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I've got solar; why is my bill so high?

02/17/17

  09:46:00 am, by Jim Jenal - Founder & CEO   , 2153 words  
Categories: Solar Economics, Residential Solar

I've got solar; why is my bill so high?

Shocking electric billsEvery now and then we get a call from someone who has solar installed at their home but they’re not happy.  Typically this occurs when they get their “true-up” bill at the end of the year, and are shocked to see that the amount that they owe is way more than they expected!  In many cases this leads them to believe that the system simply isn’t working, and now they want a third-party (like Run on Sun) to come out and evaluate the performance of their system. 

Here are the three leading reasons why that bill is so high…

Your system just isn’t working!

Although this tends to be the number one suspected reason for why the bill is so high, generally it isn’t the actual cause.  Most systems are installed properly and are in operation.  But every now and then we come across a system that simply isn’t working at all.  That was the case with one man who was convinced that his system had never worked and that the company that installed it was simply out to cheat him.  We didn’t see signs of that—the system had been installed and the overall workmanship was acceptable on the surface, so it wasn’t like someone just slapped the panels on the roof and ran away.  But here’s the thing—this was an Enphase system so there should have been monitoring in place to answer the question of how well the system was working.  Except that the installer had never bothered to complete the setup of the monitoring system!

When we came out we were able to access the Envoy directly, and while it could see the microinverters, it was clear that they had never produced any power—in over a year!

So how can a solar system owner prevent this?  Simple—when your system goes live, make sure that the installer walks you through the operation of the system so that you can see with your own two eyes that the system is actually producing power.  (This could be a readout on the inverter/monitoring system, or a spinning performance meter, or an indication that utility meter is going backwards.)  Better yet, ask them up-front how will you be able to know that your system is working, and then when it goes live, make them prove it to you!

If you believe that your system isn’t working, and you live in the greater Pasadena area, give us a call at 626-793-6025, or email us to set up a service call!

Your system is working, but…

This second case is actually far more likely: the system is performing, but it is not meeting your savings expectations.  In our experience there are two main reasons for this: hype and over use.

Beware the hype

One reason for this disconnect is that a dishonest sales person over-hyped the savings to be had from the system installed.  For example, we have seen “savings” projections based just on the size of the system, without regard for how shaded the system was, or its orientation - to say nothing of the actual rate structure that is being used by the utility. 

Shaded systems produce less energy.  Systems aligned away from South will produce less energy.  A utility customer on a time-of-use rate structure may well save less than one on a tiered rate structure (depending on how those rates are designed).

The point is to beware of overly simplistic savings projections.  A proper analysis will factor in all of these issues to provide the best possible estimate of savings.

Solar is not a silver bullet

Even the best savings projection is predicated on future energy usage being consistent with the historical data that the solar company was given (unless increases are specifically discussed and included).  While many people with solar power systems become vigilant about reducing their overall energy consumption, others go in exactly the opposite direction.  Indeed, it is not uncommon to hear people say that part of why they want to “go solar” is so they can afford to run their air conditioning “more” during the summer. 

Solar power systems are finite resources—they can only produce so much energy consistent with the size of the system, and most utilities limit system size to the historical energy usage average at the site.  If you install solar, but then triple how much energy you use during the year, you shouldn’t be surprised if you are not saving any money!

What we have here is a failure to communicate!

Which leads us to the most likely culprit—there has been a failure to communicate between installer and consumer.  At the root of this is Net Metering and the complexities of most energy bills.  (A big part of the blame here goes to the utilities who seem determined to make their bills as complicated as possible!)  Let’s provide an overview of this issue and then illustrate with a specific example.

How Net Metering Works

Solar system owners - at least here in SoCal - operate under utility rules known as Net Energy Metering, or just Net Metering for short.  Here is how this works: on the day when your solar power system is given “Permission to Operate” (or PTO) by the utility, your billing will shift to Net Metering (often the utility will change your meter to allow for that switch).  Every day, as your system operates, you will either be exporting (selling) energy back onto the grid, or importing (purchasing) energy from the grid. 

Think of it this way: you get up at 6 a.m. and it’s dark outside.  You turn on some lights, the radio, coffee maker, etc.  Your solar system isn’t producing anything (it’s dark outside, remember?) so you are purchasing energy from the grid.  You go off to work as the sun comes up, and your system turns on.  All day long, your solar system is producing energy, but there is no one there to use it—the A/C is off, the TV is off, the house is dark—so all of that excess energy is sold back to the utility.  Your fancy new meter keeps track of all of that energy coming and going.

Every billing cycle the utility will look at those readings—how much energy did you sell compared to how much did you purchase—and “net” out the difference.  If you were a net seller of energy, you will have a credit.  If you were a net purchaser of energy you will have a balance due.  But here is where some people get confused—your bill won’t ask you to pay for the energy you used that month.  Typically you  will only be charged for whatever “customer charge” there may be along with taxes and other fees.  The bill for your energy usage (or credit, if you are so lucky) is carried forward to the next billing cycle, and the next, and the next, until you get to the anniversary of your PTO date.  Now your usage will be “trued up” and you will either get a bill to pay (assuming that for the year you were a net energy purchaser) or a check (assuming you were a net energy seller, but don’t get too excited because that payment is really tiny).

Here’s the thing, depending on how much of a net energy purchaser you were, that bill could be pretty significant, in some cases well over a thousand dollars or more!

Of course, you would have been receiving bills every cycle that showed what you were accumulating (either a balance due or a credit) but since there is no related payment required, it is easy for some to overlook those bills, and if this process has never been explained—or even if it was but the consumer simply didn’t “get it” at the time—this can lead to a nasty surprise.

Bottom line - solar companies need to do a better job here in explaining how this works.  (Hence this post!)

A real-life example

Consider a hypothetical solar system owner, let’s call him Bob.  Now Bob is a smart guy, but this is the first solar power system he has ever owned.  His installer explained everything to him when the system went live, but Bob was distracted by the excitement of a potentially zero bill.  His system has Enphase microinverters so he has been receiving energy production emails from Enphase every month, and that looked cool, but he never attempted to reconcile his Enphase report with his utility bill (Bob’s not so big on balancing his checkbook, either).  But to be fair to Bob, the Enphase report that he receives is for each calendar month, but his billing is every two months, and they aren’t calendar months; rather, they run from meter read date to meter read date (e.g., 7/28/2016 to 9/26/2016).

The good news is that Enphase has a reporting feature that allows you to enter any two dates since the system went live and receive day-by-day energy production, with the total at the end.  Let’s see what we can learn when we put Bob’s billing data next to his production data from the Enphase reporting feature:

Usage versus production data

Ten months of Bob’s usage versus production

The first two columns show the start and end dates for each meter reading/billing cycle.  The bought column is the amount of energy that Bob purchased from his utility.  (Whoa, what happened during the latest billing cycle???)  The sold column is the amount of energy that Bob sold back to his utility during that period, as reported by the utility.  The next column is the amount of energy that Bob’s system produced during the dates in the billing cycle, according to the Enphase website.  But wait, how can this be?  In that first period, the utility says that Bob only sold 774 kWh of energy, but Enphase says his system produced nearly twice as much, 1,338 kWh!

How do we make sense of this disparity?  The answer is simple: local consumption.  It is important to remember that the utility has no idea how much energy Bob’s system is producing, all they see is how much energy Bob is selling back to them.  So both Enphase and the utility are correct, they are just measuring different things.  Enphase measures total energy produced.  The utility measures energy sold to them—the difference is energy used to power Bob’s house that didn’t come from the utility; rather, it came from the solar system!  In that first billing cycle, Bob’s system produced 1,338 kWh and of that, 774 kWh were sold back to the utility, meaning 564 kWh of that production were used to power his house.  And that means that Bob’s total consumption for the month is the amount that he bought from his utility, 1,402 kWh, plus the solar production that was consumed locally, 564 kWh, for a total consumption of 1,966 kWh.  Applying that reasoning to the rest of the data shows that Bob’s overall consumption has increased in every billing cycle except one, with a whopper over the holidays!  (Maybe too many holiday lights?)

The production data shows that Bob’s system has been performing appropriately - increasing over the summer months, decreasing over the winter months.  Here’s a graph that puts that all into perspective:

Bob's usage versus production

Bob’s solar power system: Lifetime energy production versus expected.

The blue represents the actual energy produced each day.  The gray line is the predicted system production (in this case modeled using the CSI calculator). Over the lifetime of the system, the maximum amount of energy produced in a day was 29.7 kWh (42% above what was predicted for that day) and on the day when this graph was created, the system produced 15.7 kWh.

Generally, the performance peaks well above what is expected (particularly in the late June through early November period).  But once we get into mid-November things deteriorate—not because of a fault in the system, but because of abnormally wet weather here in SoCal (as we head into a 1″/hour rain storm today!).  For much of the past two months, actual production has fallen well below what was predicted, with just 77% of predicted being realized so far this month.  And yet, despite all of that, overall the system has still produced 99% of its estimated lifetime production.

This points out a couple of key things to me: First, you just gotta love the data that is available through the Enphase monitoring system.  It allows system owners and installers alike to have near-real time access to system performance, as well as to review long-term data to discern trends and uncover patterns.  Priceless!

Second, we as solar professionals need to do a much better job of informing our clients so that they know what to expect.  (I’m leaving out the hype-sters who couldn’t care less what the consumer knows as long as they make a sale.) 

We live with this stuff every day but for most of our clients, this is all brand new, and confusing.  We need to take the time to explain how this works so that they can understand the actual value of their investment.

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Comment from:
stephanie
Awesome article, Jim- explains, with the clarity characteristic of your writing, what customers can realistically expect from their solar system. Most helpful!
02/20/17 @ 19:36
Comment from:
wskcondor
5 stars
Jim, I only recently found your website and blog. WISH I WOULD HAVE SOONER!. Awesome and clear explanation of these issues and concepts, and does not feel like a sales pitch. I have a question I can’t seem to answer drifting around the web and the SCE site (kind of confusing, and they have been changing the site constantly). In your 2/17/17 post, you talk about bill shock and the “true up” time, on the anniversary of solar PTO being granted. Briefly you mention, “Now your usage will be “trued up” and you will either get a bill to pay (assuming that for the year you were a net energy purchaser) or a check (assuming you were a net energy seller, but don’t get too excited because that payment is really tiny).” I am trying to find out…how TINY that payment really will be. I have had solar since the end of June (just got in NEM 1.0 (I ‘think”, because I can’t find a SCE thing that says “NEM 1.0”, but I appear to continue to be on a tiered program)). I am making more than I am using, after I kind of really went into conserve mode. (Ironically I conserve a lot more now than I did when I had no solar). But up to the tune of 250-280 kWh excess each month. SCE bill shows a monetary value connected with that (say it is now $120) but then it says elsewhere “this is not the value you will receive” at the end of your relevant period, even if you request a check. They state that at the end of the relevant period, they true up the NET kWh’s, (in my case that I produced in excess of what I consumed so it is “negative” in their bookkeeping) and they multiply that by a number. This number is the “Net Surplus Compensation Rate” (NSCR). It gets more confusing trying to figure out what the NSCR is based upon, but in short, they use the NSCR times your production to decide what to pay you. But the NSCR is only around 2.5 CENTS per kWh. Nothing close to the 16 cents or more that a consumer would pay to use a grid kWh. I could understand it being a “little” less, minus fees and taxes and what not, but 2.5 cents seems really small. The wind up to the questions: Am I missing something here? Is SCE really going to pay only about 2.5 cents for each kWh I paid to produce in excess (at the anniversary of my PTO)? Is there another charge factor that I am missing? It also states a customer can “roll over” the kWh’s into the next relevant period…which might be a better value, for instance in case you thought your system might be down for maintenance for an extended period of time, or you wanted to store up kWh credits for a very hot summer… Just wanted to check with you and see if I am reading this confusing SCE stuff correctly or not. It seems to me “cashing out” at the true up date is not really worth it at all. Like getting cash for airline miles or something. I suppose this is what the utility companies WANT, i.e. de-incentivize the consumer from ever selling back to the grid (net energy). But it also seems counter to what the law “intended” when it decreed the companies had to buy back power fair and square. Lastly, the dollar amount they keep showing me REALLY should be defined as , “Thanks for producing extra! this is the amount of money, after all your usage and production, that you are letting us charge our other customers for electricity that we did nothing to produce”.
10/15/17 @ 08:33
Comment from: Jim Jenal - Founder & CEO
First off, thanks for the kind words, much appreciated. I’m afraid you are reading it correctly - even though SCE shows the credit amount in retail dollars during the year, that is entirely misleading since they will not pay you that; rather, they will instead pay the $0.025/kWh that you identified. (We installed a large solar system for a client who then moved out of the house for a year during a major interior renovation. They showed a credit of more than $1,000! I had to remind him that what he was actually going to get was just a fraction of that amount!) I’m curious about one thing that you said - that SCE would allow you to carry over the credit past the true-up as kWh. I was not aware of that, and the law does not require them to do so, making it odd that they would allow it! Can you point me to where that is discussed? Best regards… Jim
10/15/17 @ 09:26
Comment from:
wskcondor
I found this in a brochure from SCE. Trying to see if I can attach it here,. But upon re-reading, I “think” they convert the kWh to $$ (and not much of it) and roll the $$ over to apply to whatever, usage, connection fees, etc. It just reads weird so I thought it might mean kWH. I can’t seem to attach, but it is entitled “Understanding Your Energy Bill For NET Energy Metering Customers”
10/15/17 @ 17:44
Comment from: Jim Jenal - Founder & CEO
Thanks for that - in the FAQ section of that document is this clarification: “Please note that any net surplus energy credits remaining after your 12-month relevant period has ended will be given a monetary value. You may choose to receive a check, or roll-over the monetary value to your new 12-month relevant period.” So, either way, any surplus gets converted to a (tiny) monetary amount and you either get a (tiny) check, or apply it to next year’s bill. Jim
10/16/17 @ 11:30
Comment from:
wskcondor
Ironically, the utility companies’ policy (which yes, is what the CA laws allow, but I am certain is what their political action committees created) - those policies de-incentivize any conservation. Even with solar, which is only installed and paid for by a small percentage of the population, conservation is (or would be) important if we really care about reducing carbon emissions, sustainability, etc. The current policy encourages me to use every bit of the solar I have produced, because those excess kWh are the cheapest ones I will ever get. If they cost the same as 1kWh over production, then it really would be 1kWh for 1kWh and make sense to just conserve (as well as be a greater incentive for people on the fence to install, since they could recoup their investment sooner.) I need to buy another electric car and start charging it!
10/18/17 @ 06:00
Comment from:
sunnyday
How does one calculate the new solar bill for customer. During proposal of the system.
04/11/18 @ 21:44
Comment from: Jim Jenal - Founder & CEO

@Sunnyday –

Back in the day, we built an entire series of spreadsheets for each utility in our service area. Those spreadsheets encoded the details of all of the specific rate schedules that we had encountered. When we came across a new one, we built a new spreadsheet.

We would then take the monthly usage for the potential client from the past year and plug it into our spreadsheet. Usually our calculation matched the utility within pennies. We could then apply the monthly anticipated production of the proposed PV array to the past usage, and see what the new bill would be.

We operated that way for many years, confident that it was a reasonable, and reasonably accurate way to model savings - particularly compared to people who just said, “Oh, you will save $0.25/kWh produced!”

Alas, things are way more complicated today, particularly in SCE territory where all new solar clients are switched to time-of-use rates, which means that the quantity of energy produced has to be applied to when that energy is produced. Nowadays we rely on getting hourly interval data (via UtilityAPI) and we use Energy Toolbase to incorporate that hourly usage data against hourly production data, and then model that against the appropriate rate structure. Again, we believe that is the most honest approach we can offer.

You might be interested in the three-part series that we are working on now that talks about these issues. You can read it here.

Thanks for the comment!

Jim

04/12/18 @ 08:15
Comment from:
ambulance21290
Hi there I recently had 20 solar panels installed,I have just recieved my first electricity bill, which are normally between 750/800 dollars After solar was installed I looked at the amounts on the box regularly and to often showed 3459 and figures higher or slightly lower I used my washing machine dishwasher and pool pump during the day ,there are just 2 of us Just recieved my latest bill and was horrified t see that it was 851.80 dollars The house on the bottom block has only 5 panels and they have 5 children much heavier consumption than us there bills are around 150 i am so upset with this bill can it possibly be correct feel like i have been stitched up completely
06/22/18 @ 02:27
Comment from: Jim Jenal - Founder & CEO
I am sorry to hear that your bill came as such a shocker. I have sent you an email directly, please respond to that and I will see what we can do to help. Jim
06/23/18 @ 09:43


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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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