What is Net Energy Metering (NEM)?

Net Energy Metering or NEM is an incentive program that credits homeowners who generate more energy than they use. The way this works is when your home produces more energy than it needs PG&E will purchase that excess energy and sell it to other customers.

The same goes for those who are not producing enough energy from their system. For example, if you are using more energy than your solar system can produce, you can purchase additional energy from your local energy provider.

Details of NEM

Selling and Purchasing Energy

The NEM program has changed a handful of times over the years. California is currently utilizing the NEM2 program. When it comes to selling your excess energy, PG&E  gives you a credit for every kilowatt-hour (kWh) sold. These credits accrue throughout one year of activity. 

On the flip side, credits are deducted when you begin purchasing energy back from the grid. Because of this, you will switch from a monthly billing cycle to a yearly billing cycle when you go solar.

Time of Use

The rates for purchasing and selling excess energy is determined based on a Time of Use plan or TOU. Throughout the day, there are peak hours and off-peak hours. On-Peak hours consist of the hours between 3 PM and 8 PM. Peak hours are the hours throughout the day when demand for electricity is highest. All other times are considered “off-peak.”


The rates for buying and selling during peak and off-peak hours are the same. For peak hours, you can buy and/or sell your energy for $0.40 per kWh. During any other time, you can buy and/or sell your energy for $0.25. This allows you to buy low and sell high!

However, there will be some changes coming in the next few months for NEM2. Due to PG&E’s bankruptcy, the NEM program will be changing. The buyback and selling rates will be increasing for purchased energy and decreasing for energy sold back to the grid. The dates for these changes have not been released yet but could happen as soon as May 2019.

Contract Time Period

As of right now, if you install solar before the anticipated changes, you will lock in the rates for the next 20 years! However, after the changes to the NEM2 program, the contracted rates will only last a period of 5 years. Meaning after 5 years, PG&E could change their rates once again.

Solar Companies Are Here to Help!

If you have any questions, we would love to connect you to local solar companies! Sitting down with these companies for a free consultation will give you the information you will need to make an informed decision!