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Solar net metering makes your utility company cut you a check!

Avatar for Dave Llorens
Published on 09/14/2007 in
Updated 03/12/2014

See this guy above? Right. He’s actually a meter reader. On a Segway. I’m not sure why he’s smiling so broadly, he should be freaked out since many of you are about to learn how the utility company who employs him is required to pay you for the electricity your home or business produces with sun power. He might not be able to ride fancy schmance segways in the future with all of you cutting into the expected margins of his power company.

That’s right, some utilities offer customers with photo-voltaic (i.e., solar or PV) systems the option to “net meter” excess power generated. Basically, when the PV system generates more power than the household or businesses can use, the utility pays the full retail price for this power in an even swap as the electric meter spins backward, and your PV power goes into the grid. Solar net metering allows you with a PV system to connect to the grid with your existing single meter.

Almost all standard utility meters can measure the flow of energy in either direction. The meter spins forward when electricity is flowing from the utility into the building and spins backward when power is flowing from the building to the utility. For example, in one utility program, customers are billed monthly for the “net” energy consumed. If the customer’s net consumption is negative in any month (i.e., the PV system produces more energy than the customer uses), the balance is credited to subsequent months. Once a year, on the anniversary of the effective date of the interconnection agreement, the utility pays the customer for any negative balance at its wholesale or “avoided cost” for energy, which may be quite small, perhaps less than 2 cents per kilowatt-hour.

Net metering allows customers to get more value from the energy they generate. It also simplifies both the metering process (by eliminating the need for a second meter) and the accounting process (by eliminating the need for monthly payments from your utility). Be sure to ask your utility about its policy regarding net metering.

Under the federal Public Utility Regulatory Policies Act (PURPA), utilities must allow you to interconnect your PV system. They must also buy any excess electricity you generate, beyond what you use in your home or business. If your utility does not offer net metering, it will probably require you to use two meters: one to measure the flow of electricity into the building, the other to measure the flow of electricity out of the building. If net metering is not available, the utility will pay you only a wholesale rate for your excess electricity. This provides a strong incentive to use all the electricity you generate so that it offsets electricity you would otherwise have to purchase at the higher retail rate. This may be a factor in how you optimize the system size, because you may want to limit generating excess electricity. A “dual metering” arrangement like this is the norm for industrial customers who generate their own power.

After your new PV system is installed, it must be inspected and approved by the local permitting agency (usually a building or electrical inspector) and most likely by the electric utility with which you entered into an interconnection agreement. Inspectors may require your PV provider to make corrections (which is fairly common in the construction business). A copy of the building permit showing the final inspection sign-off may be required to qualify for a solar rebate program.

Source- U.S. Department of Energy – Energy Efficiency and Renewable Energy: A Consumer’s Guide – Get Your Power from the Sun

Last modified: March 12, 2014

5 thoughts on “Solar net metering makes your utility company cut you a check!

  1. Avatar for Jim Jim says:

    It’s a rip off even in az.purchase or lease or rental will not make enough difference to justify.

  2. Avatar for Robert Robert says:

    I guess you’re not considering that people with solar panels save the power company money as well buy not having to generate as much electricity and the excess energy that a solar energy producer is putting back into the grid is being resold to your neighbors on the grid at the same rate they pay you so their net loss of money is 0. You do understand that when you sell them back the electricity it is used by other people on the grid right?

  3. Avatar for Anon Anon says:

    Highly unlikely the utility will cut a check. To give consumers the backup of having lines remain to the home, there is a cost. Otherwise the utility could retire the lines if they are not being paid for or workers to maintain them. So IF a utility is cutting a check to a very small number of customers, that WILL change if they don’t have the income to maintain the distribution lines. Then you’ll have to make sure that you purchase enough renewable energy sources to make sure you have power it the utility packs up their lines and leave

  4. Avatar for Anonymous Anonymous says:

    This is the future.

  5. Avatar for Dane Ericksen Dane Ericksen says:

    I think that two of the green arrows added to the picture of the watt hour meter are shown in the wrong direction. Only the first, third and fifth dials (counting from left to right) rotate CW when consuming power and rotate CCW when generating power back to the grid, yet the green arrows all show CCW, an impossible condition since the second and fourth dials of a watt hour meter always spin in the opposite direction of the first, third and fifth dials.

    Now, if the picture was of the the large, horizontally spinning stator disk, then it would be correct to show spinning to the right as consuming power and spinning to the left as generating power back to the grid.

    My 3 kW solar voltaic system went on line on August 11, 2009, and it was fantastic to watch my meter’s stator disk spin backwards.

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