Net Energy Metering Explained

April 13, 2021

Net Energy Metering, or more commonly known as NEM, is an effective way to optimize your commercial solar system’s productivity and value. The ideal system would be designed to offset 100% of your electricity usage at any given time.

When your system over produces, that unused electricity does not go to waste. Your electricity provider will use that energy for their grid and compensate you in the form of energy credits to apply to your electricity bill. The following graphs are an example of how NEM works for a typical small to midsize commercial solar project.

Your Electricity Usage

The gray area is the electricity you are using. Notice around early morning, the energy used spikes. This is because workers come into the shop or office, turn on lights, machinery, AC units, etc. At the end of the day when work shuts down, your electricity usage drops drastically.

Nighttime, your electricity is left with some lights, security systems and other miscellaneous items left on.

Electricity Usage Profile

Your Solar Electricity Generated

The red area of the graph is the electricity generated by your solar panels. Notice the generation spikes up early morning when the sun rises and goes down in the evening. The electricity generated supplements your electricity usage.

Your Net Energy Metering (NEM) Generated

The solar generated electricity outside of your usage area (in blue) is electricity produced that you do not use at that given time. This electricity is stored on the grid and you are compensated with credits to be used later.

The value of the credit is one major issue proposed in NEM 3.0. Your utility company and CPUC are proposing a reduction in the value for the credit. Put simply, you will earn a reduced credit for the electricity your system generates and you do not use.

Your NEM Credits Used

In some cases, this is when customers have seen their electrical meter spinning backwards or (for digital meters) the kWh going down.

In other instances, on the graph (reference above graph) there is some red area during times of the day that the sun is not out. Your system is not generating electricity when the sun is not out but your NEM credit supplements some of that electricity being used. This is NEM in action.

More information:

Commercial solar is more affordable than ever. Valuable incentives, cost saving technology and short payback periods are common for most projects. Consulting a commercial solar specialist will uncover several options for going solar. Get the process started today and stop losing valuable time and money. Contact a Revel Energy developer for a free energy evaluation.

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