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 before 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 you must schedule electric meter inspection with the City of Palo Alto Utilities 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 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 remaining NEM 1 term for the new total system is based on a formula listed in Rule and Regulation 29: New remaining NEM 1 Term = (Original system’s remaining NEM 1 term) x (Original system size in kW/ New total system size in kW) + 20 years x (system size of the addition in kW/ New total system size in kW)  The entire PV system (original and new capacities) switches to the NEM 2 rate on the NEM 1 expiration date. 


5. 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 after the NEM program cap was reached CPAU adjusts the amount of time the customer is allowed to remain on NEM 1. The adjustment is 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).


 6If 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, the original Net Energy Metering (NEM 1) program serves eligible Customer-Generators 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.
7. 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 can 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 can 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) compared to the previous system. If the replacement system is larger than the existing system, the remaining NEM 1 term is decreased following the formula in FAQ #5, above. Any time you make adjustments to an existing NEM 1 system size or inverter, you must sign a new Interconnection Agreement and file it with the City.  Please contact to obtain a new copy of the Interconnection Agreement.


8. 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


9. 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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