What is Solar Net Metering?
What is solar net metering?
We’ve all seen the electricity meter on the outside of the house. This is used to monitor your energy usage. The meter surely ticks and ticks in one direction effectively running up your tab with your local power company. When you produce a surplus of energy on your roof with a solar system this electricity meter will run in reverse. Solar energy production is at its peak in the early afternoon. In contrast power use in the home typically peaks in the mornings and evenings. During the day your solar system will most likely produce more power than you are using. This will earn you a credit with the power company. This credit can then be redeemed for use in the morning, evening, or through the night. While most states allow net metering the policies and rules will vary.
An Example of Net Metering
Now that we have the overview let’s take a look at a real-life example of net metering. John and Katie Wilson had a solar system installed on their home in South Carolina last spring. They produce an excess of 80 kwh of electricity during the day while the sun is powering the solar cells on their roof. Overnight, after the solar panels have stopped producing electricity, they use 100 kwh of electricity. In this case, they will only need to pay the electric company for 20 kwh of electricity. On certain days the Wilson’s may produce 100 kwh during the day only use 80 kwh at night. In this example, John and Katie would wake up the next morning with credit of 20kwh.
Net Metering in Your Home State
Not all states were created equal when it comes to Solar Net Metering. As of the writing of this article, 41 states and the District of Columbia have all developed mandatory rules for certain utilities. In Texas and Idaho, net metering is voluntary and specific to the utility provider. Nevada, Mississippi, Georgia, and Hawaii have alternative policies in place. South Dakota, Alabama, and Tennessee have yet to develop any formal policy. If your home state does have a metering policy in place, be sure to check with your local installer for the up to date rules and policies. Some states have a cap on the size of the solar power system a homeowner can install while others may have regulations that cap the amount of electricity per month homeowners can earn credit for.
Alternatives to Net Metering
If you live in Nevada, Mississippi, Georgia, and Hawaii you have systems in place other than net metering. Hawaii replaced traditional net metering with a system that reduces the credits given for the electricity generated from the retail rate to the wholesale rate. The wholesale rate is, on average, around half of the retail rate. Georgia and Nevada similarly lower the amount that power companies must pay. Instead of the wholesale rate, however, they use the solar-avoided cost. This number is lower than the wholesale cost and equals the amount of money that the power company saved by not having to generate the electricity.Mississippi’s system is very close to that of Nevada and Georgia. Customers are reimbursed at the solar-avoided cost, but a premium is added to that so they reimbursed price is not as low as it otherwise would be.
The Future of Net Metering
The clean and renewable energy generation is an inevitability that we all face. The residential solar industry, in particular, has seen explosive growth over the last decade and it’s only expected to increase from here. As it does, States and Utilities are adopting policies to encourage and incentivize you the homeowner to lend a hand (or a roof).