Net Energy Metering (NEM)

Category: finance

A billing arrangement that credits solar energy system owners for the excess electricity they send back to the utility grid.

When your solar array produces more power than your building consumes, the excess current spins your bi-directional smart meter backward, feeding the grid channel. The utility company logs these kilowatt-hours as billing credits, offsetting the power you draw at night.

Common Examples

• The shift from NEM 2.0 to NEM 3.0 drastically reduced the utility credit rates for exported solar, making battery storage mandatory.
• Calculating the financial ROI of a commercial solar array requires modeling local net metering structures alongside peak tariff hours.