Solar 101: How Does Net Energy Metering (NEM) Billing Work?

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Perhaps you are considering jumping on the solar energy bandwagon, but the new terms and seemingly endless new things to learn about it are holding you back from making the decision. Maybe you are already using solar panels for powering your home, but are confused as to why your NEM billing structure is so different than your old standard energy billing structure.


Have no fear! While NEM billing can be quite confusing for new solar customers, it is not as difficult as you would think! We promise!


Not only is the structure of the bill different from the energy bill you may be used to, but your monthly payment due may be significantly different as well. NEM enables you and your environmentally-friendly solar panels to put electricity back into the grid when you don’t need it! This means big savings on energy costs for both the planet and your wallet!


What is NEM billing, and why should I care?

NEM stands for Net Energy Metering and is a concept unheard of to most of our new solar energy customers. NEM differs in three big ways from traditional energy bills:

  1. NEM bills consist of two parts
  2. Customers with NEM billing are considered solar power “generators”
  3. It is possible to significantly lower your energy costs through NEM billing, possibly to an energy “surplus” or “credit”, resulting in a $0 energy bill

Understanding how this works is important to make a smart decision regarding your investment in solar energy technology for your home and/or business! So, let’s break it down to basics.


The Two Parts of a NEM Energy Bill

Like standard energy bills, every monthly NEM billing cycle, you will receive your energy bill, consisting of both an overview of your energy used for the month, as well as the balance due for the billing cycle.


Besides your main bill, NEM bills are coupled with a breakdown of your usage. This breakdown will consist of both energy amounts used when you did not have solar power in your energy “bank”, as well as the energy you put back into the grid when there was more than enough power in your bank to power your home, resulting in a credit to your bill. That’s right! By adding solar panels to your home or business, you are effectively generating electricity from the sun, therefore if you generate more than you use at any point, you get money back for that energy!


What it Means to be a Generator

Since solar panels are generating electricity from the power of sunlight, you are effectively a generator on the power grid! If that isn’t cool enough alone when you use less electricity than your panel’s energy bank has stored, that extra energy goes back into the power grid, and you receive a credit on your bill for the difference.


Being a generator makes it possible for you to create your very own electricity from sunlight, and when you generate more than you need, you get paid for it! Almost like a miniature power plant at your home or business.


Significant Savings Through NEM Billing

Now that you understand how NEM energy billing works, the best and last part about it you must know is your energy bill savings.


Using less electricity than you produce as a generator will result in credits to your monthly bill and more money in your wallet. If you manage to use less electricity for the entire month than you generated, congratulations, you don’t have an energy bill for that month! Additionally, every 12 months you will receive an annual bill showing all of your usage and credits for the year in total, and any final balance you may owe if there was more energy used than generated, ensuring no savings on your bill go missed! The money saved through NEM billing and solar power generation can truly add up over the years.


In Conclusion

Now that you have a general idea of the basics surrounding Net Energy Metering (NEM) and your energy bill, you are now prepared to make an educated decision when deciding to invest in solar panels for your home and/or business. There is no need to feel intimidated about this new way of energy, and you know possess the knowledge necessary for understanding your monthly energy bill, whether you are already a solar customer, or you are thinking about becoming one. The most important thing to remember about NEM billing is that you are in control of your energy bill, and the amount you save through your usage!


Energy Generated – Energy Used = Billed / Credited Balance

It is that simple! You may end up having free energy bills thanks to the technology of solar energy and NEM billing.


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