Net Energy Metering
Net metering is a high electricity program wherein your electrical company is expected to buy excess solar energy generated from the solar arrays at complete power prices.
When your solar energy system generates more energy than your household requires, it transmits the excess electricity to the network. Your electric company will then pay you for it. Rooftop solar is an excellent way to save money by utilizing net metering. The ideal locations for solar installations are not those that catch the most sunlight. It is the state with the most favorable net-metering policies.
How does Net Metering work?
Net metering is a credit system that allows you to return solar electricity to the grid. It also offsets the electricity you use from the utility in future. This gives you the economic value of the solar energy you produce. You can eliminate your monthly electricity costs by properly sizing your solar system.
The middle of the day, when the sun shines, is when solar panels produce the most electricity. Problem is, the middle of the afternoon happens to be the time you use the most electricity. Your panels are producing way more electricity that your home actually needs.
The excess electricity generated by solar panels is sent to the grid when it produces more electricity than the home uses. Net metering is used to manage excess generation. Your utility will credit your account for the full retail price of solar energy when a net-metered system sends it to the grid.
At night, your solar panels stop producing electricity. The grid then supplies electricity to your electric meter. The utility then calculates the difference between how much electricity you have sent to the grid and how much you used in determining your final bill at the end of each billing period. This is net metering.
These are the key issues to consider when looking at net metering within your state:
Limitations on system capacity
The system size (or total capacity) that you can install is often limited by utilities or public commissions. These policies often limit the system’s capacity at a specific percentage of your annual electricity consumption. This is usually between 100 and 150%.
Excess generation credit rate
Excess generation is when your system produces more electricity that you use. Your utility must compensate you through net metering.
Most utilities will pay you for excess electricity that you produce over a 12-month period. If this is the case you can use excess production credits up to one year.
There are many utilities that offer compensation for excess solar production. Many utilities credit excess solar generation at full retail rates, which allows for the “one to one” crediting described above.
Some utilities, however, are now crediting excess generation at lower rates. If this is the case you will need to install a system to allow you to use as much solar electricity as you can on-site.
Cap on state-wide net metering
Many states have policies that limit how much energy can be net metered. These rules are detrimental to states and limit solar deployment. Many cases suggest that legislators established a low nationwide net-metering cap years ago (often less than 3 to 4 percent of total utility electricity sale).
Many states are considering raising the net metering cap to help support Solar’s continued growth.
All applicable utilities
There may be different net metering regulations and laws between territories. There may be different net metering policies for investor-owned utilities, rural electric cooperatives and municipal utilities.
Many state net metering programs, for example, are only enforced in the case of larger investor-owned utilities. Many times, municipal electric authorities and rural electric cooperatives are exempt from these regulations.
Policies to expand net metering
There are many types of net energy metering. In order to increase access to solar energy, some states have passed laws allowing virtual and aggregate net metering.
Additional Barriers
Net metering is a system where utilities and public service commissioners (i.e. Utility regulators may place additional barriers in order to make it more difficult for residents to go green. These could entail additional expenses for grid interconnection, lengthy regulatory approval, and perplexing pricing.
Other types of net energy metering
Most net metering arrangements that are used for businesses or homes involve one meter on a single property, with energy credits to one account or bill. Imagine residential solar panels. They are installed on one property and feed into one electric meter. The homeowner is responsible for the utility account.
- Metering aggregate net – This policy allows solar owners with multiple electric meters on their property to credit any surplus solar electricity they have from one meter to the next (on the same property).
- Aggregate net metering – which is more common on farms is often referred to as “Agricultural Net Metering.” Multiple buildings may be part of a farm, each with an electric meter. However, only one roof can be used for solar. Sometimes, a good-for-solar structure may not have much electric demand. The aggregate net metering system allows surplus electricity to be transferred to other buildings that have higher demand (e.g. a house). Aggregate net metering in many states is restricted to farms
Virtual net metering
Community Solar can be enabled by virtual net metering. Multiple utility customers, called ‘subscribers”, can sign up to receive credit towards the electricity produced by a single solar project in their locality.
Virtual net metering allows community solar users to get bill credit for the output of off-site solar installations.
In 2017, less than 20 states had virtual net metering policies. For more information, visit our community please contact us.
Are net metering credits transferable from month to month
It all depends on the utility. However, most full-retail net billing programs allow energy credits for transfer from month to month. If you produce more electricity than you use in a given month, excess net metering credits may be used to offset the electricity taken from the grid for the following month.
You’ll usually have more credits during the summer months when the days are longer and sunnier. These summer credits can be used to reduce your electric bill in the winter.
The true-up policy of your utility, which is how often they buy credits out, will determine whether credits can be carried over month to month. This policy can be found within their net metering policy.
What does net metering mean for electricity bills?
Most homes will generate more electricity during the summer months than they need, and use less electricity from the grid during the winter. These variations in production are predictable so your utility will not send you a monthly check if you produce more electricity than you need. You will instead build up credits in the summer months to be able to draw on them during the winter. Your system can produce enough power to meet your annual electricity consumption if it is designed correctly.
You will be credited if your solar power system produces more electricity than you use in a given month. This credit is based on how many kilowatt hours you have returned to the grid. To make up the difference, you will need to purchase electricity from your utility if you produce less electricity than what you use. These cases would see you paying for electricity, less any excess electricity generated by your solar panels.
What are the advantages of net metering
Utility bill savings
Net metering is a great option for solar homeowners because it saves them money on their utility bills. Over the life of your solar panel system, net metering could save you thousands of dollars.
Solar panel systems can be used to offset the entire cost of solar customers’ electricity use within a billing cycle, as we have already mentioned. But, electric bills are subject to fixed charges that net meters cannot eliminate.
Payback periods are shorter
The payback times for areas that offer full retail net meters will be shorter than those that don’t. Because solar homeowners will save more on their electricity bills and recoup their investment costs quicker, this is why they are so popular.
A New Jersey solar power system would pay back in 4 to 5 years. This is due in large part to net meters. South Dakota’s system, however, may take as long as 12 years to pay back because it doesn’t have any form of net meters.
Your solar payback time is not just affected by net metering. The length of the payback period will depend on many factors, including the size of your photovoltaic systems, how much electricity you use, and whether there are any rebates or incentives in your area.
This reduces the grid’s stress
Because residential solar panels reduce stress on the electric grid distribution network, utilities and their customers reap the benefits. Solar homeowners don’t draw power directly from the grid, but instead use their own electricity.
Additionally, if a solar system generates more energy than is needed, it can be used by other customers of non-solar utilities to meet their energy needs. This puts even more pressure on utility power plants.
Is net metering available in all states?
Technically, net metering is required in 38 states and Washington D. C. Some major utility companies in Idaho and Texas which also offer net metering for residential solar customers, although they are not required to.
South Dakota and Tennessee are both the only states without any form of net meters or alternative net meters in place. These states may not be the only ones that do not have net metering or alternative net metering rules. Utility companies across the U.S. have been trying to reduce net metering programs in an effort to increase their profit margins and solar savings for residential customers. In states like Louisiana, South Carolina and California, which are the most solar-friendly, utilities have achieved success.
If you have net metering available in your region, you can be credited for any surplus energy in one or both of the following ways:
- Net metering at retail prices: You receive credit for every kilowatt hour sent to the grid. If you are charged 16 cents for each kWh consumed, then you will get 16 cents for every kWh exported. This type of net-metering is required in 29 states.
- Net metering with a lower feed-in tariff: Electricity surplus sent to the grid will be credited at a lower price. You may pay 16 cents for your consumption, but 10 cents for export. In 17 states that retail-rate net billing is not mandatory, feed-in tariffs or other programs may be used.
Use net metering to save by going solar
Because you can store all the energy you generate with solar, net metering is the best option for solar policy. You can then use the remaining energy from the grid at a later time. Net metering can help you save thousands of dollars by offsetting your electricity needs from the grid.
Although net metering may not be the only way utilities pay homeowners to go solar, it is the most popular and effective. Also, be sure to visit the Database of State Incentives for Renewables and Efficiency(r), which tracks other policies.
If you are interested in learning more about net metering or other incentives for solar power, the Database of State Incentives for Renewables & Efficiency is a great resource. Visit the websites of your state’s utility company and government to find out more about solar incentives.
Financial incentives for going Solar
One of the most powerful incentives for solar power is net metering policies. You can combine net metering with other financial incentives to increase your ROI.
- You can claim 26% of the cost of solar installations as a tax deduction under the federal solar tax credit. If your solar installation cost $10,000, you could claim $2,600 as a tax deduction on your next tax return. This benefit is available anywhere in the U.S.
- Depending on your location, you may be eligible for state tax credits. These can be claimed in addition to the federal incentive.
- Some state governments offer solar rebates. These incentives are cash incentives that can be subtracted from the price of your solar PV system.
Before you sign a contract, it is important to reach out for quotations. This will help you to avoid low-quality, overpriced installations and ensure that you are getting the best deal possible. Contact us to get quotes from Nevada Solar Group, the best solar company in your area.
Go solar now while net metering is still available for the best savings
We are going to be open with you: net metering’s best days are gone. The future of net-metering is not looking good. Net metering, despite being the driving force behind the solar industry, is under attack from greedy electric utility companies seeking to preserve their profit margins.
You can get the most savings from net metering if you go solar as soon as possible. You run the risk that your utility will cut the program. This means you’ll end up paying less long-term.
Our solar panel calculator will help you determine how much solar panels could reduce your electricity bills. We can give you a customized estimate for your home based on information from our local installers. This will include your solar savings and the cost of a solar installation. So you can decide if it is worth it.
We monitor changes in net metering policies across the country. While some states expand net metering, others try to reverse it. Nevada Solar Group is the only organization that mobilizes solar owners to promote net-metering advancements in their community and to oppose net-metering attacks.