What Is a Solar True-Up and How Does It Work?
Unravel the solar true-up process. Discover how utility companies reconcile your energy production and consumption for precise billing.
A solar true-up is an annual or periodic reconciliation process conducted by utility companies for customers with solar energy systems. This process settles the difference between the total electricity generated by a customer’s solar panels and the total electricity consumed from the utility grid over a specified timeframe. It ensures the customer’s account accurately reflects their net energy usage or production, leading to a final financial adjustment.
Net Metering The Foundation
Net metering is a billing mechanism allowing customers with solar panels to send excess power back to the utility grid. When a solar system produces more electricity than the home consumes, the surplus energy flows onto the grid, and the customer receives a credit on their utility bill. Conversely, when the home’s electricity demand exceeds its solar production, or at night, the customer draws power from the grid.
Net metering credits offset electricity consumed from the grid during times of lower solar production, such as cloudy days or evenings. A bi-directional meter records both electricity flowing from the grid to the home and excess electricity exported back to the grid. These credits accumulate over monthly billing cycles, reducing the total amount owed to the utility.
This long-term accounting is where the true-up process becomes important. Without a true-up, monthly credits might indefinitely accumulate or be difficult to reconcile against annual consumption patterns. The true-up mechanism provides a definitive end-point for these monthly credits, ensuring the utility can finalize the financial relationship with the solar customer for a full year of energy exchange.
How Solar True-Up Works
The solar true-up process occurs annually, though the specific reconciliation period can vary by utility provider. This period often spans 12 months, commencing on the anniversary date of when the solar system was first connected to the grid. Throughout this cycle, the utility company monitors and records two primary energy flows: the total electricity consumed from the grid and the total excess electricity generated and exported back to the grid. These measurements are tracked in kilowatt-hours (kWh).
At the conclusion of the true-up period, the utility calculates the net energy balance. This involves subtracting the total electricity generated and sent to the grid from the total electricity consumed from the grid over the annual cycle. For instance, if a household drew 10,000 kWh from the grid and exported 8,000 kWh, their net consumption would be 2,000 kWh. This annual calculation provides a clear picture of whether the customer was a net consumer or a net producer of electricity for the full period.
If the customer’s total energy consumption from the grid exceeded their solar generation over the true-up period, they are a net consumer. In this scenario, any accumulated net metering credits from preceding monthly billing cycles are applied to offset this net consumption.
Conversely, if the solar system generated more electricity than the customer consumed from the grid over the true-up period, the customer is a net generator. Any remaining excess credits after offsetting the customer’s own usage are addressed according to the utility’s specific policies.
Understanding Your True-Up Bill
Upon completion of the true-up period, customers receive a specialized true-up bill summarizing their annual energy activity and any resulting financial obligations or credits. The true-up charge or credit appears as a distinct line item, reflecting the final settlement for the entire period.
If the customer’s electricity consumption from the grid exceeded their solar generation over the true-up period, the true-up bill indicates a net consumption balance. The customer will owe the utility for the net difference in kilowatt-hours, billed at a specific per-kWh rate. This rate might be the standard retail electricity rate or a different rate depending on the utility’s tariff structure for solar customers. The bill shows the total amount due for this net consumption.
Conversely, if the customer generated more electricity than they consumed over the true-up period, they will have accumulated excess credits. How utilities handle these excess credits varies by provider and regulatory framework. This might involve carrying them forward to the next true-up period, paying them out at a reduced wholesale or “avoided cost” rate (often around $0.02 to $0.04 per kilowatt-hour), or having them expire with no financial compensation.
Beyond net energy charges or credits, the true-up bill may include other fixed charges that apply regardless of solar production. These can include minimum monthly connection fees or delivery charges, which cover the costs of maintaining grid infrastructure and customer service. These fees can range from $5 to $15 per month and are applied consistently throughout the year, appearing on monthly bills and summarized on the true-up statement. Additionally, non-bypassable charges, mandatory fees that cannot be offset by solar credits, will also be present.