True-Up Periods, Billing Frequency & Wholesale Energy Rates
As Solar PV Generation is created throughout the year, its main objective is to offset the amount of imported energy the customer is consuming. As this is happening, there will be times where the amount of generated energy is greater than what the customer is importing to their home or business. When this happens, PV-generated energy is then sent back out to the grid, where the customer will earn “Credits” for that energy.
Customers cannot just keep accumulating credits on a monthly or annual basis continually. There will be a point where the credits will “reset” back to zero. This is called the True-Up Period, and it can occur on a monthly or an annual basis. This date will vary depending on the specific metering rules of each utility company.
True-up Period - Annual
The most common True-Up Period is an Annual True-Up. This is where the utility will have one specific day out of the year when they will reset all banked energy credits (that are not used up by being applied to a surplus of imported energy) to zero.
Below is an example of how energy credits from PV are applied to a customer’s consumption profile throughout the year.
The “Energy” column represents the customer's electric statement they would receive from the utility company. Positive numbers represent the cost of imported energy used during the month in excess of PV generation. Negative numbers represent the value of credits earned from exported PV energy for each month of a total year.
In this example, the winter months of January and February show that this customer did not produce enough excess energy credits with PV and therefore has a remaining balance due to the Utility. In March, the “Energy” column shows a negative value and represents a scenario where the customer produced more energy than they used, creating a surplus of exports for that month.
Moving down into the months May-August, you will begin to see a negative in the “Cumulative Energy Credit” column. This implies that the energy generated from PV is greater than the amount of energy the customer pulled from the grid during the current billing period. The surplus is accumulating month after month and providing the customer with energy credits for that generation. These accumulated credits can then be applied to the following months when the customer uses more energy than what the PV generates.
The months of October-December show that the customer had used up their accumulated energy credits they banked during the summer months and are now using more energy than the PV system has produced.
At the end of the year, this customer has used $1,433 worth of energy in excess of what their PV system produced. They will receive a True-Up statement with a bill for that amount, and their account will be reset to zero to start the annual billing process over again.
True-up Period - Monthly
A monthly True-Up works similarly except that any exported credits banked during a given month are reset back to zero each month and do not carry through and accumulate for the following months. If a customer generates more energy than what they consume in a given month, the result would be a $0 energy charge and, depending on the Utility, a small compensation for surplus credits at a wholesale energy rate.
A customer importing more energy than what PV generates will have a bill they will pay to the utility for that month.
Utility Billing Frequency
This refers to the frequency in which a customer receives a utility bill that must be paid. With an annual True-Up Period, there are two different scenarios for Utility billing frequency.
- Annual: Customers on an annual billing frequency will receive statements each month showing them the state of their annual NEM charges or credits but will not have a bill that is due until the annual true-up period date.
- Monthly: Customers with an annual True-Up period but on a monthly billing frequency will receive a utility bill each month, and if there is a balance resulting from more ‘imports’ than ‘exports’ to date, the customer must pay the amount due monthly.
Wholesale Energy Rate
The value of excess kWh energy credits at the end of a 12-month NEM cycle. This only applies if a customer finishes their 12-month NEM cycle with excess credits (i.e., more energy produced than used).
Net Surplus Generator
A term often used within the renewable energy industry “net surplus generator.” This occurs when the PV system creates more energy annually than what the customer is pulling in from the utility. In this instance, one of two things can happen:
1. The customer will receive a “Wholesale” rate for energy credits accumulated during the billing period. This amount will vary from utility to utility but often land in the three to five-cent range.
2. The customer does not receive any credits for PV generation that exceeds the annual consumption and should consider reducing the amount of PV being proposed.
*Note: for an annual true-up scenario, the customer has been receiving credits throughout the year that are applied to each month’s energy bill, but any generation that exceeds annual consumption will typically be credited at the wholesale rate.