Switching over to solar power comes with a lot of expectations. One of the more common ones is eliminating your electricity bill all together. Unfortunately for some home homeowners, this isn’t what happens.
Instead, they’re hit with a high true up bill that makes them regret going solar all together. In this article, we’ll explain what a true up bill is, why your true up is high, and what you can do about it to bring that number down or avoid getting one all together.
What is a true up bill?
When you go solar, you’re automatically switched over to net energy metering or NEM for short. Before going solar, your home is pretty much an energy consumer and because of this you’re usually on a standard residential rate plan.
It isn’t until you make the switch over to solar that you’re also switched over to a net energy metering since your home is now producing its own electricity. Think of it as a mini power plant now.
At this point your home is fitted with a net meter that tracks how much electricity your solar system produces, as well as how much energy your home consumes since it’s grid-tied solar.
At the end of your annual billing cycle, you’ll either end up with a credit on your electricity account or a debit (charge) depending on if you used more electricity than what your solar system produced.
That charge for supplemental electricity usage is what is known as your annual true up bill.
Understanding your true up
It might sound confusing but it’s actually pretty simple. Your annual true up statement is tallied up based on the solar system’s energy production and the homes electricity usage. Think of it as your bank account – some months you have more money in your account to pull from and some months your have less.
It’s a simple credit and debit system. The solar energy your system produces acts as a solar credit and any excess energy your home uses acts as an energy debit.
Here’s a true up bill that ended the year with credits. The following breakdown is for Pacific Gas & Electric company based out of California. Your true up statement may show a little differently but they’re all essentially the same.
Here’s the breakdown of how a true-up bill works:
• Bill Period End Date: The end of the months billing cycle.
• Net Peak Usage (kWh): Amount of electricity used from the power grid
• Net Off Peak Usage (kWh): Electricity sent into the power grid from your solar
• Net Usage (kWh): Net amount (sum) of electricity used or delivered by your home
• Estimated NEM Charged Before Tax: Cost or credit of the months usage or consumption
• Estimated NEM Charges After Taxes: Final amount owed to or credited by your utility account. This number will vary based on the utility your solar is tied to.
The true up bill shown below is owed a credit because the homes solar system produced more electricity than the homeowners consumed. You can see this reflected in the last row labeled ‘TOTAL’ where they received a negative balance of -$7.05.
The above NEM bill is an example of a homeowner who had their solar system properly sized. Below you’ll see a PG&E true-up bill that is extremely high.
Notice how the NET Off Peak (kWh) column is missing. This homeowner’s solar system was faulty and not producing electricity. So at the end of their rolling 12-month billing cycle, the annual true up cost came out to $2,295.28 or roughly $191.27 per month in electricity costs.
The bill above is a unique case but has become more and more common as solar has gained popularity across the country. If you’re wondering why your true-up bill is so high, here are 6 reasons why.
Why is my true up bill so high?
• Not Enough Solar: One of the most common reasons is that your solar system was under-sized. Depending on how you decided to go solar, your system may have been designed based on the square footage of the home and not on the homes annual electricity usage.
It’s common for solar sales reps to give you a system based on price rather than based on the homes energy usage. While this might look good up front with a smaller monthly bill, the catch is that you’ll need supplemental electricity from your utilities power grid – this ultimately leads to a high true-up bill.
•Changed Living Habits: Has your family grown? Have you had any family that has moved in? Has a pandemic randomly sprung up that’s forced you to be at home more often than you normally would? Circumstances aside, true-up bills will of course come back higher than normal with increased time at home.
Keep this is mind when looking at your true-up statement and understand that your solar system, if sized correctly based on your annual electricity usage, is covering what it was initially set up to cover.
• Electric Vehicles, Jacuzzi, Pool, Workshop, Second Fridge, etc: With major car manufacturers moving away from gasoline powered cars and creating all electric fleets, that means using an EV charger at home.
This along with a pool, jacuzzi, or hobbies such as metal work or woodworking all use much more electricity and could play a factor in a high true up bill.
• Solar Panels or Inverters Not Working: Anything man made will eventually have an error. Much like car manufacturers have recalls for faulty parts, solar products fall under the same rule. Sometimes things don’t work as they’re supposed to and need to be repaired or replaced.
More often than not a solar system not working has to do with the inverter burning out prematurely and not an individual solar cell. Depending on how you chose to go solar, you should have a workmanship warranty and a manufacturers warranty to get any parts replaced and serviced.
• Rising Electricity Costs: Solar protects you from your utility providers electricity rates. It does not mean that electricity rates won’t rise. If your utility raises their electricity rates over time, then any supplemental electricity you pull from the power grid is going to cost more as a means of their rising rates. A few pennies every year can definitely reflect higher on a true up bill.
• Solar Panel Degradation: In a perfect world, your photovoltaic system would produce the same excess energy it used to. The reality is that anything under the sun takes a beating, the same goes for solar.
As time and use go on the production of your solar system will experience what’s called solar degradation. Year-over-year you’re expected to lose between 0.5% to 0.6% of panel efficiency.
How to lower your true up bill
The first step in a quality solar experience is understanding how solar works and what to expect. This means getting your homes electric usage from the energy company and then sizing your solar system to generate surplus energy, this way you aren’t getting a surprise bill at the end of the year.
We recommend getting your solar system sized to offset 115% to 130% of your homes electricity usage. Another measure that could be taken is to switch to energy efficient lighting and appliances.
If you already have solar, the best option is to add more solar panels to offset what you’re currently pulling from the electric grid. The solar company you went with can usually add a secondary solar system alongside your existing one through a lease, PPA, or purchase to help offset that extra electricity usage your home pulls from the power company.
