Going solar fundamentally changes a homeowner’s relationship with PG&E or local utility provider. When a homeowner goes solar, PG&E expects electricity costs to go down so much that they will only bill once per year for electricity. The annual bill, known as a True-Up Statement, is the net electricity usage for the year and summarizes electricity charges and credits for each month into the annual bill.
It is easier to explain True-Up Statements while reviewing an actual True-Up Statement. Feel free to download the example True-Up statement to follow along, click here to view the document.
On your True-Up Statement, PG&E states:
- The electricity produced by your system.
- How much electricity you used for the year.
- When electricity was used and credited.
- The retail electricity rate used to value the kWh credit accrued.
- The amount owed based on Net Usage or kWh used.
Since the annual True-Up Statement marks the end of the electricity billing cycle, electricity charges and credits reset to zero for the next billing cycle. It is important to remember that, unlike old Cingular wireless minutes, electricity credits do not carry over into next year. Because of this, solar PV systems are actually sized to offset 100% or less of usage to ensure homeowners get retail values for electricity produced. A solar system that is too big for a home will exceed total usage and trigger Net Surplus Compensation, which will be addressed later in this article.
Above is the summary of the True-Up statement. The table shows all the charges and credits for each month based on when electricity is used and pushed onto PG&E’s grid through the electricity meter.
At the bottom-right, you’ll see that the total cost for electricity over the course of the year was only $74.94. To the left, you’ll see that the net usage for the year was 1298 kWh. Dividing the usage by cost will give us an effective electricity rate of only $0.06/kWh. That’s some cheap electricity!
The above bar graph shows the Net Energy Metering (NEM) credits or charges for every month. For more info on NEM, click here. During the summer months when the sun is shining, solar systems typically generate more electricity than the home uses. That excess electricity is pushed onto PG&E’s grid and is “banked” in the form of NEM credits. During the winter months when systems aren’t generating as much electricity, homes use more electricity from the grid. The summertime NEM credits are applied to the winter NEM charges to offset the increased grid power usage.
The following line graph demonstrates the cumulative credits and charges for each month:
The billing period started in August 2015, and the general trend goes like this:
- Credits were banked in August and September;
- October to March credits are used and costs began to accumulate as winter takes some of your solar electricity production; and
- Then in April credits start to grow faster as summer approaches and cumulative charges began to decrease as we head into True-Up;
- At True-Up in August 2016, the running total came out to about $75, roughly $0.06 per kWh.
100% Offset Now The Way To Go
While we used to design systems to offset less than 100% (e.g. ‘tier shaving’) of a home’s annual usage, electricity rates have increased to the point where it makes economic sense to eliminate the entire electric bill. Solar typically generates electricity at $0.08 – $0.15 per kWh depending on site conditions and financing which is well below PG&E’s Tier 1 cost of $0.24 per kWh.
If your system produces more than 100% of your annual usage, you are considered a Net Surplus Generator meaning that instead of earning retail rates for the power you send back to the grid. Net Surplus Generators get a measly $0.04 per kWh or Wholesale rate for the excess energy. This is why we still don’t oversize systems despite the many benefits of NEM. See below:
Above is a screenshot of a different True-Up statement where the homeowner over-generated by 3,346 kWh. At the top right, you can see a total NEM credit of $841.98. Because the homeowner had extra credits at year end, Net Surplus Compensation takes effect.
The reality is PG&E owns the grid. As a result, California’s Public Utilities Commission (PUC) agreed to structure the NEM program so homeowners can’t go big with solar and become mini power plants that sell power to PG&E—a different model that is used in Europe. In California, the PUC lets PG&E take the accrued 3,346 kWh credit and cash it out using the average wholesale electricity rate of ~$0.03754 per kWh. The homeowner will only get $125.62 for $841.98 worth the power.
Until policies change to encourage as much solar production as possible, it makes more economic sense to size systems to existing and projected usage. Solar is one of the best investments in today’s volatile market but becoming a miniature renewable energy power plant with excess production still doesn’t quite pencil out.
To learn more about the buying and selling of solar electricity between homes and PG&E, call Allterra Solar at 831.425.2608, email firstname.lastname@example.org or get a free quote. Our team of industry experts, engineers, and electricians will be happy to delve into the details.