Solar net metering enables commercial and residential customers who generate their own solar power electricity to send the electricity they do not use back to the grid or to neighbors. This billing mechanism essentially allows homeowner to receive credits instead of paying for electricity. While the concept seems relatively simple, it has been the source of a significant amount of confusion. The following information looks to shine a little sunlight on the green and mutually beneficial scenario of solar net metering.
Your solar piggy bank.
The simplest way to understand net metering is to consider it like your solar net piggy bank.
- During the day, your solar panels absorb sunlight and generates energy for your household appliances. Since you are typically at work during the day, you are less likely to use significant electricity. As a result, your energy consumption is low and the panels produce much more energy than your home uses. In this case, you are feeding energy into your solar net metering piggy bank.
- As a result of your solar panels producing more electricity than you are using, your meter spin backwards, which deposits solar credits into your piggy bank.
- When you come home from work, you begin to watch television, cook food, turn on the computer, and essentially use energy. Since your solar panels are not producing electricity due to the lack of the sun, you are taking electricity out of your solar piggy bank. Essentially you are using the extra electricity generated during the day while you are away at work.
- Your utility company will re-purpose your power to others in your neighborhood to prevent the use of coal.
- In the event your home uses more energy than you have saved up, the electric company will charge you their regular coal-powered rates for nighttime. Fortunately, the nighttime rate is much lower than the day or “peak” rate.
For example, when a customer has a PV system on the roof of their home, the system can very likely create more electricity than the household uses during the day. When the home is net metered, the meter for electricity will run backwards to credit against whatever electricity is not used. The credits can be used during other periods when the household uses more electricity than the system generates. In any case, customers are billed only for their “net” energy usage, which is less or can have a credit balance.
Types of net metering accounts
There are two different types of net metering accounts, which are briefly explained below:
- Host Customers are those who produce extra electricity from their PV panels.
- Allocate Accounts are those from which the additional electricity produced by host accounts are transferred.
How do I get money back?
At the end of every year, month, or billing period, your utility company will send you a invoice for the “net” difference. The net is the difference between what you have used and the amount of energy your solar panels have produced.
But while the idea of “selling” your power back to the power company, typically your savings will not cover 100% of your electric bill each month. And given that most of our customers will rarely produce more then they use in a given 12 month period, they will never actually get a check or realization that net-metering has occurred.
An example of how net metering works in Maryland
That said, here is an example of how net metering benefited one of our customers in Maryland:
For our example, the solar array was set to produce 20,000 kwh a year, we installed in January. So for all of the months up until harvest season, their metering was “spinning backwards”. During this period, they they received electric bills for $ 0, however they were not compensated for the additional electricity.
However, all of that additional production was accounted for. In the fall, they used all of that additional electricity and wound up net-nuetral at the end of the year.
If the solar panels produced 20,000 kWh, and at the end of the year they only used 19,000 kwh, the utility company would issue a rebate at the end of the year for the difference at wholesale price. While this is not typical for every state, this is how Maryland manages their net metering program.