How Do Utility Credits Work?
The credit system used by utility companies across the Hawaiian Islands is a common source of confusion for customers producing and using solar energy. In this post, we will explain how these credits work for past and current energy programs.
Net Energy Metering (NEM)
If you are a customer enrolled in NEM, which was in place until 2015, you receive a 1:1 credit. This means that for every unit of energy you send to the grid, you get one back at no cost. If your solar panels generate more energy than you use, the excess is credited to your account, allowing you to draw from it later without additional charges.
Customer Grid Supply (CGS)
For customers who enrolled after 2015, the CGS program replaced NEM. Under this system, you receive a fixed credit of 17.5 cents per kWh for the excess energy you produce and send to the grid. However, this credit system functions differently than NEM and has important limitations.
The Coupon Analogy: Understanding CGS Credits
To better understand CGS credits, think of them as coupons:
- When your solar system produces excess energy and sends it to the grid, you receive a credit, much like receiving a coupon.
- Each credit (or coupon) is worth 17.5 cents per kWh and can only be applied to one unit of energy.
- When you purchase electricity from the utility at 43 cents per kWh, you can apply only one 17.5-cent coupon per kWh purchased.
- This means you still pay 26 cents per kWh out of pocket, even if you have produced and sent the same amount of energy to the grid.
Expiration of Credits
A key drawback of the CGS program is that unused credits do not carry over. If you produce more energy than you consume, the extra credits expire each month. Unlike NEM, where excess energy could be used later, CGS credits provide no benefit beyond the month they are earned.
Smart DER
After seven years in the CGS program, customers are automatically transferred to Smart DER, where energy credits drop significantly to just 6 cents per kWh. The way credits work in this program is the same as CGS. More information on this switch is available in our blog post linked here.
Key Takeaways
- NEM customers receive full 1:1 credit for excess energy, with no expiration (except on a yearly basis).
- CGS customers receive a fixed 17.5-cent credit per kWh, but credits cannot be stacked.
- Any excess energy sent to the grid beyond what you consume results in lost credits, as they expire monthly.
If you’re wondering how this applies to you or want to find ways to save more, reach out to Maui Energy Advisors —we’re happy to help!
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