Net Metering in California: What Is It? (And How to Take Advantage Of It)

Last Updated on September 26, 2022 by Jeremy Pearl
Feb 15

If you own a solar panel system or are considering getting one installed, you may be wondering, “How does net metering in California work and how can I benefit from it?”

To help you understand and take advantage of net metering, we’ve compiled a list of facts about net metering that you should be aware of. We explain what net metering is and how it can benefit you, and we also provide a breakdown of recent changes to California net metering laws.

California Net Metering Explained

During the day, your solar panels probably collect more energy than you need, and with net metering, excess energy is sent to the electricity grid. Net metering is what ensures that all of the energy generated by your solar panels gets used, and you receive credits on your electric bill for the energy that you share.

The way net metering is handled differs from state to state, but as a leading solar energy state, California’s policies offer some of the largest benefits to its residents. In California, you are credited for energy that you send to the grid at the same rate that you are charged for it.

For instance, if you pay $0.05 per kilowatt-hour for energy from the electric company, you will be credited at a rate of $0.05 per kilowatt-hour for what you send to the grid.

The Benefits Of Net Metering

While the biggest beneficiaries of net metering are typically those who have home solar systems, net metering can also provide benefits for utility companies, individuals who don’t have solar panels and the environment. Utility companies that receive solar energy from home systems may be able to reduce the loss of energy associated with long-distance electricity transmission.

The environmental benefits are due to the fact that solar energy is cleaner than the energy sources used by most electric companies.

For you, the direct benefits are that the energy your solar panels produce doesn’t go to waste. Further, net metering allows you to reduce your annual energy costs even more than you already are by using solar panels to generate power for your home.

How Net Metering Credits Are Applied

One of the biggest benefits of the California net metering system is that it doesn’t operate on a month by month basis.

Your solar panels will generate the most power during the summer and during the day. However, at night and in the winter, you’re likely to need to draw from the main electricity grid. With California’s net metering system, your credits carry over from month to month.

This means that you can use credits from your solar panel’s overproduction in the summer to help pay for the cost of powering your home during the winter. In fact, you have the option of settling your bill on a monthly or yearly basis.

Qualifying for Net Metering

For most homeowners, qualifying for net metering is very simple. You just need to have an eligible home solar panel system that is connected to an electric company’s grid. It’s important to be aware that California law states that systems that are designed to provide more power than a home can use in a year are not eligible for the net metering program.

Along with being available for individual home solar systems, net metering may also be available for multi-tenant properties through virtual net metering. For example, if you live in a condo or apartment building, individuals in the community may be able to reduce their electric bills based on energy from solar panels used at the property.

California Net Metering Changes

In 2016, California made some changes to the state’s net metering policies and regulations, and the updated regulations are referred to as NEM 2.0. These changes will only affect people who have new solar systems installed. Individuals who had a system installed prior to the changes are grandfathered into the NEM 1.0 policies for 20 years from the date of installation.

– Prior to recent changes, qualifying systems were those that generated at least one kilowatt of power but not more than one megawatt of power. These limitations are no longer in place, but there are new charges and fees that were not required with NEM 1.0.

– Customers who are governed by NEM 2.0 rules will be required to pay a one-time interconnection fee if their solar system doesn’t generate at least one megawatt of power annually. This fee generally ranges from $75 to $150.

– Individuals with systems that generate more than one megawatt of power annually will be allowed to take advantage of net metering, but people are required to pay for interconnection and facilities upgrade costs. Prior to NEM 2.0, these systems were not eligible for net metering.

– Customers falling under NEM 2.0 regulations will be required to prove that their solar panel system components come with a 10-year warranty and are CEC approved.

– NEM 2.0 customers may be required to move to time of use rates instead of fixed rates.

California’s net metering regulations will be reviewed again by the commission in 2019.

Take Advantage Of Solar Energy Savings Today

If you enjoyed learning about net metering in California or found our list helpful, consider sharing it with your friends or family. We’re also happy to answer any questions that you might have that the list didn’t answer.

As one of the leading Santa Cruz solar companies, Sandbar Solar provides reliable solar panel installation services to homes and businesses in Santa Cruz and Monterey counties as well as San Jose and many other regions in the San Francisco Bay Area.

We take pride in being locally owned and operated since 2004, and we have a reputation for designing and installing the area’s most efficient solar panel systems. When you do business with us, you can count on quality work and a focus on environmental stewardship.

For more information about how you can save money and the environment by switching to solar, call us at (831) 469-8888 or send us an email. We’re happy to answer any questions that you might have.

About the Author

Scott Laskey is the founder of Sandbar Solar & Electric. With a Bachelor’s Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.