frequently asked questions: net energy metering

1. Is there still capacity in the City of Palo Alto Utilities' (CPAU) original Net Energy Metering (NEM 1) program?
CPAU reached its NEM 1 program cap on December 31, 2017. Any solar customers who did not submit and receive approval for a NEM 1 Reservation application prior to January 1, 2018 are automatically served by CPAU's NEM Successor (NEM 2) program, as part of the PV permitting process.                                                                                                                                                                                                                                                                                                                   

2. What is the PV interconnection approval process?

 In Palo Alto, the Building Inspector issues interconnection approval (also known as “permission to operate”) of the PV system at the final inspection. Please note that the City of Palo Alto Utilities electric meter inspection must be scheduled PRIOR to the final building inspection.


3. What are the permit requirements?
For more information see:

                    -PV Permitting for Residential Solar

                    -PV Permitting for Commercial Solar


                     Or contact Palo Alto Development Services at: (650) 329-2496.

4. What if my system doesn’t pass final inspection before my NEM program Reservation expires?
 An extension of 30 days is available if the final inspection occurs before the NEM Reservation Deadline but minor changes are required to receive final inspection approval. The follow-up inspection must be scheduled within the 30-day extension window. At its sole discretion, the City may also choose to grant a custom extension due to exceptional circumstances.      


5.What if I want to add capacity to my existing, installed and interconnected PV system that is currently on the NEM program, BEFORE CPAU reaches the NEM program cap? 

Customers participating in the NEM 1 program were able to expand their systems and include additional capacity in NEM so long as there was capacity available in NEM 1. These customers needed to submit and receive approval for a NEM 1 reservation application for the additional capacity. The term of the additional capacity is based on the interconnection date of the customer’s original system, and therefore the additional, new capacity does not receive a full 20 years of grandfathering in NEM 1. The entire PV system (original and new capacities) switch to the NEM 2 rate 20 years after the original system was installed, regardless of newer installations.


6. What if I want to add capacity to my existing, installed and interconnected PV system that is currently on the NEM program, AFTER CPAU reaches the NEM program cap?

Existing solar customers participating in the NEM program may still expand their systems, but if the NEM program cap has been reached , then upon interconnection, CPAU will adjust the amount of time the customer is allowed to remain on NEM. The adjustment will be based on the ratio of the expanded and original system sizes, according to the following formula:          New Remaining NEM Term = Original system’s remaining NEM term X (Original system size in kW / New system size in kW).


 7. If I am a NEM 1 customer, how long is my NEM 1 term?

As stated in the City of Palo Alto’s Rule and Regulation 29 on Net Energy Metering, eligible Customer-Generators are served by the original Net Energy Metering (NEM 1) program through a period of twenty (20) years following the date of interconnection of their eligible renewable energy (in this case, solar) generating facility. For more information on the setting of the NEM 1 term, refer to the City’s Staff Report from April 2016.
8. What if I need to replace my system at some point during the NEM 1 term (because the existing system is no longer functioning properly, was damaged in some way, etc.)?
A replacement system will be allowed to stay on NEM 1 for the remainder of your 20-year NEM term (for example, if you have been on NEM 1 rates for 5 years, your new system would stay on NEM 1 for 15 more years), so long as the new system is the same size or smaller (measured in kW CEC-AC) as compared to the previous system. If the replacement system is larger than the existing system, the remaining NEM 1 term will be decreased following the formula in FAQ #6, above. Any time adjustments are made to the existing NEM 1 system size or inverter, a new Interconnection Agreement needs to be signed and filed with the City. Please contact to obtain a new copy of the Interconnection Agreement.


9. What is the process for adding battery storage to my rooftop solar system?

Work with a licensed professional to add battery storage to an existing rooftop solar system or to include battery storage as part of a new solar installation. Refer your contractor to these Energy Storage Systems Submittal Guidelines. The steps for submitting a permit application for energy storage systems are similar to those outlined on our Residential PV Permitting web page


10. As a solar customer, I still use some electricity from the grid. What are the sources of the electricity that the City of Palo Alto supplies from the grid?

The City of Palo Alto’s electricity supply has been 100% carbon neutral since 2013. The City receives an estimated 32% of its electricity from utility-scale solar PV systems located within California. Hydropower, wind, and landfill gas (biomass) power supply the remainder.


CPAU will continue adding solar power to the electricity it supplies as new solar PV projects come online, including a 26 MW solar project in Los Angeles County that is scheduled to begin operating in 2021.

While a portion of the City’s electricity already comes from solar, generating electricity on site has benefits. Read about the benefits of rooftop solar on our 
Background and Benefits page. If you want to learn about the history of Net Energy Metering in Palo Alto, check out our Net Energy Metering Historical Context page


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