Net Energy Metering and Smart Meters

Net metering, or net energy metering (NEM), is a billing system that credits small customers at the full retail electric price for any excess electricity they generate and sell to their local electric company via the grid from on-site small sources such as residential rooftop solar arrays.

1. Net Energy Metering
and Smart Meters
LNT/SES 101 – Fall 2017
Mark Valen

2. Net Energy Metering (NEM)
Net energy metering, or "NEM", is a special billing
arrangement that provides credit to customers with
solar PV systems for the value of the electricity their
system generates.
•NEM is an enabling policy to foster private
investment inrenewable energy.

3. Net Energy Metering (NEM)
•Under NEM, the customer's electric meter keeps
track of how much electricity is consumed and how
much excess electricity is generated by the system
and sent back into the electric utility grid.
•The customer pays annually for the net amount of
electricity used from the utility over-and-above the
amount of electricity generated
•(in addition to monthly customer transmission,
distribution, and meter service charges they incur).

4. Net Energy Metering (NEM)

5. Net Energy Metering (NEM)

6. Net Energy Metering (NEM)

7. Net Energy Metering (NEM)
California
•557 kWh/household
•$0.17/kWh
•$94.59 Average Monthly Bill

8. Net Energy Metering (NEM)

9. Net Energy Metering (NEM)
A kilowatt-hour (kWh) is a measure of energy equal
to the use of one kilowatt for one hour.
•For Example
•If you used a one-kilowatt appliance for two hours
the display below would increase by two.
•Calculation
•001563 + 000002 = 1565

10. Net Energy Metering (NEM)
To find out how much energy you use in a given time,
subtract this first reading from a second reading
taken at a later date or time.
•For Example
•If you go back to your meter later and it reads 001940,
then you have used 377 kWh for the time period
between your current read, and the previous meter
read.
•Calculation
•001940 -001563 = 377 kWh

11. Net Energy Metering (NEM)
•NEM is always at retail.
•Not technically compensation.

12. Net Energy Metering (NEM)
•When panels produce more energy than can
be used over the course of a month, credits
on SDG&E bills are provided that can be used
in future months.
•If there is a surplus over the course of twelve
months, the customer is credited for the
extra kWh at thewholesale compensation
price.

13. Net Energy Metering (NEM)
SDG&E -Wholesale Compensation Prices

14. Net Energy Metering (NEM)
•Eligibility
•Any SDG&E residential or commercial electricity
customer who generates at least some of their
electricity with a renewable energy source.
•Primary requirements:
1.Electricity generating system must be fueled by solar,
wind, or a different renewable source including
biomass, geothermal and small hydro.
2.System must comply with the rules and regulations for
interconnecting customer-owned generation to
SDG&E’s grid.

15. Controversy
Renewable energy proponents say net metering is
necessary to encourage solar installations.
•These small generation sources are referred to as
distributed generation (DG) and someone owning or
leasing a rooftop solar array is aDGcustomer.
•Most utilities are required to buy a DG customer’s
excess power at full retail price even though it costs
those utilities much less to produce that electricity
themselves, or buy it on the wholesale market.
•These policies encourage the adoption of distributed
solar on residential and commercial buildings.

16. Controversy
In 2015, CA Utilities proposed alternative methods of
compensation to solar users for the excess energy
recycled back to the grid.
In December 2015, theCalifornia Public Utilities
Commission(CPUC) proposed to continue with retail
rate net metering.
•According to theLos Angeles Times, California utilities
were dissatisfied with the proposal. According to
[SDG+E], the proposal did not address the “growing cost
burden” on their customers, which is estimated at $100
per month or, collectively, $160 million per year.

17. Net Energy Metering (NEM)
Major CA Utility NEM program rates
Before June 2016 After June 2016
•Under CA’s original net metering policy, SDG&E had a net metering cap of
five percent of total peak electricity demand in the utility’s territory.
•Under NEM 2.0, there is no cap on net metering in SDG&E territory.

18. Net Energy Metering (NEM)
For each kWh fed back to the grid, a credit for
the full retail value of that kWh is earned.
New residential solar customers currently pay
between $0.22 and $0.50 per kWh, depending
on the month and time of day.