Southern California Edison (SCE) compensates solar owners for energy produced by their system through California’s Net Energy Metering (NEM 2.0) program. The program uses a bidirectional meter to measure the net difference between the energy you consume and the amount your system produces. If you use less energy than you consume during a given month, SCE credits you for the excess energy you produced.
How net energy metering works
When you go solar, you will be required to be on a time-of-use (TOU) plan. With a TOU plan, when you produce or consume energy affects how much you pay, or are compensated for that energy. The problem is, SCE’s TOU plans charge their peak rates in the evening after your system has stopped producing energy.
SCE’s TOU plans
There are three TOU plans to choose from. The default TOU plan that you are placed on by SCE when you go solar is TOU-D-4-9-PM. On that plan, peak rates are from 4 PM to 9 PM.SCE also offers the TOU-D-5-8-PM plan, which charges peak rates from 5 PM to 9 PM. Lastly, SCE offers a special rate plan called TOU-D-Prime, which is available only to EV or plugin hybrid owners or lessees.
How time-of-use plans affect your net energy metering compensation
Your solar system produces power during the day. If you produce more power than you consume, you’ll be compensated for the power you produce at your plan’s daytime TOU rate. That rate is lower than the rate you pay during the evening hours. Thus, even if you produce more power than you consume, you may still owe more than you get compensated if you used a lot of power during the high evening peak rate hours. Here’s a breakdown of how that works.
Daytime vs. evening rates using TOU-D-4-9-PM as an example
The daytime rate that you are compensated at if you produce more power than you consume is 25 cents (summer rate). The evening rate that you pay is 40 cents. Thus, if you have an excess of 2 kilowatt-hours during the day, but you used 2 kilowatt-hours during the evening, you’d owe SCE 30 cents.
Because the peak rates are in the evening, you need to use as little power as possible in the evening or any compensation you’d receive from NEM 2.0 will be eaten up by those higher evening rates.
Home batteries are a solution to high evening TOU rates
One way that California homeowners are “beating the system” is by installing home batteries. The batteries power the home during those peak rate hours. As long as you don’t use up all the power stored in the batteries, you then avoid paying high peak TOU rates. Battery-equipped systems can also provide power to the home during blackouts. Home batteries are eligible for the federal tax credit and California’s Self-Generation Incentive Program (SGIP). The program pays you an incentive-based on the installed kilowatt-hour capacity of your batteries.
You should contact a qualified tax expert and consult with them. Neither Freedom Forever’s family of independent authorized dealers nor Freedom Forever itself can give you tax advice. A qualified tax professional will understand your situation and be able to give you the most relevant advice.
Freedom Forever has home batteries
If you are interested in going solar with or without batteries, Freedom Forever can help. We install confidence thanks to our 25-year production guarantee. We guarantee the amount of power your system will produce for 25 years. If it ever breaks or underproduces, we fix it. If the problem stemmed from something that was our fault, we compensate you for lost energy production. The amount you would be compensated will be listed in your contract with us.