Demystifying Net Energy Metering (NEM) for Solar Systems

Net Energy Metering (NEM) is a program that offers solar customers the opportunity to exchange solar credits with the grid, effectively reducing their electricity bills. In this blog post, we will delve into the details of NEM, exploring its application to solar systems and providing valuable insights for customers considering participation in the program. By understanding how NEM works, customers can make informed decisions about their solar installations, maximize their energy savings, and contribute to a greener future.

Understanding Net Energy Metering (NEM): Net Energy Metering, often abbreviated as NEM, is a program offered by utilities to solar clients. It facilitates the exchange of solar credits between a customer’s solar system and the electrical grid. This program is particularly beneficial for solar users, as it allows them to offset their energy consumption with the surplus energy they generate.

When a solar system is interconnected to the grid, a bi-directional meter is installed. This meter measures the electricity flowing in two directions: from the grid to the customer’s home and from the customer’s solar system back to the grid. During daylight hours, when the solar system produces excess power, it is sent to the grid, and the customer’s account is credited for that surplus energy. At night or when the solar system’s generation is insufficient, customers can draw power from the grid using these accumulated credits.

Net Consumption and Net Generation Explained: To understand NEM better, let’s explore the concepts of net consumption and net generation. Net consumption refers to the difference between the energy consumed by a customer from the grid and the energy generated by their solar system. On the other hand, net generation represents the surplus energy generated by the solar system that is sent back to the grid.

Smart meters play a crucial role in tracking and measuring net consumption and net generation accurately. These meters record the energy flowing in and out of the customer’s home and provide valuable data for billing purposes. When customers receive their monthly utility bills, they can see the net consumption and net generation figures. However, it’s important to note that the bill does not include energy consumed directly from the solar system without passing through the meter.

The Billing and True-Up Process: The billing process in a net metering program involves calculating the net consumption and net generation over a specific billing period, usually a month. The utility company reconciles these figures to determine the customer’s net energy usage. If the customer’s solar system generates more energy than they consume during a billing period, they accumulate credits.

At the end of a 12-month cycle, a “true-up” bill is issued to settle any remaining credits or outstanding payments. If a customer has accumulated credits, they may be paid out for the excess energy generated. The payout can be based on either the retail price (the price the customer would pay for electricity) or the wholesale price (the price the utility company pays for excess energy).

Conversely, if a customer’s net consumption exceeds their net generation, they will need to pay for the additional energy consumed. This ensures that the utility company receives compensation for the energy provided during periods of low solar generation.

Monitoring and Reporting: To stay informed about their solar system’s performance, customers receive monthly statements from the utility company, which indicate their progress year-to-date. These statements provide insights into net consumption, net generation, and the overall energy usage patterns. Additionally, most utility companies offer online platforms that allow customers to access detailed data on their daily, monthly, and yearly production and consumption.

By regularly monitoring this data, customers can gain a better understanding of their energy consumption patterns, identify opportunities for optimization, and make informed decisions about their energy usage. It also empowers customers to track the effectiveness of their solar system and assess its impact on their energy bills.


Net Energy Metering (NEM) is a valuable program that enables solar customers to exchange solar credits with the grid, providing them with significant financial benefits. By participating in NEM, customers can offset their energy consumption and contribute to a greener future by leveraging their solar system’s surplus energy.

Understanding the principles and processes of NEM is essential for solar customers to make informed decisions about their installations. By comprehending net consumption, net generation, and the billing and true-up process, customers can optimize their energy usage, monitor their solar system’s performance, and potentially earn credits or receive payouts.

By embracing NEM and adopting renewable energy solutions, customers play an active role in reducing carbon emissions, promoting sustainability, and creating a cleaner environment for future generations.

Contact Supreme Solar today for a personalized solar consultation and take the first step toward a brighter, cleaner future!


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