What Is NEM?

NEM Explained

Making sense of NEM is about as simple as understanding that saving money is good. NEM, or Net Energy Metering, is both an incentive and a process that keeps utility costs down by transferring excess solar power that isn’t used to the main electrical grid. This is an exchange for credits that can then be saved until a later time; this is usually when the household’s energy consumption exceeds the solar energy that the household has produced. At this point, the homeowner can pull energy from the electrical grid, just as was done before transitioning to solar power, but it’ll be at a reduced cost because of the credits that were amassed. The credits are based on the number of kilowatt hours that were given back to the grid. These credits are then used to pull the same amount of energy at a later time. The system owner will only be billed a “net” amount of the energy used. Essentially, homes can be powered, day or night, by the solar energy that is converted and produced during daylight. 

Why choose NEM?

The metering system is a mechanism meant to balance a surplus of energy at certain times with the shortage, and need, for it at others. Solar panels convert the most energy during the afternoon when consumption is usually low, yet the inverse is that virtually nothing is converted at night, when consumption is usually higher. The method of metering uses estimates of the household’s consumption levels to then oscillate between the homeowner’s solar energy and the stored energy of the grid. This back and forth is the process of metering, which is how you save on rising utility costs.

Is NEM available?

Many states have made NEM mandatory. Only three states do not have any form of metering, nor a form of alternative compensation for excess energy. These three states are: Alabama, South Dakota, and Tennessee. Every other state either: makes metering mandatory, offers alternatives, or allows utilities that will offer metering. If you would like to learn more about the policies in our great state of Florida, use the, “Database of State Incentives for Renewables and Efficiency.” (DSIRE®) This site monitors and records metering policies for states, utilities.

Maintaining a self sufficient, low cost household is becoming easier and more affordable than ever with solar. It’s not only beneficial to the environment but it will save you tens of thousands of dollars over the course of a lifetime. If you would like to learn more, check out the resources on our website, or connect with one of our solar specialists today.