Receiving financial credit for your surplus solar energy is possible through a special billing arrangement known as net energy metering, or simply net metering. This arrangement is regulated by the CPUC, meaning there is standardized process for creating and receiving financial credit.
How Net Energy Metering Works
Whenever a solar installation produces more energy than is currently needed, that energy is pushed back through the electric meter and back into the grid – resulting in a credit on the owner’s account. This typically occurs during the afternoon, when solar production is at its highest. On the other hand, when solar production is not at an optimal level (like during the late afternoon), the site will begin to draw power again from the utility to compensate for the decrease in solar production. This back and forth of sending and receiving electricity from the grid is where we get the term “net” in net metering. With solar installed at your commercial site, you will receive credit any time surplus solar energy is pushed back into the grid, allowing you to offset the costs of utility energy when solar alone is not enough to meet your demand.
Net Metering 2.0
The original net metering policy mandated credit for every kilowatt-hour (kWh) that was produced and fed back into the grid. In 2017, this policy was updated to Net Metering 2.0, which includes new rules for how credits are handled. These new rules are: time-of-use rates, interconnection fees, and non-bypassable charges.
Time-of-use (TOU) scheduling
Under a time-of-use rate scheduling, the price of electricity is dependent on the time of day. This is because our grid energy demand fluctuates throughout the day. There are more people using energy during the peak hours (afternoon and the early evening) than there are during non-peak hours (late at night or early in the morning). All meters using net metering 2.0 are switched to TOU scheduling. This means that you will have to pay more for drawing electricity during peak hours, but you will also receive more credit for producing surplus solar.
New solar installations require an inspection before being allowed to join net metering. Owners of new systems must pay a one-time interconnection fee to connect to the electric grid. Fees range from $130-$150 depending on your utility.
Non-bypassable charges are small charges (usually 2-3 cents) that are applied to every kWh sent through the gird or from the grid. These charges help fund regional energy efficiency, customer assistance, and other utility public programs.