Should You Go Solar Before Your Utility Adopts Net Billing? Here’s What You Need to Know
Why Now Is the Best Time to Go Solar
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If you’re considering going solar, you’ve probably heard about the financial benefits—lower electricity bills, reduced carbon foot print, and long-term savings. However, there’s an important shift happening in the solar industry, and you should be aware of the transition from Net Energy Metering (NEM) to Net Billing Tariff (NBT). Major utilities like PG&E, SoCal Edison, and San Diego Gas & Electric (Investor-Owned Utilities, or IOUs) have already switched to Net Billing, and other utilities across the state are expected to follow.
But here’s the key: if you act now and install solar before the transition in your area, you could still lock in the benefits of NEM, which offers greater financial returns. The timing is critical, so you don’t want to wait.
Reduced Compensation for Excess Solar Energy Under NBT
Under the previous NEM model, solar customers were credited at the full retail rate for the excess energy they returned to the grid. This allowed many homeowners to dramatically reduce their energy bills—or even eliminate them altogether. However, Net Billing has changed things.
Under Net Billing, you’ll be compensated based on time-of-use (TOU) rates instead of full credit for excess energy. These rates vary depending on grid demand, so during midday, when your solar panels generate the most power but grid demand is low, you’ll receive lower credits. The rates might be higher during peak demand periods, but overall, the credit you receive will be much less than under NEM.
If you plan to go solar, acting before Net Billing becomes the norm in your area could mean much higher financial returns for your excess energy. Don’t miss out on the opportunity to take advantage of NEM’s more favorable compensation while it’s still available.
The Advantage of Going Solar Now Before the Switch
Other utility areas (i.e., Burbank Water & Power) are preparing to transition to Net Billing, but you can still install solar and benefit from NEM. This means:
- Higher Credits for Excess Energy: NEM allows you to receive full retail-rate credits for your panels' extra energy, reducing your energy bills significantly.
- Faster Payback Periods: Under NEM, the typical payback period for a solar system is shorter, around 5-7 years. However, due to lower compensation rates from Net Billing, this period may extend to 8-10 years.
- Long-Term Savings: Locking in NEM now means more savings over the lifetime of your solar system, which can last 25 years or more.
Once your utility switches to Net Billing, these benefits will take more work to achieve. Going solar now could allow you to get grandfathered into NEM and secure the financial advantages that come with it.
Why a Battery Can Boost Your Solar Savings
While Net Billing reduces the value of excess energy you export, adding a battery backup is still a way to optimize your system for savings. Suppose you pair solar panels with a battery. In that case, you can store the energy generated during the day and use it when electricity rates are higher, like in the late afternoon or evening.
This prevents you from returning energy to the grid for lower TOU credits under Net Billing. Instead, you’ll use your stored energy, maximizing your savings.
Public Safety Power Shutoffs
For service areas impacted by Public Safety Power Shutoffs (PSPS), like PG&E and SCE, having a battery ensures energy reliability during outages, keeping your home powered even when the grid is down.
If you plan to go solar, coupling solar panels with a battery can help you future-proof your system—even if your utility switches to Net Billing.
How Net Billing Will Affect Future Solar Customers
As utilities transition to Net Billing, more areas will experience reduced compensation rates for solar energy. If you wait too long to go solar, you may lose out on the opportunity to take advantage of the higher savings available under NEM.
Here’s how you can prepare for Net Billing if you miss the window for NEM:
- Incorporate Battery Storage: A battery allows you to store excess energy and use it when grid electricity is most expensive. This reduces your reliance on the grid and helps you save, even with lower export rates.
- Understand Time-of-Use Pricing: Solar customers are compensated based on TOU rates, so adjusting your energy usage to when your solar system produces energy is important. By using energy efficiently, you can still reduce your overall costs.
- Focus on Self-Consumption: The best way to maximize your savings under Net Billing is to use as much solar energy as possible in your home rather than exporting it back to the grid. Running appliances, charging electric vehicles, and managing your energy consumption during peak solar production hours will help you make the most of your system.
Why Acting Now Is the Smartest Choice
If you’ve been on the fence about going solar, now is the time to act. Waiting could cost you the chance to benefit from the more favorable NEM model. By installing solar now, you could lock in NEM’s higher compensation rates and ensure a faster return on your investment.
At Green Convergence, we’re ready to help you with your energy needs by designing a solar system that best fits your situation, and our experts are here to guide you every step of the way.
Don’t wait until it’s too late! Contact one of our solar experts today to learn about the financial benefits of NEM.
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