How to Build an ADU and Keep Your NEM 2.0 Solar Benefits: Our Recommendation
/The rise in popularity of Accessory Dwelling Units (ADUs) in California is a trend that shows no signs of slowing down. Whether you're building an ADU for additional living space, a rental unit, or to house a family member, it’s important to understand how adding this new structure might impact your solar energy system, especially if you're currently taking advantage of **Net Energy Metering 2.0 (NEM 2.0).
NEM 2.0 is a key benefit for homeowners with solar systems, allowing them to earn credits for excess energy they send back to the grid. But when it comes to building an ADU, **adding a new unit with its own electrical meter could impact your solar savings and energy costs**. In this post, we’ll explore how NEM 2.0 works, why your ADU could affect it, and what we recommend to make sure you don’t lose your NEM 2.0 status
Understanding NEM 2.0: What It Means for Homeowners**
Net Energy Metering 2.0 (NEM 2.0) is a program offered by California utilities that allows solar homeowners to receive credit for the excess electricity their solar panels generate and send back to the grid.
-How it works: During the day, when your solar system generates more energy than you use, the excess power flows back into the grid, and you earn credits. At night, when your panels aren’t generating energy, you draw power from the grid, and those credits are used to offset your energy consumption.
- Why it’s valuable: Under NEM 2.0, you receive credits at the full retail rate for the energy your solar panels produce. This helps lower your electric bills, and over time, can significantly reduce the overall cost of your solar system.
However, if you're considering building an ADU, there are a few things to keep in mind regarding your solar energy system.
The Challenge: ADUs and Their Impact on NEM 2.0
Adding an ADU to your property means you’re adding another living space that will require its own energy usage. If your ADU is connected to the same electrical meter as your primary home, it will increase your overall energy demand. But here's the catch: If the ADU uses more power than your solar system is generating, you could lose some of the benefits of NEM 2.0.
When you add a new structure to your property, like an ADU, the utility companies may view the ADU’s energy consumption as part of your home’s total energy usage. This can create several complications:
1. Higher Energy Usage: The ADU’s additional energy consumption could push your home’s total usage above the amount your solar panels are generating. While you’ll still receive credits for the excess energy you generate, if the ADU uses more power than your panels can produce, you might need to buy more electricity from the grid.
2. Potential Impact on NEM 2.0: In some cases, if the ADU is not separately metered and is drawing power from the same meter as your primary residence, the utility may recalculate how your system’s credits and charges are applied. This could cause you to lose some of your NEM 2.0 benefits, especially if your total energy usage increases beyond what your solar system can offset.
Our Recommendation: Put the ADU on a Separate Meter
To ensure you don’t lose your NEM 2.0 status when building an ADU, we recommend installing a separate meter for the ADU. Here’s why:
- Separate Billing: If your ADU is on a separate meter, its energy consumption will be tracked separately from your primary home. This means the electricity used by your ADU won't count against the solar energy credits generated by your existing system.
- Retain Your NEM 2.0 Benefits: By keeping the ADU on a separate meter, your primary home’s energy consumption—and the amount of energy it sends back to the grid—will remain independent. You can continue to earn full credits for the energy your solar panels produce, without the ADU’s energy usage affecting your NEM 2.0 benefits.
- Flexibility: If the ADU is using a lot of energy (for example, if it has high-energy appliances, air conditioning, or electric heating), a separate meter allows you to manage each unit’s power use independently. This can help you avoid unexpected bills or disruptions to your solar energy credit balance.
Additional Benefits of a Separate Meter for Your ADU
Besides protecting your NEM 2.0 status, there are other financial and logistical advantages to putting the ADU on a separate meter:
- Clearer Energy Usage: You’ll have a more accurate picture of how much energy your ADU is using versus your primary home. This can help you assess whether the ADU is using more energy than expected and make adjustments (like adding more solar panels or improving energy efficiency) if needed.
-Future Flexibility: If you decide to rent out the ADU or sell your property, a separate meter can make it easier to track and allocate electricity costs, as well as create a clear distinction between the energy use of the primary home and the ADU.
Tax and Incentive Benefits: Depending on the energy programs available, a separate meter might help you qualify for certain incentives or tax credits related to the energy efficiency of your ADU.
Final Thoughts
Building an ADU is a fantastic way to add value to your home and increase living space, but it’s essential to keep an eye on how it impacts your solar energy system and your NEM 2.0 benefits. By installing a separate meter for the ADU, you can avoid complications with your solar credits and ensure that you continue to reap the rewards of your solar investment.
At Rooftop Solar, we specialize in helping homeowners maximize the benefits of their solar systems, whether they’re building an ADU or just looking to optimize their current setup. If you’re planning to build an ADU and want to ensure your solar system is set up for success, feel free to contact us. We’ll guide you through the process and help you protect your NEM 2.0 status while you add that extra space to your home.
