If you have solar panels, you may be billed under either Net Energy Metering (NEM) or the newer Solar Billing Plan (SBP). Both programs give you credit for extra solar energy you send to the grid, but they calculate those credits differently. Here’s a simple breakdown of what’s changing, when customers move from NEM to SBP, and what it could mean for your monthly bill.
What is Net Energy Metering (NEM)?
NEM is the original solar billing structure used by most existing solar customers. Under NEM, when your solar system produces more electricity than your home or business uses, the extra energy is sent to the grid, and you receive bill credits. Those credits are generally valued at the full retail generation rate and can be used to help offset electricity you use from the grid later.
What is the Solar Billing Plan (SBP)?
SBP is the newer solar billing structure for customers with new solar systems and for existing NEM customers whose legacy period has ended. Under SBP, you still receive credits for extra solar energy exported to the grid, but those credits are based on hourly Energy Export Credit values that reflect the value of electricity at the time energy is exported to the grid. In general, this means exports may be worth more during high-demand hours and less during times when solar energy is abundant.
How NEM and SBP are different
| Topic | NEM | SBP |
|---|---|---|
|
How export credits are valued |
Credits are generally valued at the full retail generation rate. |
Credits are based on hourly export values that reflect the effective value of electricity. |
|
When credits are applied |
Charges and credits are settled monthly, with an annual cash-out each spring. |
Charges and credits are settled monthly, with an annual cash-out each spring. |
|
What happens to excess annual generation |
Eligible surplus generation is paid at the net surplus compensation rate plus MCE’s additional $0.02 per kWh. |
Eligible net surplus generation is paid at the applicable net surplus compensation rate. |
|
Bonus credits |
NEM customers do not receive SBP Energy Export Credits. |
SBP customers receive MCE’s Solar Bonus Credit equal to 10% of Energy Export Credits earned. Some customers may qualify for additional credits. |
When will a customer move from NEM to SBP?
Most existing NEM customers can stay on NEM for 20 years from their original Permission to Operate date. After that legacy period ends, they will transition to SBP. Customers may also be moved to SBP if they make certain changes to their solar installation that require a new Permission to Operate, such as a significant increase in system size. Adding battery storage to an existing NEM 1.0 or NEM 2.0 system generally does not end NEM eligibility.
What happens to my existing solar credits?
If you are transitioning from NEM to SBP, you keep your existing MCE solar credit balance. At the time of transition, MCE NEM credits are converted to MCE SBP credits, so they can continue to be used on your bill.
How could SBP impact my bill?
The biggest change is how exported solar energy is valued. Under NEM, solar exports are credited at the retail generation rate. Under SBP, export credits vary by hour and are based on the value of electricity at the time of day it is being exported to the grid. That means customers will see lower credits for energy exported during the middle of the day, when solar energy is abundant and cheap, while you can earn much higher credits during afternoon and evening periods when energy is more valuable to the grid.
Because of this, customers on SBP benefit greatly when pairing their solar with a battery storage system. Having a battery allows customers to consume more of their solar energy onsite, or export when prices are most economical and earn much higher credit value. Annual cash-out: what to expect
Each spring, MCE reviews solar customer accounts for the April-to-March annual cash-out period. If you produced more electricity than you used over the year, you may be eligible for a cash-out payment or bill credit. Under NEM, eligible net surplus generation is paid at the applicable net surplus compensation rate plus $0.02 per kWh. Under SBP, eligible net surplus generation is paid at the applicable net surplus compensation rate.
Tips for getting the most value from solar under SBP
- Use major appliances when your solar panels are producing, when possible.
- Consider whether battery storage could help you use more of your solar energy or shift exports to later in the day.
- Review your bill regularly so you understand when you are importing energy from the grid and when you are exporting solar energy.
- Before expanding your solar system, check whether the change could affect your NEM eligibility.
The bottom line
NEM and SBP both reward customers for exporting clean energy to the grid, but SBP changes how those credits are valued. If you are an existing NEM customer, your transition timing depends on your original Permission to Operate date and any major changes to your system. When you move to SBP, bill credits will be based on when your system exports energy, making battery storage more important than before.
