“the Economics Of Net Metering: How Solar Homes Impact The Grid”

“the Economics Of Net Metering: How Solar Homes Impact The Grid” – Thanks to net metering, your solar panels can save you – and help you – a lot of money.

When grid-tied solar panels produce more energy than a customer needs, the excess energy is sent back to the electrical grid along the same wires that carry electricity to homes when the sun goes down.

“the Economics Of Net Metering: How Solar Homes Impact The Grid”

Net metering is a utility billing practice of recording the excess energy generated by a solar installation and applying it to the customer’s bill as a credit for the energy drawn from the grid.

Distributed Generation & Net Metering

It’s a very simple way to compensate solar panel owners for their contributions, and many places in the United States have had this law for years. But as with anything involving utility companies or the law, when you look a little deeper, there are nuances and complexities to the picture. And many states are beginning to move away from net metering as the economics of participating in the grid become more complex.

Here’s our guide to net metering, including how it works, where it’s available, pros and cons, and alternative billing programs.

The type of net metering described above is the simplest example in practice and is also called “true net metering” or “1-for-1 net metering,” because the utility gives credit for each kilowatt-hour (kWh) of electricity. is sent to the grid, which can be redeemed for kWh used when the sun is not shining.

When a homeowner installs a solar energy system, the utility replaces their electric meter with a new bi-directional meter, which can record the energy the solar panel exports to the grid and the energy the customer takes from the grid when the solar panel is not present. Generating enough power to run household appliances.

Virtual Net Metering Of Solar Energy

At the end of each billing period, the utility aggregates the energy sent to the grid and the energy consumed from the grid. If a homeowner uses more electricity than is sent, the utility bills them for the difference. If they send more than they use, the utility records a credit balance that will be applied to the next monthly bill.

Here’s a graphical representation of how it works, with increasing credits during daylight hours that are used at night:

Under most net metering programs, kWh credits are month-to-month, meaning that energy generated during the summer months can be credited toward energy purchased by the customer during the dark winter months.

Some utilities allow these credits to be held indefinitely, but most match any remaining credits at the end of a 12-month period and pay the customer for them at a near-wholesale rate. This is called the “true-up date” and is typically set as the date a customer’s solar panels are allowed to operate off-grid (PTO).

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Some utilities allow solar customers to choose their annual true-up date, while others set one date for all customers, which is usually in late spring, giving solar owners the best chance to use any banked credits from the previous year before the next year. Sunny season.

There are also places where net metering credits are reconciled every month. Any excess energy left at the end of each billing cycle is credited to the solar system owner, usually at a rate well below the wholesale cost of energy. This reduces the financial benefits of net metering, and homeowners in these locations may choose to design solar systems that do not exceed their total consumption during sunny months.

Under true net metering, each kWh credit represents one kWh and can be redeemed for energy from the grid at any time. But some net metering programs provide financial bill credits instead. That credit can be equal to the retail value of one kWh, but sometimes it can be less.

For example, under Net Energy Metering (NEM) 2.0 in California, non-bypassable charges result in energy credits that are only a small fraction of the marginal rate, which is the portion of the marginal cost of energy that goes toward lower income. and environmental programs.

The Future Of Solar Economics And Policy

Some utilities offer time-of-use (TOU) rate plans, under which energy costs vary based on time of use. Peak demand on the grid usually occurs on weekday evenings, when most people return home from work and start using their devices. During this time the cost of energy increases.

TOU rate plans have at least two different rates for on-peak and off-peak times. Solar panel owners on TOU rates receive credit for the electricity their panels send to the grid.

So for example, a solar installation sends 10 kWh to the grid during off-peak periods when energy is $0.10/kWh. The owner will receive a $1 credit for that energy. If the price of energy from the grid is $0.15/kWh during peak times, the credit they receive can only offset 6.7 kWh worth of peak-time electricity.

Due to the different value of energy, TOU rates can make a home solar battery more economically viable. Homeowners can charge their batteries with solar energy during the day and use the energy stored in the batteries to avoid peak energy prices in the evening.

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Net metering has many benefits, some of which go to the solar system owner and some to the grid and society as a whole. Here is a list of some of the benefits:

As solar advocates, we’d love to tell you there’s no downside to net metering, but that’s not necessarily true. Studies have shown that solar grids have a net benefit when net metered systems are less interconnected, but things get more complicated when net metering reaches a threshold of 5% to 10% of peak demand.

The implications of the alleged “cost shift” are difficult to fully understand, as the argument that cost shifts exist is advanced primarily by the electric utility companies themselves. Over the past ten years, utility companies across the country have pushed the cost shift narrative as a way to end net metering.

Often, these companies just try to hit rooftop solar and don’t try to create a system that works to lower bills for their ratepayers. They don’t try to offer reasonable succession programs that recognize the full economic, environmental and social benefits of solar power to the grid, nor do they spend millions of dollars (sometimes ratepayer dollars) to lobby. Those benefits.

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There are a few different net metering options around the U.S., including net billing, feed-in tariffs, and buy-all, sell-all. States like Arizona and California used to have net metering but have since moved to so-called “successor” programs, while other states never had effective policies.

Under net billing, solar energy used to power home appliances directly reduces the homeowner’s electric bill by the full marginal cost of electricity, but energy sent to the grid is collected at a lower rate. Financial credits are applied to a customer’s bill, but typically do not equal the cost of the electricity customers are pulling from the grid when their solar panels are not generating energy.

Net billing is often combined with TOU billing, and the credits given to solar owners for power dispatched during the sunniest hours of the day are often too low, while the energy they have to buy from the grid in the evening is too high. Because of this, net billing encourages solar owners to add batteries to their systems, store solar energy instead of selling it for pennies on the dollar, and then use it in the evening instead of buying on-peak power from the utility.

California’s net billing is the most notorious example of this type of solar metering. In late 2022, the California Public Utilities Commission decided to move the state away from its revised net metering system. The new net billing tariff has different payments for solar energy for each hour of the day, each day of the year, which changes on a monthly basis. Many times during the year, the value of exported solar power is almost $0.

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In a worst-case scenario for home solar, you may need to engage in “buy-all, sell-all,” known as “parallel operation” with the utility grid. “Buy-all, sell-all” means you buy all the energy you need from the utility company and send all the solar energy your system produces to the grid.

The price paid for solar power under a buy-all, sell-all program is called a feed-in tariff. These programs usually pay a lower price for each kWh of solar energy than the price at which the utility sells electricity to residential customers.

In many places utility customers can set up a special solar installation called a “non-export system”. This means that you either have to use, store or lose solar energy so that it is not available

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