Net energy metering (NEM) is a unique billing arrangement that allows solar owners to earn credits on their electricity bill in exchange for the excess solar energy their panels generate and add to the grid. These credits can be used to offset the cost of electricity that solar owners need to pull from the grid when the sun isn’t shining, like at night.
Net billing, or NEM 3.0, works similarly, but how the utility provider credits homeowners is a bit different. Excess solar that homeowners add to the grid will be credited at the avoided cost rate—or the price a utility provider would otherwise pay to produce the same power itself or purchase from a power plant. The avoided-cost rate changes every hour but tends to average around 4 to 8 cents/kWh.
Net billing only applies to California’s three investor-owned utility companies:
Pacific Gas & Electric (PG&E)
Southern California Edison (SCE)
San Diego Gas & Electric (SDG&E)
Municipal and cooperative utilities, such as Los Angeles Department of Water and Power (LADWP) adopt their own policies. LADWP currently offers 1-to-1 net metering credits at the same rate the utility charges you for consuming electricity.
To learn more about net billing, visit: NEM 3.0: Learn about California's net billing program