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Net Settlement For Home Solar Panels

Updated: Sep 23, 2019

What is net settlement?

Net settlement of the energy components is a solar incentive that allows you to store energy in the electric grid. When your solar panels produce more electricity than you need, that energy is sent to the grid in exchange for credits. Then, at night or other times when your solar panels are under producing, you pull energy from the grid and use these credits to offset the costs of that energy.

With the right size solar energy system, you can produce enough electricity to match your home’s electricity use for the entire year. However, the amount of electricity your solar panels produce will vary throughout the year. Net settlement helps you account for these differences by crediting you for the excess electricity your panels produce so you can use it later.

Net settlement of the energy components is announced by EMA to allow all consumers embedded solar PV system will be charged or paid based on :

  1. Net withdrawal of electricity, when the total consumption at your premise exceeds the total generation of the solar PV system for each trading period*; or

  2. Net injection of electricity, when the total generation of the solar PV system exceeds the total consumption at your premise for each trading period.

*Any half-hourly period when electricity products are traded in the National Electricity Market of Singapore (NEMS).

Would I receive cash payment for excess solar sold back to the grid?

Yes. You are required to register with the Energy Market Company (EMC) to receive payment for excess solar electricity sold back to the grid based on the prevailing nodal prices.

Currently, any solar energy produced is first used to offset your own consumption during that period. Any excess solar energy will be exported to the grid. You will receive payment (based on the prevailing low-tension electricity tariff minus grid charge) from SP Services by way of a credit adjustment to the monthly electricity bill.

Generally, most homes will produce excess electricity during hot sunny day. Meanwhile, they will consume more electricity from the grid in this period. Your electricity bill will not send you a monthly check when you produce more than you need. Instead, you will build up extra credits during hot sunny day because you can draw from them at night. With the right design, your solar PV system can generate enough power to match your total electricity consumed througdhout the year.

How Net Settlement of Energy Components Works?

Solar energy systems typically hit peak electricity production in the afternoon, when many people are not at home using electricity. In contrast, home electricity use is typically higher in the mornings and evenings. Net settlement helps you to account for these ups and downs in your day-to-day electricity production and usage.

With net settlement, excess electricity is fed into the grid when your system is producing more than you need. When this happens, your meter actually runs in reverse. When your system is not producing enough electricity, you can draw it from your utility just as you did before you went solar. This “back-and-forth” between your system and the grid ensures that your excess production will still be used and your shortages will be met. With net settlement, the excess electricity your home produced covers the times when you do not produce enough.

When your solar energy system generates more electricity than you use over the course of a month, your electricity bill will receive a credit based on the net number of kWh you sold back to the grid. If you produce less electricity than you use in a given month, you must buy electricity from the grid to make up the difference. Consequently, you would pay for the electricity you use, minus any excess electricity your solar panels generated.

What About Going Off The Grid?

In essence, net settlement is like having the grid serve as a giant solar battery. If you install an energy storage system to take your home “off the grid,” you will not have access to the benefits of net settlement. In most cases, staying connected to the grid is your best option while home solar battery systems can account for hour-by-hour variations in solar electricity generation. They are not large enough to provide the seasonal “smoothing” benefits of net settlement of energy components.

With Net Settlement, You Can Save By Going Solar

Thanks to net settlement scheme, homeowners are credited for the energy that their solar panels generated that they would pay to their electricity. As a result, you can save tens of thousands of dollars on electricity costs over the lifetime of your solar energy system. Calculate your solar savings to get an instant estimate of just how much you can save with a solar energy system, or start getting quotes from Solar Era.

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