NEM - Net Energy Metering - for Solar

NEM - Net Energy Metering - this is how your utility "settles" up with you.

I.e. it would be really nice for the *consumer* that when you generated excess power, you would get the FULL retail rate (back as cash!), because then you can offset pulling power from the utility company at night, when it's cloudy, etc. But it's obviously unrealistic to expect the Utility company to be an "infinite battery" for consumers as it is totally economically unsustainable, especially as the percentage of power from Solar increases - i.e. lots of excess when the sun is shining!

More typical these days (and increasingly so) is the utility company will pay you *wholesale* (or less) rates when you generate excess but charge you *retail* rates when you need to pull from the grid. The arrangements can be pretty complicated especially if TOU (Time-of-Use) pricing is involved. Here's the Xcel Energy form that I filled out. Note that their "payback" rate (in 2021) was $1.786 cents/kWh when retail electrical rates were about 12 cents/kWh ... i.e. that's about a 15% return. Note that in 2022, the numbers were 2.672/13 ... so about 20% return ... better, but still dismal.

Fortunately for me, Xcel (currently!) offers another option with "Continuous Rollover Credits" which end up in a Solar Bank. In summary, NEM (currently!) 1:1 consumed and converted (then) to a dollar amount for a Solar Bank than can accumulate and be used to offset any extra. But since you can NOT cash this in and you LOSE it when you move, you do NOT want to generate excessive Solar Energy!

You hear a lot about how electrical rates influence the economics of Solar, but I'm increasingly convinced that NEM will have a bigger effect ... plus that can change somewhat quickly - albeit there (hopefully) will be some grandfathering. There's good reasons why Hawaii has completely dropped NEM and other places are moving in that direction ... and California will probably change the rules for existing customers - fact sheet here.



Back to main Solar page