utilities (SDG&E for example) set a cap on how many of their customers could go solar on the current Net Energy Metering program. SDG&E set that Net Energy Metering cap at 5% of the aggregate customer peak demand, or 607 megawatts of installed solar.
Now, that’s a lot of solar, but keep in mind that this program has been going since 1996. In fact, there’s only about 1/3 of that left, and with the rate at which solar is growing, some industry experts are suggesting the cap will be reached by the end of 2015 or early 2016! When the cap is reached, all new solar customers will be on the NEM 2.0 program.
Why should you care?
The problem with new customers going to NEM 2.0 is that currently there is no NEM 2.0! The 5% cap is going to be reached way sooner than anyone anticipated, so now the California Public Utilities Commission is scrambling to put together NEM 2.0. On one side of the process are organizations like CALSEIA, lobbying for the solar industry. On the other side is the investor owned utilities (SDG&E, PG&E, SCE) asking for policies to ensure they continue to make money.
What will NEM 2.0 look like? No one knows for sure yet, but there is plenty of speculation out there. Remember that minimum charge I mentioned before that solar customers have to pay just to be tied to the grid? What if that amount goes from $5 a month to $15? Or $20? Might not seem like much each month, but over the life of the system, that’s thousands of dollars.
Why You Shouldn’t Wait
The truth is, we don’t know what it will look like for solar customers that sign up after the NEM 1 cap is reached. What we do know is that NEM 1 is a great program and it allows solar customers to enjoy a maximum amount of savings.
If you’re on the fence about solar, don’t hesitate! Get grandfathered in to NEM 1 for the next 20 years while there is still space. And regarding space in the Net Energy Metering, you have to be energized (system turned on), not just have a contract signed, in order to be placed in the system.
As 2015 progresses, top-tier solar companies such as Baker Electric Solar will get really busy. Summer and fall are our most demanding times. Our volume goes up and our time from contract signing to Permission to Operate increases. Homeowners looking to be energized by the end of 2015, safely securing their spot in NEM 1, should sign up no later than mid-summer.
By why wait until then? Why not go solar now and get installed by summer! Put in that fifth load of laundry, crank the AC, and leave the lights on -your electricity usage is no longer a worry when you have solar.