Photo by Solar to the People
If you have solar panels installed on your home, in all likelihood during the summer they produce more energy during the daytime than you use — probably a lot more. Net Energy Metering (NEM), or net metering for short — allows you to profit from this excess energy. To net meter, you use your existing energy meter to track the number of kilowatt hours (kWh) you send back into the power grid, which your utility company then credits against your energy consumption. This results in a lower energy bill, as you can roll over your electricity credits from the sunny summer months to the cloudier months of winter.
You might think your utility company frowns on individuals producing power — that would make you a competitor, right? — or that doing so requires special equipment. In fact, many state and local governments give you the right to connect the grid.
And as the Solar Energy Industries Association explains, sending energy to the grid helps the utilities maintain a liquid energy supply. This means everyone gains energy that’s more reliable during peak hours and far less wasteful.
If you’re concerned that net metering is technically complex or a hassle, think again. Your existing energy meter is likely bidirectional, which means you already have the equipment you need to meter the energy you return to the grid.
Further, it’s common practice for solar installers to set up net metering for their clients, which means that your primary concern as an end user is to understand how you will receive compensation, and to feel good about becoming a clean energy producer.
Do All Utilities Allow Net Metering?
In 1978, The Federal Energy Regulatory Commission (FERC) created a protected class of “small power production facilities” — that would be your solar-powered home or business — with the Public Utilities Regulatory Act (PURPA). While the act establishes fair energy rates for consumers and guarantees some rights, FERC’s guidelines leave most regulation up to the states. This means the amount of energy you can sell, how much you’ll receive, and the form of repayment varies widely by state and your utility company.
On the plus side, 43 states and the District of Columbia have adopted clear net metering policies. The Solar Energy Industry Association (SEIA) has provided a map of which states have mandatory NEM policies, and those without.
Even if your state lacks clear regulations, many municipal and local governments require utilities to buy back energy, and provide credits to the utilities to offset their costs for doing so, so even if you don’t see your state listed in the map, make sure to check with your local government!
Photo by Kasselman Solar
Net Metering Benefits Your Community and the Environment
When a community’s energy needs grow, the usual response is to build a new power plant. Whether this plant is fueled by nuclear power, coal, a dam, or a wind farm, the process always carries steep environmental costs. This doesn’t have to be the case.
Though humanity’s energy demands are escalating, the truth is households consume the vast majority of power at certain times of day and seasons, while offices and factories have peak demands at different times. For example, most households consume less during the day because the adults are working and the kids are at school, while homes in areas with cold winters consume less energy in the summer, when they don’t require heating.
Simply put, by connecting solar-powered homes with a power-hungry grid, a community can offset its energy needs without building a costly power plant, and at the same time, reducing the cost of solar panels. That, in a nutshell, is why the government encourages net metering.
How to Start Net Metering
As mentioned, your home or business is likely connected to the grid with a bidirectional meter. Assuming that’s the case, getting started with net metering only requires a simple application to your utility company if you choose to have panels installed. While most installers will provide this service for you, if you’d like to learn more, the applications can be found on your utility company’s website, or on the website of your state or local energy agency.
For example, in California, all three major utilities — PG&E, SDG&E, and SCE — offer several options for crediting solar customers’ generated energy, and California provides a useful guide to applying for net metering on its Go Solar website.
One catch is that utilities limit the size of the power system you can connect to their grid, essentially to prevent people from setting up a commercial solar plant on their property. However, it’s highly unlikely your home or business solar power system comes anywhere near that limit.
How to Receive Credits from Your Utility Company
Credits. While net metering can greatly increase the savings generated by your solar system, note that the utility typically provides rebates in the form of credits. Most utilities allow you to use credits to offset your current energy bill, roll-over credits into the next year, and a few allow you to convert them into a cash rebate at the end of the year.
Tariffs. Simply put, a “tariff” is in the context of net metering is the price paid per kWh. Many states and utilities allow individuals who export more energy than they consume to receive money for this net surplus at the end of the year, as energy credits aren’t much use if you don’t owe the utility anything for consumed electricity. The rates are stipulated in a tariff schedule provided by your utility. Additionally, a tariff schedule may offer alternative repayment options, such as a system for transferring excess credits to additional utilities accounts, or for refunding tenants if you are a landlord of a multifamily property through a process known as Virtual Net Energy Metering (VNEM).
Another Way Solar Pays
If you have solar, chances are you can be saving even more money by net metering. If you don’t, net metering offers one more financial incentive to install a solar system. After you’ve installed your solar system, net metering is usually as simple as filing an application with your utility company.
And provided you live in the 43 states with mandatory net metering policies — and the many more cities with even more advantageous policies — you will be fairly compensated for providing reliable, clean energy to your neighbors.
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