Net metering has long been an incentive for homeowners seeking to harness the power of the sun and reduce their carbon footprint. This billing practice, especially prevalent in California, enables solar panel owners to contribute excess energy to the grid and receive credits on their utility bills.
Read on to learn more about net metering!
How Net Metering Works
Net metering is a straightforward concept; when solar panels generate more energy than a homeowner needs, the surplus is fed back into the grid. A bi-directional meter records this excess energy, and the utility credits the homeowner for the kilowatt-hours (kWh) sent back. This credit is then applied to offset the energy drawn from the grid during periods of low solar production.
Key Components of Net Metering Programs
- Credit Rollover: Programs differ in how long credits are allowed to roll over, ranging from monthly to annual or indefinite periods.
- Time of Use Rates (TOU): Some utilities employ TOU rate plans, varying energy costs based on usage times. Solar panel owners receive credits based on when their panels contribute to the grid, influencing the financial benefits.
- Virtual Net Metering (VNEM): VNEM allows shared solar arrays, extending benefits to consumers who cannot install solar panels. Subscribers receive credits for the energy produced by their share of a community solar installation.
Benefits of Net Metering
Net metering brings several advantages to both homeowners and the broader community:
- Financial Viability for Homeowners: Net metering makes solar investments financially attractive, providing a good return on investment.
- Simple Billing Arrangements: The straightforward credit system simplifies billing for solar owners.
- Environmental Benefits: Encourages solar development, reducing carbon emissions and minimizing the need for new fossil fuel power plants.
- Reduced Infrastructure Costs: Diminishes the demand for new power transmission infrastructure, lowering costs and controversies associated with grid expansion.
- Accessibility: Allows those unable to install solar panels to benefit from shared solar installations.
Net Billing
Unlike traditional net metering, where homeowners receive a credit at the full retail rate for this excess energy, under net billing, homeowners earn a reduced credit. This credit is determined by a complex formula but tends to average around 5 to 6 cents per kilowatt-hour. The reduced credit for excess solar energy is a significant departure from the 1-for-1 crediting system common in traditional net metering.
Due to the substantially lower credit offered for excess solar energy in net billing programs, homeowners in California, for example, are incentivized to explore the addition of energy storage solutions like batteries.
By installing a battery system, homeowners can store excess solar energy generated during the day and use it during times when the sun is not shining. This enables them to avoid purchasing electricity from the grid during peak periods when rates are higher. The emphasis on self-consumption with batteries becomes a strategic approach to maximize the financial benefits of solar energy in a Net Billing framework.
Net metering has been a driving force behind residential renewable energy adoption, enabling individuals to actively contribute to a sustainable future. Net metering and its alternatives will continue to play a pivotal role in shaping the future of decentralized, clean energy generation. At North Valley Power, we install solar panels for homeowners. Contact us today!
