If you find yourself frequently away from home or spending most of your time at work, you might wonder if solar power is right for you. It might seem logical to stick with conventional electricity if you’re not there to use the solar energy your panels produce.
The same questions arise if you’re thinking about putting solar panels on a vacation home where you’re only around occasionally.
Whether or not solar makes sense in these scenarios really depends on your goals.
Chasing Cost Savings? It’s All About Net Metering (NEM)
If saving money is your main goal, then the answer hinges on your utility company’s net metering (NEM) policies. Here’s a quick rundown:
Some states and utilities have great NEM programs that are a big win for solar users, while others don’t. Take Southern California Edison (SCE) as an example. They used to give solar homeowners a 1:1 credit. This meant if your solar system generated 1,000 kWh in August, but you only used 800 kWh, you’d get a 200 kWh credit for future use. Simple, right? But things changed with NEM 3.0. Now, the credits are a lot less generous.
It’s important to note that this shift at SCE isn’t a statewide California change but rather a specific utility decision. Different states and utilities have different rules, so it’s crucial to look at the specifics where you live.
Another key point is that homeowners with solar panels installed before April 15th, 2023, in California got to keep the old 1:1 credit ratio. Those who switched to solar after that date are subject to the new, less favorable terms.
Northern New Jersey: A Solar-Friendly Zone
On the flip side, let’s look at Northern New Jersey, where our operations are based.
New Jersey has a strong NEM policy. If you have extra credits in your energy account at the end of the year, you get reimbursed at about 70%-85% of the retail price. This means you can recoup a lot of your investment.
Here’s how it works:
At the end of the year, the utility company does a True-Up process. If you haven’t used all the energy credits your solar system generated, they reimburse you, usually at the supply rate, which is roughly 70%- 85% of the total electricity cost. Depending on the exact utility company. So, while you earn credits at the full retail rate throughout the year, any extra is reimbursed at the supply rate during the True-Up. This setup still makes financial sense.
Example Scenario:
Assuming the following details:
- Total Electricity Generated by Solar System: 10,000 kWh
- Total Electricity Consumed from the Grid: 8,000 kWh
- Electricity Cost (Retail Rate): $0.20 per kWh
- Supply Rate (Reimbursement Rate): $0.14 per kWh
Monthly Solar Energy Production and Consumption: Detailed Analysis
| Month | Electricity Generated (kWh) | Electricity Consumed (kWh) | Net Electricity (Generated – Consumed) | Credit Earned at Retail Rate ($0.20/kWh) |
|---|---|---|---|---|
| January | 1,200 | 800 | 400 | $80 |
| February | 1,000 | 700 | 300 | $60 |
| March | 1,300 | 900 | 400 | $80 |
| April | 1,000 | 600 | 400 | $80 |
| May | 1,500 | 1,000 | 500 | $100 |
| June | 1,000 | 800 | 200 | $40 |
| July | 1,200 | 700 | 500 | $100 |
| August | 1,400 | 900 | 500 | $100 |
| September | 1,100 | 800 | 300 | $60 |
| October | 900 | 700 | 200 | $40 |
| November | 1,200 | 800 | 400 | $80 |
| December | 1,300 | 700 | 600 | $120 |
| Total | 13,300 | 9,800 | 3,500 | $940 |
True-Up Process:
At the end of the year, during the True-Up process:
- Net Electricity Sent to the Grid (Unused Credits): 3,500 kWh
- Reimbursement Calculation: 3,500 kWh × $0.14/kWh = $490
Financial Benefit Analysis:
- Total Credits Earned (at retail rate): $940
- Reimbursement Received (at supply rate): $490
Even though the reimbursement rate ($0.14/kWh) is lower than the retail rate at which credits were earned throughout the year ($0.20/kWh), the total credits earned ($940) are still higher than the reimbursement received ($490) during True-Up. This illustrates the continued financial benefit of having a solar system that generates excess electricity.
This setup encourages efficient use of solar energy and provides homeowners with ongoing financial benefits, despite excess electricity sent to the grid being reimbursed at a lower rate during the True-Up process.
The Bottom Line
If your property is empty a lot and the credited power doesn’t match your utility’s rates, solar might not save you as much money as you’d hoped, especially if cost savings are your primary goal. But if you’re in it for the green energy benefits, this might not be a deal-breaker.
The key takeaway? Understand your utility’s specific policy—something your local solar expert can help you with.
If you live in a state with utility companies that are friendly to solar customers, consider making the switch sooner rather than later. Policies can change, often not in the consumer’s favor, so grabbing a grandfathered status can be a smart move.
For anyone thinking about going solar, consulting a local solar expert is crucial. They can help you navigate your state’s rules and, most importantly, understand your utility’s NEM policy.