Net Metering & Beyond


Inside this Article

Most modern kWh meters will record in both directions (energy export and import), but “net metering” is an agreement with the utility of the cost/credit value of those kWh.
The component simplicity and lower cost of a batteryless grid-tied PV system makes it the most common solution for distributing clean energy to the grid.
JLM Energy’s Energizr 200 energy storage system with Loadz appliance interface offers lithium iron phosphate battery storage and the ability to control household loads for energy management strategies.

For grid-tied PV system owners, net metering has been a popular way to credit homeowners for the surplus energy their systems produce. Net metering, together with monetary incentives and state PV energy target levels, makes it easy to connect PV systems to the grid and has resulted in the high growth of residential PV systems.

But this popular policy has recently been under attack and the resulting changes will have serious implications for the solar industry and future PV system owners. This article highlights what changes are occurring, their ramifications on the solar industry, and how to approach PV system design if these changes come to your area.

Net-Metering Basics

Under net metering, when a grid-tied PV system’s output is greater than the building’s electrical consumption, that excess energy flows through a kWh meter into the utility grid. The monetary value of the energy is counted and accumulates as credit, which can be used when the loads are higher and PV system output is lower or nil, such as at night or during cloudy weather. Most utilities allow credits to be carried over from month to month, which allows homeowners to draw on summer’s “banked” electricity during the winter months, when system production tends to be lower.

According to the Solar Energy Industries Association (SEIA), in a typical residential net-metered solar installation, only 20% to 40% of the energy produced by the PV system is exported to the grid—most of the energy produced is used directly in the home. Customers are only billed for their net energy use—that is, the electricity they use at home beyond their PV system’s production and beyond any accrued credits. Surplus PV electricity is usually consumed close by, reducing the load on the utility grid, reducing transmission and distribution losses, and reducing emissions and pollution from power plants.

Net metering offers a simple, low-cost way to accommodate and encourage the installation of grid-tied PV systems. Typically, a single kWh meter can be used, instead of requiring an additional kWh meter for the PV system. A key concept of net metering is that the customer buys electricity from the utility and sells back their PV-produced electricity at the current utility rate. Some utilities also combine net metering with time-of-use (TOU) rates—if the excess electricity is produced during peak rate periods, it is credited at this higher rate, therefore offsetting the cost of more kWh consumed during off-peak periods, which are priced at a lower rate.

Net metering has helped encourage the rapid growth in “distributed” PV systems, which provide other benefits. Distributed PV systems produce nonpolluting energy close to the points of consumption and the systems’ production often coincides with peak demand occurrences, such as air-conditioning on a hot, sunny summer day. This supply of peak power is much less expensive than buying it on the utility power exchanges or building new plants to meet this demand.


Comments (3)

Peter Gruendeman_2's picture

The electric utilities are facing the end of their glory days and the beginning of a cold hard future where people are happy to make their own electricity-- or at least some of it. The authors mention "self-supply", where Hawaiian customers generate some of their electricity but export no excess to the grid. Nobody on net metering is required to generate enough electricity so that they have a surplus to send to the grid for a profit. I realize that there are a lot of fees associated with net metering so that cavebear42 would want to produce electricity for export, but it's not required.

Which scenario has a greater effect on the utilities and environment: One house in four making enough electricity to export some to the grid, or all four houses using PV for domestic hot water? The latter scenario has a much greater effect yet it costs less to do this for four houses than to make one house a net energy exporter. Why? Because the inverters and balance of system costs almost as much as the panels for the grid-tied home. The balance of system is extremely simple and cheap for PV-->DHW, and no grid connection is needed at all. No fees, no approvals needed. Some of the details are in the sidebar on page 52.

A modest contribution made by each of many homes has more effect than one spectacular grid-tied home. When electricity storage is cheap and efficient, more home owners will choose to generate their own electricity. Until then, heating water with PV is a good way to reduce energy use, and BTW, is cheaper than solar thermal because the installed cost of PV is so much lower. The joys of cheap Silicon!
Pete Gruendeman

cavebear42's picture

Net metering is a start but it is holding us back. I have a house in California with a big roof and plenty of sun. I also have made it very energy efficient. I could install a large PV system and, by my math, turn quite a profit on the year. The problem is that the system cost is mine and the profit would be for the energy company. At the current time, it's not worth a small system to offset our power but, if I could actually make money rather than "credit to my bill", I would install the largest system my roof could hold and a few more panels on the back awning.

Michael Welch's picture
It's not much, but you can get paid $0.04 per kWh for that energy in CA. Do an internet search for "net surplus compensation.
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