Net Energy Metering Program

What is the Net Energy Metering Program (NEM)

A two-way connection.

If you have taken steps to equip your home or building with solar power capabilities, and your system(s) produces more energy than you use, you can earn bill credits for the excess power you put back into our electric grid.   

You also may require electricity from SDG&E when the sun doesn’t shine at night or on cloudy days when your system doesn’t produce what you need.

The only way to ensure that extra power is available is to be connected to the grid – the system of wires, poles, meters, substations and power plants.  It’s a two-way connection.  When solar customers need electricity, they take it off of the grid.  When they produce more than they use, they give it back to the grid and get a credit on their bill.  This give and take is Net Energy Metering, or NEM.


Any SDG&E residential or commercial electricity customer who generates at least some of their electricity is eligible for net energy metering (NEM).

The two basic eligibility requirements for NEM are:

  1. Your electricity generating system must be powered by solar or wind or an eligible renewable source
  2. Your system must comply with the NEM rules and regulations for interconnection to SDG&E’s grid

Rules That Govern NEM

There is a state-mandated cap on NEM and the rules are slightly different for systems that connected before or after the NEM Cap was met. 

Two sets of rules govern NEM customers.

Customers with authorized connections established before the NEM Cap was reached are subject to the “NEM Tariff”.  To be included in the NEM Tariff, SDG&E must have received:

  1. a complete NEM application with signed Terms and Conditions, and
  2. the Electrical Clearance from the appropriate City / County authority that has jurisdiction over the premise.

Customers with the NEM tariff are grandfathered under current rules for 20 years from the original interconnection date.

Customers who establish their interconnections after the NEM Cap will be billed according to the “NEM Successor Tariff”, or NEM-ST. The NEM-ST rules are similar to NEM tariff except for three primary differences.  NEM-ST customers will:

  1. Pay a one-time non-refundable interconnection fee
  2. State that their system equipment has at least a 10-year warranty
  3. Pay non-bypassable charges (NBC’s) on the electricity that is received from SDG&E (NBC’s are not paid on electricity generated by the customer’s solar PV system)

When approved by the CPUC, residential customers on the NEM-ST tariff will be moved to Time of Use Rates, where you pay a certain rate based on the time of day/night you use it.

You can follow the progress on reaching the NEM cap*.

*California law limits the amount of customer-owned renewable generation that can be connected to the electric system/grid under NEM treatment. This is called the NEM Cap. The NEM cap was reached this summer.

Inspections and Fees

If you connect your eligible system under NEM-ST, a one –time non-refundable interconnection fee will be charged at the time of filing the application. For systems generating less than 1 MegaWatt (< 1MW), the fee is$132.  The fee covers application processing costs and an inspection to make sure that your solar electric system  is connected to the grid safely.

Customers taking service under NEM Aggregation tariffs or Virtual NEM tariffs, there is are additional costs that can range from $900- $3,000. 

All solar installations must comply with the SDG&E gas and electric standards.  

Learn more about gas and electric standards here

Self-Generated Energy Charges

There are no charges for the electricity that you self-generate. However, you do need to select an electric rate. See NEM Rates below.

NEM Rates

For homeowners, the bill credits you earn and the electricity that you consume, (that is 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.

Under the NEM-ST rules, residential customers will be moved onto a Tim-Of-Use (TOU) rate when they become available in SDG&E’s territory.  Customers that take service on NEM-ST before the TOU rates are available will have the option to stay on their initial rate for up to 5 years if they take service.

Learn more

Your NEM Bill

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

More information regarding your bill


There is a state-mandated cap on Net Energy Metering.  Click below for the formula for current percent of cap and the current calculation.

See the cap