What is Net Metering?
Most solar PV systems are connected to the power grid. When your system generates more power than your home needs, the excess is sent to the next closest building. Likewise, you take energy from the grid whenever your home needs more than it is generating or when the sun is not shining. This ensures you always have a continuous supply of electricity.
In the days of digital meters, the utility can make this process more complicated. The meter doesn’t spin anymore and the utility can actually compensate you at a different rate for the electricity you produce than the electricity you can use. With the arrival of “smart meters” purchased with rate-payer dollars, the net metering wars began and rage on to this day.
Net metering is the policy that ensures that you get compensated fairly for the energy you produce. It allows you to offset your electric bill with your solar production. Typically, this is a one-to-one credit. In other words, the solar energy you produce is equal in value to the energy you receive from your utility. So, if you produce one kWh of electricity, you reduce your bill by one kWh of electricity. States’ rules vary in how and when they calculate the net metering credit.
When you are connected to the grid, you are part of a grid-tied system. The advantage of a grid-tied system is that you do not need batteries, and you have a constant supply of energy from either your panels or the grid, whether the sun is shining or not. However, if the power goes out on the grid, your system is designed to shut down so that energy does not backfeed on the line. That means, that if the power goes out, you can’t use your solar power unless you have batteries or special equipment.
Every state has its own net metering policies, some favor installing solar more than others. Solar United Neighbors wants to help everyone going solar understand how their investment is being valued and ensure compensation is fair.
When looking at net metering in your state, consider these key issues:
• System capacity limit Utilities or public commissions often limit the total system capacity you may install. These policies usually cap a system’s production to no more than a certain percent (often between 100 percent and 150 percent) of the customer’s yearly electricity consumption.
• Excess generation credit rate When your system produces more energy than your home uses monthly, your utility is obligated to compensate you for that energy under net metering. Typically, on a 12-month cycle the utility will compensate you for any excess energy produced. However, the rate of compensation is not always equal to the price of energy that you purchase from the utility.
• State-wide net metering cap In some states, policies limit the total amount of energy that can be net metered. These rules can harm states and hamstring solar deployment.
• Applicable utilities Net metering laws and regulations can vary between utility territories. Municipal utilities, utility cooperatives, and investor owned utilities may have different policies, so it is important to understand how your system will be compensated.
• Policies expanding net metering Several different types of net metering exist, as shown above. Some progressive states have expanded net metering laws to expand access to solar energy.
• Additional barriers Within net metering, utilities and public commissions may deploy additional barriers to make it harder for individuals to go solar. These may include additional fees when interconnecting to the grid, lengthy processes, and confusing tariffs.
Each of our state net metering pages lay out what you need to know when considering solar energy.