Net Energy Metering (NEM)

Category: infrastructure

A billing mechanism that credits residential solar system owners for the excess electricity they feed back into the utility grid.

NEM allows the consumer’s electric meter to spin backward when their solar panels produce more power than the home consumes. The utility credits the owner at a specific rate (e.g., NEM 2.0 vs. NEM 3.0 frameworks). Shifting from full retail rate credits to reduced avoided-cost credits drastically alters the ROI calculation, making local battery backup storage essential for economic viability.

Common Examples

• Under the new state NEM 3.0 rules, the credit value for exported solar energy dropped by seventy percent, extending the system payback window.
• We updated our financial underwriting models to account for the local utility’s net metering policy changes before presenting the solar proposal.