Net Energy Metering Program

This note is an update to the note we sent on September 8, 2017, as a reminder that after 11:59 p.m. on September 8, all interconnection applications for inverter-based systems must use smart inverter technology.  In our previous note we incorrectly stated that only those inverters with the [SI1] designation in the model number will be accepted.

We sincerely apologize for any confusion this has caused.  Here is the corrected information:

Please visit and click on the “Inverters List – Full Data” for the comprehensive list of inverters. Only those inverters with a certification date identified in column G will be approved.  For example, ABB PVI-3.0-OUTD-S-US-Z-M-A (240V) [SI1] is an approved smart inverter since it has a certification date of 09/09/2017 listed in column G.

For a detailed description of the smart inverter requirements, please refer to section Hh. of SDG&E’s Electric Rule 21.  If you have questions, please feel free to give Ken Parks a call at (858) 636-5581.

What is the Net Energy Metering Program?

A two-way connection

If you have an electricity generation system that uses a renewable fuel source at your home or business and your system(s) produces more energy than you use, you can earn bill credits for excess power that flows from your system to SDG&E’s electricity grid.

At times when the renewable fuel source is unavailable or limited, like when the sun isn’t shining or on cloudy days, and your system isn’t producing enough electricity to meet your needs, you will likely need to use SDG&E as a source of back-up power or rely on the credits that you may have generated at an earlier time.

This give-and-take is referred to as Net Energy Metering or NEM.


Any SDG&E residential or commercial electricity customer who generates at least some of their electricity with a renewable energy source is eligible to participate in the NEM Program.

There are two primary eligibility requirements for NEM:

  1. Your electricity generating system must be fueled by solar, wind or a different renewable source that is eligible for NEM. Other renewable fuels include, but are not limited to, biomass, geothermal and small hydro.
  2. Your system must comply with the rules and regulations for interconnecting customer-owned generation to SDG&E’s grid. 

Learn more about gas and electric standards here

Rules that govern NEM

There is a state-mandated cap on NEM and the rules for customers with systems connected before the NEM cap was met are slightly different than the rules for customers with systems connected afterwards. 

Customers with authorized interconnections established before the NEM cap was reached are subject to the provisions of Schedule NEM (NEM). 

NEM customers are grandfathered under NEM rules for 20 years from their original interconnection date.  Refer to the Transition Process section of Schedule NEM for details.

On June 29, 2016, the NEM cap was reached in SDG&E’s service area.  Going forward, interconnection applications for net energy metering are governed by the rules of the NEM Successor Tariff (Schedule NEM-ST or NEM-ST).

What’s new with NEM-ST

Interconnection fees and utility system upgrade costs

  • Customers with eligible systems that are 1 megawatt (MW) or smaller will be charged a $132 interconnection fee.
  • Customers with eligible systems larger than 1 MW will be charged the standard $800 interconnection fee and will be responsible for paying the costs of applicable transmission and/or distribution system upgrades that may be required.
  • Customers participating in the Single-family Affordable Solar Housing Program do not have to pay an interconnection fee.

Non-bypassable charges

  • NEM-ST customers will be billed non-bypassable charges (NBCs) on the net kilowatt-hours (kWh) delivered by SDG&E during each metered interval.
  • NBCs are made up of the following rate components:
    • Public Purpose Programs (PPP) charge
    • Nuclear Decommissioning (ND) charge
    • Competition Transition Charge (CTC)
    • Department of Water Resources Bond Charge (DWR-BC)
  • In the event an existing Schedule NEM customer increases NEM generator system size in excess of the following limitations, the customer will be responsible for paying NBCs on 100% of the net kWh delivered by SDG&E during each metered interval:
    • Systems that are 10 kilowatts (kW) or smaller can be increased by no more than 1 kW.
    • Systems that are larger than 10 kW can be increased by no more than 10% of the existing system size.
  • NEM-ST customers receiving service under a multiple tariff facility arrangement will also be billed NBCs on 100% of the net kWh delivered by SDG&E during each metered interval.
  • NBCs cannot be avoided by installing a generation output meter.

Time of use (TOU) rates

  • SDG&E customers who begin service under NEM-ST on or after the initial effective date of the tariff and for up to 120 days after the initial effective date of SDG&E’s General Rate Case Phase 21 (GRC P2) TOU rates can choose to receive service under an optional TOU rate or the existing tiered rate.
  • SDG&E customers can continue to receive service under their current rate for up to five years after they received permission to operate their system.
  • SDG&E customers who begin service under NEM-ST after 120 days from the initial effective date of the GRC P2 TOU rates must be on a TOU rate.

10-year warranty

  • All NEM-ST applicants must certify that a warranty of at least 10 years is provided for on all system equipment and installation.

Transition period

  • Eligible customers can continue to receive service under NEM-ST for up to 20 years from the original year they received authorization to operate their systems.  The following criteria, which are not mutually exclusive, will apply in the event NEM-ST is closed to new customers:
    • Customers whose system capacity is 10 kW or smaller can increase the capacity by up to 1 kW.
    • Customers whose system capacity is larger than 10 kW can increase capacity by up to 10% of the original capacity.
    • In the event a system is transferred to a new owner, the new owner will maintain the 20-year transition period so long as the system remains eligible for service under NEM-ST at the same location.
    • A paired energy storage system will be subject to the same transition period as the renewable facility that it is paired with. 

Service delivery point for virtual NEM

  • The virtual NEM successor tariff, Schedule NEM-V-ST, allows customers who are connected to different service delivery points on the same property to participate as Qualified Customers under the tariff.

NEM rates

For homeowners, the bill credits you earn and the electricity you consume (usage not covered by bill credits) are based on the electric or billing rate you select when you join the program. You can opt for the NEM billing rate or elect to stay with your residential rate.  Click below to do a self-analysis of your regular energy usage to select the rate that's right for you.

Learn more

Your NEM bill

Now that you're generating part or all of your own power needs, your billing will change to reflect this. You should expect to receive two bills from SDG&E; one bill for the meter your renewable generator is associated with and another bill for your gas meter and other electricity meters, if you have any. Click below for the specifics.

More information regarding your bill

1In its decision adopting NEM-ST, the California Public Utilities Commission (CPUC) established a requirement that all residential customers receiving service under NEM-ST must be billed on a TOU rate.  Prior to that decision, SDG&E submitted a proposal to the CPUC in its most recent GRC P2 Application that will, if approved, result in a change to the current TOU billing periods.  Because of this, SDG&E asked for and received approval from the CPUC to delay the implementation of mandatory TOU rates for residential NEM-ST customers until the GRC P2 rates become effective.