Category: News

One of the most common questions we hear from customers is, “Who makes the best solar panels?” The manufacturers they typically ask about, such as Panasonic and LG, are often the same ones who made their television or washing machine. However, the manufacturer we recommend most often is one that most of our customers don’t recognize: SunPower.

There’s a reason why you may not know that name—the only thing they do is make solar power equipment. And there’s a reason why SunPower is almost always our first choice when it comes to solar power.

SunPower—and its founder Richard Swanson—are a big part of the reason why solar panels are practical and affordable.

Solar panels are not a recent innovation. In fact, the first patent for what we would now recognize as a solar cell was awarded more than 130 years ago. By the 1950s, solar cells were being used in a variety of commercial applications, as well as on satellites. But they incredibly expensive and inefficient, costing more than $16,500 per watt in today’s dollars. At that rate, a modest-sized residential solar power with a capacity of 5 kilowatts (5,000 watts) would cost $83 million.

This was obviously a bit steep for most people. Research in the 1950s and ‘60s improved the efficiency of solar panels and pushed down the manufacturing costs, but they were still extremely expensive.  Ironically, it was research by Exxon in the early 1970s—spurred on by rising oil prices—that resulted in the first drastic improvement in solar cell costs. But they were still very costly—about $130 per watt in today’s dollars, meaning a 5-kW system would cost $650,000.

Around this time, an engineer named Richard Swanson earned his Ph.D in electrical engineering and joined the faculty of Stanford University—California’s foremost private university, with a list of alumni that includes presidents, countless company founders, and more than a  dozen astronauts—as a solar power researcher. His goal was to improve solar cell manufacturing techniques. By the 1980s, his work proved promising enough to earn funding from the Department of Energy. He and a colleague named Richard Crane founded EOS Electric Power, which in 1988 was renamed SunPower. Since its founding, SunPower’s headquarters have been located in San Jose, California.

After years of experimental work on behalf of private corporations and NASA, SunPower’s focus shifted to consumer-grade products, and revolutionized the solar panel industry. In a 2013 lecture at Stanford, Swanson explained that in 2000, he decided to take the extremely high efficiency panels he had developed and adapt them for lower-cost, large-volume manufacturing processes. After spending two decades making better solar panels, he wanted to make cheaper solar panels that the public could afford. In 2004, the company’s first manufacturing facility started operations. Within a decade, the company’s value increased from a few billion dollars to nearly 5 billion dollars.

SunPower’s solar panels are considered the best on the market because of the ratio of their quality versus their cost.

Just about every solar panel company has had to focus on cost as their primary concern, because they were consumer brands that had to make affordable products from day one. This meant starting with relatively low-grade solar panels. As consumers have come to demand more from their solar panel systems, these companies have had to develop ways to make them more effective.

The reason that Richard Swanson’s little experimental solar panel company increased in value by 1,000 times in the space of 15 years is because of SunPower’s unique path in the solar panel industry. The company spent decades developing hyper-effective solar panels that could be used to power a car across Australia years before the first fully electric cars hit the market. They developed panels that could push an unmanned aircraft 96,000 feet into the sky.

Then, SunPower spent a decade making their panels cheaper. The solar panels that resulted from these efforts are widely considered to be the best consumer-grade solar panels on the market, because:

• Their X-Series panels top out at 22.8% efficiency, the best in the industry
• Their panels are more resistant to heat-related inefficiency than just about any on the market
• Real-world testing has shown that the energy production of SunPower’s panels degrades at a fifth the rate of other panels.
• They guarantee that their panels will retain a power output of at least 92% after 25 years of use.
• SunPower’s products have a 25-year warranty, the best warranty in the industry, which covers repair and replacement of defective equipment.

For more than a decade, SunPower has been bringing solar power to newly constructed California homes.

In 2017, new laws went into effect requiring every new home build in the state of California to comply with stringent energy codes for insulation and energy efficiency. And the state didn’t stop there—beginning in 2020, the state will require homebuilders to build homes with integrated rooftop solar panel systems, or to create shared community solar power systems.

But SunPower has long anticipated that California and other states with increasingly burdened energy infrastructure would compel homebuilders to embrace solar power. Since 2005, SunPower has partnered directly with homebuilders all across the country. As of mid-2017, the company has assisted in the construction of more than 25,000 homes with integrated solar power systems, working with 10 of the nation’s 13 largest builders. More than 2,000 of those homes have been built by a single Northern California builder, Richmond American Homes, right here in our own backyard.

In addition, in 2007 the California Energy Commission launched the New Solar Homes Partnership (NSHP). Designed to help home builders prepare for California’s energy efficiency goals, the program offers builders incentives to build solar power-equipped homes. Of the 27,000 solar system-equipped homes built by installers participating in the program, SunPower has assisted with nearly half of them.

That’s why we’re passionate about SunPower’s products: because they are even more passionate about them. Capital City Solar installs panels made by a variety of manufacturers, but nobody else in the solar power industry puts so much effort into improving their products and pushing for the widespread adoption of solar power. This passion is plainly obvious in the quality of SunPower’s products. That’s why our first recommendation to each and every customer we work with is to choose SunPower solar power systems.

At the beginning of 2018, the United States government enacted a tariff on imported solar panels. Essentially, most companies that imported more than 2.5 gigawatts’ worth of crystalline silicon solar cells and solar modules would have to pay a 30% tax on the equipment.

While the cost of solar power has continued to get cheaper, these tariffs have created a great deal of hardship within the industry. SunPower, one of the largest solar cell manufacturers in the country, estimated that the tariff has been costing them $1.5 million to $2 million per week. This was despite the fact that the tariff granted exemptions for solar equipment imported from certain countries. Most such equipment is made in China, Mexico, and the Philippines, all of which are impacted by the tariffs.

But in September 2018, the United States granted SunPower and other manufacturers tariff exclusions on certain types of solar products.

Beginning on September 19, 2018, the U.S. Trade Representative—the agency responsible for developing and recommending trade policy for the United States—announced that some products would be exempted from the import tariffs. Among the residential and commercial scale solar products granted tariff exemptions are:

• 10 to 60-watt rectangular solar panels of certain sizes
• Portable and off-grid crystalline silicon photovoltaic (CSPV) cells
• Solar panels producing less than 27.1 watts, measuring less than 3,000 square centimeters, and meeting certain other requirements

The media has noted that of the various manufacturers operating in the United States, SunPower, which manufactures and assembles its modules in the Philippines and Mexico, benefits significantly from this development. SunPower itself acknowledged the benefits of these exemptions, as they will apply to the back-contact solar cells and panels the company makes.

While SunPower was seriously impacted by the tariffs, its efforts this year have led to benefits from the new tariff exclusions.

SunPower has been making significant efforts to mitigate the effects of the tariffs. Some industry outlets have noted that the company had been hard hit by the trade policy, with one stating, “SunPower stands out within the solar industry… as a company damaged by the administration’s [original tariff] policy.”

While many solar manufacturers have relocated overseas in recent years, SunPower has been continuously headquartered in San Jose, California since 1985. Today, it’s one of the largest American solar power companies. The company employs more than 17,500 workers located in 40 states, and supports more than 500 dealers across the country. It is also one of the very few solar companies that does not import components from China, a prime target for import tariffs.

In addition, in 2017 alone SunPower spent more than $120 million on American R&D endeavors, with the aim of enhancing the productivity, efficiency, and reliability of its panels. In 2018, SunPower sought to extend its American investments by acquiring SolarWorld Americas, making SunPower one of the largest U.S. manufacturers of solar components.

The newly announced exclusions are good news, as is increased investment in American manufacturing capabilities. The exclusions will allow SunPower to continue to offer their products at competitive prices. But the remaining tariffs will continue to impact many manufacturers and products. We will keep you up to date on ongoing developments in the solar power industry, and their impact on homeowners and business owners like you.

Solar power is a great way for homeowners to save money by generating their own electricity and reducing their reliance on increasingly costly energy generated by local utilities. But there’s a big problem with solar energy: If you don’t use electricity as it’s generated by your solar power system, that energy is lost. Technically, that electricity is never generated in the first place. While we won’t get too technical here, it’s easy to see the key issue here.

Solar power systems generate electricity during the day, but most households use the bulk of their electricity in the evening. This severely undermines the usefulness of solar power. That’s where net energy metering (NEM) comes into play.

Net energy metering is a system where unused energy can be sent to the local utility grid and credit which offsets the cost of electricity used later.

Back in the early 1980s, a few individuals and organizations in the United States were beginning to experiment with alternative forms of energy generation, primarily solar and wind power. These systems were typically connected to the energy grid, as consumers usually needed a source of electricity when their needs exceeded their generation capacity. But the nature of these systems meant that when their solar or wind power systems generated excess electricity, it was sent to the grid.

Consumers began lobbying utility companies and local governments, asking to be compensated for the electricity they generated and sent to the local grid. They proposed a system that would allow them to time-shift their energy usage—much like recording a TV show when it airs, and then watching it later when it’s convenient. They could send energy to the grid when they didn’t need it, and then be paid back later with electricity from the grid.

Over the last 35 years, 44 states have passed laws codifying this system, known as ‘net energy metering.’ The details of these laws vary from state to state regarding the:

• Percentage of homeowners who can ‘subscribe’ to net metering
• Maximum generation capacity
• Unused credits can be rolled over month-to-month or year-to-year
• Compensation rate for electricity sent to the grid

California’s net metering policy is favorable to homeowners, though it’s been updated recently to address long-term concerns for utility companies and their customers.

California enacted its first net energy metering in 2006. Originally, this NEM policy was very straightforward and generous to homeowners. Having a solar power system connected to the grid was free, the credit amount for every kWh of energy sent to the grid was equal to the rate charged by utilities, and fees were minimal.

This was by design, as offsetting the very high prices of early solar power systems required a great deal of incentivization. For perspective, the Solar Energy Industries Association (SEIA) estimates that solar power installation costs have dropped by 47% in just the past 5 years.

But in the last decade, California’s solar power production rate has soared. The Solar Energy Industries Association (SEIA) estimates that 16.68% of the state’s electricity was sourced from solar power in 2017—the highest rate in the country.

This presents something of a problem for energy utilities and their customers in the long-run. When a homeowner reduces their reliance on utility-sourced electricity, their payments to their local utility also decrease. A very conscientious homeowner may well be able to ‘zero out’ their energy bill and pay nothing—even though they still rely on the energy grid, which requires maintenance, repair, and expansion. If the current trend continued, those without solar power—either by choice or because they didn’t have the means or option of installing solar power—would bear an outsized share of the financial burden of maintaining the state’s energy grid.

In 2016, the California Public Utilities Commission (CPUC) rolled out NEM 2.0, a revamped net energy metering system.

Homeowners who install solar power systems today enjoy many of the benefits of NEM that have motivated Californians to go solar for more than a decade. But there are four key changes that impact new adopters of solar power:

1. You must pay a one-time ‘interconnection fee’ to have your system connected to the energy grid. This fee is about $150.
2. You must enroll in your utility company’s time-of-use pricing.
3. You are compensated for the energy you send to the grid at a rate 2 to 3 cents lower than the retail rate. These deducted fees are used to support a variety of state programs.
4. A small percentage of energy charges are ‘non-bypassable,’ meaning that they cannot be offset with energy credits. This is to ensure that the cost of maintaining utility energy grids is not paid for solely by non-solar customers.

Even under the new NEM 2.0 system, it is still possible to nearly zero out your energy. Capital City Solar’s customers average a 75% reduction in their energy costs. Some even manage to finish the year with a net surplus of electricity on their annual true-up settlement bill, meaning they produced more electricity than they sold.

Customers are credited for this excess electricity at a ‘net surplus compensation’ (NSC) rate specified by their utility. As of December 2018, PG&E’s NSC rate is 2.951 cents/kWh, while SMUD’s NSC rate is 5.52 cents/kWh.

NEM programs in California and elsewhere will continue to evolve over time as more homeowners install solar power systems. The popularity of these programs, and the efforts of solar industry and customer advocacy groups mean that future adopters of solar power will continue to enjoy the financial benefits of net energy metering for many years to come.

Currently, about 75% of the energy generated in California comes from three private utility companies:

• Pacific Gas & Electric (PG&E), which serves much of Northern and Central California (including many of our customers)
• Southern California Edison in Los Angeles
• San Diego Gas & Electric (SDGE) in L.A. and Orange County

While the above companies are privately owned by investors, the Sacramento Municipal Utility District (SMUD), which provides electricity to Sacramento County and is one of the largest publicly owned utilities in the country.

It’s understandable that many homeowners would want the option of buying their energy from a not-for-profit organization, like SMUD, or to have the option of choosing how their electricity is generated. This is why many communities in California and other states are attempting to secure lower energy prices—or to source green energy—from local utilities by creating CCAs, or community choice aggregations. CCAs are non-profit public agencies which represent geographic regions, such as communities, cities, or even counties. Homes and businesses located within a CCA’s service area are automatically enrolled in the CCA, from which they buy their energy. The CCA in turn contracts with an energy utility for electricity supply, grid maintenance, and other service needs. The CCA acts as an intermediary between the public and the utility, which continues to handle all the responsibilities it did previously. Even the billing is still handled by the utility, which includes a line item for the rate paid by CCA members.

Even though the energy is still being generated by the same utilities that currently serve Californians all across the state, the idea does make sense. Just about everyone understands the concept of buying in bulk in order to secure a lower per-unit price. The larger the order volume, the more the supplier is willing to negotiate on price. Just ask anyone who shops at Costco.

But, how well do CCAs work in achieving their advertised goals? Well, it’s a mixed bag. We’ll take a look at a couple of the CCAs operating in the Sacramento region—Valley Clean Energy Alliance, and Pioneer County Energy—discuss the benefits that they advertise, and then consider some of the underlying weaknesses of CCAs.

Valley Clean Energy Alliance serves the residents of Davis, Woodland, and unincorporated regions of Yolo County.

In September 2017, SMUD announced that it had secured a five-year contract with the Valley Clean Energy Alliance (VCE) to provide electricity, as well as maintenance and customer support services. VCE began providing energy services in June 2018, with the goal of reducing reliance on electricity generated from fossil fuels, while also reducing prices.

VCE offers two service tiers to customers:

• A competitively priced standard plan, with a goal of rates 2.5% below PG&E’s standard rates, while using more ‘clean energy’ than PG&E typically provides (with a goal of 42% of energy being derived from renewable sources). This is the plan which customers are enrolled in by default.
• For those who wish to use 100% green energy, VCE offers an ‘ultra-green’ option, for which they charge a $0.015/kWh premium over standard rates.

One of the chief goals of the Valley Clean Energy Alliance is to maximize benefits for residents with solar power systems. The VCE is still in negotiations with SMUD, with the start date of VCE’s NEM program scheduled for January 1, 2019. The policy currently being developed will compensate solar customers at a rate of 1 cent per kWh over what PG&E pays direct customers. This means that VCE’s solar customers will be better compensated for the energy they send to the grid, further reducing their power bills.

Placer County residents now receive their electricity from Pioneer County Energy.

Pioneer Community Energy was established to purchase energy from PG&E on behalf of the residents of Placer County. Managed by a board of local elected officials, the goal of Pioneer is to ensure that residents enjoy the lowest possible rates, and address the larger energy needs of the local community.

In December of 2017, Pioneer set its rates at 3% below the average rate charged at the time by PG&E. When PG%E raised its rates in March of 2018, Pioneer’s board voted to maintain the previously established price per kWh, meaning that Pioneer’s customers now enjoy rates 9% below those now charged by PG&E. It should be noted that the amount of this discount varies depending on a customer’s rate schedule, but the vast majority of customers receive a discount of 5% to 9% on their energy rates.

One of the most attractive benefits touted by CCAs are reduced rates—but this benefit is contradicted by mandatory ‘exit fees.’

California’s population has been growing explosively for decades now, and a growing population means growing energy needs. Building new electricity production facilities and the energy grids to meet this need is very costly. Thus, utilities must be very forward-looking in their budgeting. For utilities to recoup the costs of new facility construction in the short term, they would have to raise rates tremendously.

Instead, they take a long-term repayment approach, raising rates just enough to recoup costs over a period of many years or even decades. But with millions of consumers joining CCAs which negotiate lower rates that don’t cover these costs, this presents the risk that consumers still directly served by the utilities would have to bear an unfair share of the infrastructure costs.

This is why California’s Public Utilities Commission (CPUC), which regulates the state’s energy industry, requires that customers joining CCAs must pay an ‘power charge indifference adjustment’ (PCIA), better known as an ‘exit fee.’ Exit fees essentially itemize infrastructure costs for CCA customers—the main share of your bill is dedicated to your energy costs, but you pay an additional fee per kilowatt of energy used to cover infrastructure costs.

For CCA members, this means that in some cases, their rates may increase, rather than decreasing. Valley Clean Energy and Pioneer Community Energy currently state that their advertised rates are inclusive of exit fees.

But exit fees are subject to regulatory changes. In October 2018, the PUC adopted a proposal that will increase exit fees. With the new fees, CCA customers in PG&E territory will see their rates increase 1.68%. Customers elsewhere are being hit harder. Consumers served by Edison will see bills rise by 2.5%, and those served by SDG&E will experience a rate increase of 5.24%.

These rate changes underscore how CCA members may not actually benefit from the touted benefits of CCA membership long-term.

If exit fee rates rise again in the future, CCAs may face an awkward situation where their rates are actually higher than utilities. Another worry is that some CCAs may go bankrupt, and the cost of transitioning consumers back to utility companies may be extensive.

Another criticism is directed at the greener energy options offered by CCAs. Utility customers receive electricity that is generated by a blend of different sources, including fossil fuels, wind, and solar. Depending on demand and time of the day, percentage of energy produced from green sources may increase or decrease.

But CCAs are pushing hard on offering energy options that have a much higher percentage of energy sourced from green facilities. For instance, recall that VCE’s goal for its standard service is 42% green energy, while also offering a 100% green energy option.

The issue is that the utilities generating electricity aren’t meeting these demands by producing more energy from green sources. Instead, they’re engaging in what’s known as ‘resource shuffling.’

Utilities like PG&E don’t guarantee a certain percentage of energy produced from green sources for services provided to direct customers. So, imagine that on average, PG&E averages about 20% green-sourced energy across the board for all of its customers. But then half of their customers join a CCA that guarantees a baseline of 30% green energy. PG&E meets this requirement by directing more green-sourced energy to the CCA customers, and more fossil fuel-derived energy to its own customers to compensate. The CCA customers use energy that’s 30% green, while PG&E’s customers use energy that’s 10% green—working out to the original average of 20%. This means that the CCA isn’t doing anything to actually benefit the environment.

But this doesn’t appear to be slowing the public’s embrace of CCAs.

CCAs are emerging all over California, with more than 8 million Californians now buying their electricity from CCAs.

According to the California Community Choice Association (CalCCA), there are now 18 CCAs providing services in California as of November 2018. The largest of these is East Bay Community Energy, which manages more than half a million customer accounts. Other notable CCAs include Monterey Bay Community Power (which serves Monterey, San Benito and Santa Cruz Counties), Peninsula Clean Energy (San Mateo County), and Silicon Valley Clean Energy (Santa Clara County).

Other counties currently considering CCAs include Butte County, Lake County, and San Joaquin County. Southern California counties looking into establishing CCAs include Fresno, Tulare, San Luis Obispo, Santa Barbara, and many more.

We are often asked by our customers if they should stay in a CCA they have been enrolled to, or choose to opt out—every CCA enrollee has the right to opt-out for free, as long as they do it quickly, usually within 60 days of enrollment. The answer to that question depends on your personal preferences, and your risk tolerance. Consider the following:

1. With the currently offered rate, will you see a cost reduction significant enough to take the risk that future exit fee hikes may reduce discounts, or even result in higher rates down the line?
2. If your CCA fails, you may have to pay a significant reenrollment and/or settlement fee with your local utility. Do you have the financial means to bear this cost?
3. If environmental concerns are a key factor for you, is your local utility committed to a significant reduction in the use of fossil fuels, or is it likely they will use resource shuffling to compensate for your CCA’s cleaner energy?
4. CCAs are often managed by local government officials. Are you comfortable with your local government making energy decisions on your behalf?

It is almost certain that more CCAs will be formed in the short-term. We will continue to watch these developments closely, and will share follow-up posts as necessary to keep our customers apprised of new developments.

From the moment affordable residential solar power systems gave homeowners the ability to generate their own power, and not have to rely entirely on local utilities, there has been tension between solar cell manufacturers, energy utilities, and homeowners. Energy producers push for higher electricity prices and lower NEM rates, alleging that solar power system owners benefit from the grid without adequately covering the cost of operating it, while homeowners accuse utilities of price gouging. Outside forces sometimes impose upon these delicate relationships as well, such as when the federal government imposed costly tariffs on imported solar panels.

There are innumerable advocacy organizations lobbying on behalf of energy producers and fossil fuel companies. But who speaks for consumers who wish to take the greatest possible advantage of their investment in solar power, without unfair imposition from political or commercial interests?

This lack of representation is an issue that has weighed on the minds of players in the solar power industry for quite some time. After all, their continued future depends upon continued consumer demand. If, for instance, government interests acting on behalf of the fossil fuel industry took actions that increased the cost of solar power, or reduced the financial benefits, demand for solar would die.

The groundwork for the nation’s first solar consumer advocacy group was laid in the back room of a Southern California restaurant.

Directors of the California Solar and Storage Association (CALSSA), an advocacy group which promotes the use of clean technologies, have long recognized the need to create a formalized organization which could act as a mouthpiece for solar consumers. After two years of concerted effort, CALSSA had managed to cobble together the organization Solar CitiSuns, which boasted a membership of 800 people. But the group needed more traction.

They started by hiring David Rosenfeld, a political organizer who has spent more than two decades working the Public Interest Network, MoveOn, OSPIRG, and other advocacy funds. With Rosenfeld on board, the group was able to catch the attention of such industry movers and shakers as Tom Starrs, the chair of the Solar Energy Industries Association, and Billy Parish, the CEO and co-founder of Mosaic, the country’s largest residential solar lender.

In an ad-hoc strategy meeting in the back room of a steak house in Anaheim in early 2018, David Rosenfeld and various industry representatives came together to identify a path forward for the organization. Solar CitiSuns was then rechristened as the Solar Rights Alliance, or SRA.

SRA’s members occupy the full breadth of the political spectrum, but agree on the importance of solar energy.

The SRA has no political ideology—Democrats, Republicans, and the independently minded all count themselves as members—save for the goal of establishing a Solar Bill of Rights, which would guarantee:

1. The right to generate solar energy, free from obstruction by utility companies.
2. The right to connect solar energy systems to the energy grid as cheaply as possible, and without delay.
3. To get a fair price for energy sent to the grid.

While these might seem like minor requests, power companies have been locked in bitter battles with consumer advocates and the solar industry for years:

• In 2016, the utility industry donated more than $21 million to ballot initiatives seeking to ban the third-party sale or leasing of solar panels.
• Utility companies in South Carolina spent hundreds of thousands of dollars to block a bill that would have lifted the cap on the number of homeowners who could take advantage of net energy metering.
• Energy companies in Florida designed and backed Amendment One, a state ballot initiative which appeared to increase public access to solar power, but which was actually designed to mislead voters into price-gouging solar users.
• Many states, including California, are in the process of phasing out net metering, the agreement which financially compensates solar power system owners when they generate energy for the local utility grid.

These challenges from the energy industry are why the SRA is pushing back. Within six months of Rosenfeld taking control of the SRA in March 2018, its membership increased from 800 members to 7,000.

The group’s first opportunity to flex its collective muscle came in September 2018, when it became apparent that the governor of California, Jerry Brown, was hesitating to sign SB 700, a bill passed by the legislature that would extend the lifespan of the Self-Generation Incentive Program.  The SGIP offers rebates to help cover the construction of distributed energy production and storage systems. The SRA alerted its members, and 500 of them contacted the governor’s office. That same week, the bill was signed into law, ensuring funding for $800 million in subsidies.

But the SRA is still small, especially when you consider that more than 700,000 Californians have invested in solar energy systems. The group’s short-to-midterm goal is to grow membership to 70,000 people, or 10% of homeowners in California with solar power systems.

We encourage you to visit the Solar Rights Alliance website to learn more about solar power, and your rights as a solar power system owner. Their blog is updated regularly, with answers to common questions asked by owners, developments in the industry, issues of concern for system owners, and more. If the SRA’s goals match your own, then consider joining the organization, or even supporting their mission. If nothing else, we hope that you’ll find that they are a great resource.

When you have a solar power system installed on your home, not only does the amount of money you spend on electricity change significantly, but how you pay for electricity changes as well. After your system is switched on, you will continue to receive monthly statements from your utility company. These will indicate how much electricity you used from the grid, how much you sent back, and what your net balance is for the month. But it’s important to remember that these statements aren’t bills.

After you go solar, your energy company will stop billing you on a monthly basis to avoid unnecessary accounting costs.

If you’ve ever split ongoing costs with a partner or family member—like friends who take turns paying for weekly lunches—you know this often results in money moving back and forth repeatedly. It’s not a very efficient process, and for a company that processes massive numbers of transactions, like PG&E or SMUD, this would prove to be very costly.

For instance, in May, you might owe PG&E $50. But in June, PG&E owes you $50. If PG&E billed on a monthly basis, they would have to process those two payments, with the net result of no money changing hands. Why take on those accounting and processing costs if there’s no need? Consider this example summary of a PG&E’s energy billing over the course of a year.

While there’s a fair amount of money moving back and forth, until the last couple months of the year, neither PG&E nor the customer owes that much overall over the course of the year, as can be seen when looking at a running total:

Between January and October, the total running bill never exceeded $104 owed to PG&E, and $46 owed to the customer. So, to make payments more efficient, your energy provider instead keeps what is essentially a running tab or IOU. Your energy provider will track your energy consumption each month, along with the credits you earn through net energy metering. Each month you’ll receive a statement summarizing your energy usage and the energy you sent back to the grid.

You won’t be billed for your energy usage, but you will be assessed a small ‘electric minimum charge’ or ‘basic delivery charge’—usually around $10 to $12—which covers the cost of keeping you connected to the grid.

At the end of your 12-month payment period, your power company will send you what is called a ‘true-up’ bill or settlement bill, billing or crediting you for your energy usage for the previous year.

At the end of the year, your utility tabulates:

• Your energy usage over the course of the year
• The minimum charge—if you meet certain requirements, your payments will be credited back to you
• The credits you’ve earned by sending energy back to the grid
• Taxes owed

With all this totaled, you are either billed for what you owe, or are provided with a ‘net surplus compensation.’

This statement will include a ‘summary of NEM [net energy metering] charges,’ similar to the example seen above. This summary includes quite a bit of information, including the amount of energy used for each tier of your provider’s time-of-use pricing schedule, total usage for each month, taxes owed for each month, and year-end total for each of these figures.

This is a good opportunity to better understand your energy usage habits by examining your monthly usage and what times of day you use the most electricity. If you are a PG&E customer, your true-up statement will also include charts showing your net monthly consumption, as well as your cumulative balance. Below is a graph which combines both pieces of information based upon our example.

By examining how your month-to-month energy usage impacts your total year energy budget, you can find ways to maximize the savings offered by your solar power system. Consider the example above, where for 10 months out of the year, the homeowner’s total energy cost never exceeds about $100. But in the last two months of the year, during the holiday season, their energy usage explodes. Rather than owing a few dollars, they end up with a true-up bill of more than $500.

It’s not unusual for homeowners new to solar power and the change in billing to run into unexpected financial hardships due to being hit with a big true-up bill. But by adjusting their behavior in months with historically high usage—reducing your reliance on electric heat, cooking during off-peak hours, installing more efficient lighting—you can ensure that you end the year on a high note, and not a high bill.