Customer-Sited Renewable Energy Generation

Key Information

Note: The content on this webpage applies in the territories of the large electric investor-owned utilities (IOU): Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E). Also, this webpage only covers retail transactions for energy (not "non-export" interconnection, energy sales at avoided cost, or wholesale market transactions).

Overview

California allows customers to install renewable electrical generation facilities primarily to offset the customers’ electrical needs, and to interconnect these facilities with the electrical grid. Customers have mostly installed solar, wind, and fuel cell facilities, but other energy sources such as biogas, biomass, geothermal, small hydroelectric, and ocean currents also count as renewable. A variety of California laws, listed below, have directed the CPUC to create rules (or “tariffs”) under which the IOUs must allow customers who generate their own energy ("customer-generators") to serve their energy needs directly onsite and to receive a financial credit on their electric bills for any surplus energy fed back to their utility.  Participation in these tariffs does not limit a customer-generator's eligibility for any other rebate, incentive, or credit provided by an electric utility.

Customer-Sited Renewable Energy Tariffs and Programs

Net Energy Metering

More than 90% of all megawatts (MW) of customer-sited solar capacity interconnected to the grid in the three large IOUs’ territories are on net energy metering (NEM) tariffs. Under NEM tariffs, participating customers receive bill credits for excess generation that is exported to the electric grid during times when it is not serving onsite load.  These bill credits are applied to customers' monthly bills at the retail rates (including generation, distribution, and transmission components) that the customers pay for energy consumption according to their otherwise applicable rate structures.  These tariffs are closed to new enrollments. For more information on the NEM tariffs, please visit the NEM and Net Billing webpage.

Net Billing

Since April 15, 2023, customers applying for interconnection have taken service on the new net billing tariff (NBT) pursuant to D.22-12-056. The NBT applies to the types of renewable electrical generation facilities that would previously have used standard NEM tariffs (i.e., not facilities eligible for the tariffs listed in the next section).  As with NEM, onsite generation is first used to serve onsite load under the NBT, offsetting energy costs. The NBT’s major difference from NEM 2.0 is that under the NBT, compensation for excess generation exported to the electric grid is applied to a customer’s bill at a rate reflecting the value of this generation to the grid.  For more information on the Net Billing tariff, please visit the NEM and Net Billing webpage.

Virtual Net Energy Metering (VNEM) and Virtual Net Billing Tariff (VNBT)

Virtual net energy metering (VNEM) enables an owner of a multi-tenant property to allocate a renewable electrical generation facility’s benefits to tenants across multiple units.  Tariff rules allow the system owner to allocate renewable generation bill credits between common load areas and tenants along a single or multiple service delivery points.  Otherwise, the bill credits function the same as under the standard NEM tariff.  The VNBT was created in the NEM Revisit rulemaking.

NEM Aggregation (NEMA) and Net Billing Aggregation Subtariff

Senate Bill (SB) 594 (Wolk, 2012) authorized NEM aggregation (NEMA).  NEMA allows an eligible customer-generator to aggregate the electrical load from multiple meters, and NEM credits are shared among all property that is attached, adjacent, or contiguous to the generation facility.  A customer-generator must be the sole owner, lessee, or renter of the properties in order to utilize NEMA.

For example, an agricultural customer could use a single renewable generation system to provide NEMA bill credits to offset the electrical load from their home as well as from an irrigation pump located on an adjacent parcel.  As of November 30, 2022, roughly 1% of all NEM projects were NEMA projects.  The Commission authorized the IOUs to implement NEM aggregation in Resolution E-4610 and established a bill credit calculation methodology in Resolution E-4665.

The Net Billing Agrregation subtariff was created i the NEM Revisted rulemaking.

Renewable Energy Self-Generation Bill Credit Transfer (RES-BCT)

This tariff enables local governments and universities to share generation credits from a system located on one government-owned property with billing accounts at other government-owned properties.  The system size limit under RES-BCT is 5 MW, and bill credits are applied at the generation-only portion of a customer’s retail rate.  RES-BCT was established by AB 2466 (Laird, 2008) and codified in Section 2830 of the Public Utilities Code.  In 2021, SB 479 was signed into law, which expanded RES-BCT eligibility to California Native American tribal governments. Information on the IOUs’ RES-BCT programs can be found at the following links: PG&E, SCE, and SDG&E.

NEM Fuel Cell (NEMFC)

Fuel cells that use renewable or non-renewable fuels and meet a greenhouse gas (GHG) emissions standard are eligible for the NEMFC tariff.  NEMFC was established by AB 1214 (Firebaugh, 2003) and codified in Section 2827.10 of the Public Utilities Code.  NEMFC bill credits are applied at the generation-only portion of a customer’s retail rate.  The program has a separately defined program cap of 500 MW.  As of November 2022, 120 MW of fuel cells were installed under this tariff.  Pursuant to SB 155 (2021), fuel cells must commence operation on or before December 31, 2023 to participate in NEMFC.

Income Qualified Solar Programs

The California Solar Initiative included a Single-family Affordable Solar Homes Program and a Multifamily Affordable Solar Housing Program.  Both of those programs are closed, though the MASH VNEM tariff can still be used by eligible properties.  The Solar on Multifamily Affordable Housing (SOMAH) Program provides financial incentives for the installation of solar PV systems on multifamily affordable housing properties.  Additionally, there are several programs, described on the Solar in Disadvantaged Communities webpage, that are designed to increase adoption of renewable generation in disadvantaged communities.

Renewable Energy Credits (REC)

Customer-generators may be eligible to receive compensation for the RECs associated with any excess generation.  To receive compensation, a customer must register their generation facility with the Western Renewable Energy Generation Information System and have it certified to be eligible by the California Energy Commission. For small customer-sited generation facilities, the compensation that would be earned by RECs is not generally high enough to be worth the time and fees involved in this process.

Contact Us

If you have any additional questions about information on this webpage, please contact the CPUC Energy Division at energy@cpuc.ca.gov.

Customer Generation