What is Net Metering?

Coming from Nth Degree Solar Energy from Grand Junction Colorado, I get asked a lot about net metering, and how it operates, so here are some concepts to ponder about net metering and solar power generation.

When you use electrical power, it spins your electric meter forward. You pay on this meter based on how many kilowatt hours you consume during a measured period (usually a month).

If you install a grid-tied solar photovoltaic PV system, it will generate electricity. When this electricity flow through the system, it runs the meter backwards, or unwinds the usage that spins it forward.

During sunny days when you are mot home and electricity use is minimal, the meter flies backwards. Then you come home, after dark and start using the electricity and the meter goes forward again.

The key concept to grasp here is that you are essentially using the power companies grid (the lines that brings electricity to your home) as your storage mechanism, instead of having to have batteries to store the power you generate during the day to use at night.

From the utility company perspective:

Net metering is an agreement between the utility company and the system owner allowing for ‘banking’ excess power produced by a solar system in the electric grid and ‘drawing’ from the electric grid when more power is needed.

Wikipedia defines net metering as follows:

Net metering is an electricity policy for consumers who own (generally small) renewable energy facilities, such as wind, solar power or home fuel cells. “Net”, in this context, is used in the sense of meaning “what remains after deductions” — in this case, the deduction of any energy outflows from metered energy inflows. Under net metering, a system owner receives retail credit for at least a portion of the electricity they generate. Most electricity meters accurately record in both directions, allowing a no-cost method of effectively banking excess electricity production for future credit. However, the rules vary significantly by country and possibly state/province; if net metering is available, if and how long you can keep your banked credits, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. Unlike a Feed-in Tariff or time of use metering (TOU), net metering can be implemented solely as an accounting procedure, and requires no special metering, or even any prior arrangement or notification.

Net Metering is generally a consumer-based renewable energy incentive. While it is important to have Net Metering available for any consumer that interconnects their renewable generator to the grid, this form of renewable incentive places the burdens of pioneering renewable energy primarily upon fragmented consumers. Often over-burdened energy agencies are not providing incentives on a consistent basis and it is difficult for individuals to negotiate with large institutions to recover their Net Metering credits and/or rebates for using renewable energy.

Net metering is all a residential customer generally gets from the power company. Businesses, on the other hand, get to apply their solar generation to their usage ala Net Metering, but also reap the benefit of getting paid a production rate on every kilowatt hour generated, but only on solar system sizes larger than 10 kilowatts.

Read more about Solar Energy Solutions for Business.