What is net metering?
"Net metering" is a simplified method of metering the energy consumed and
produced at a home or business that has its own renewable energy generator,
such as a solar PV system or wind turbine. Under net metering, excess
electricity produced by the solar PV system will spin the existing home or
business electricity meter backwards, effectively banking the electricity
until it is needed by the customer. This provides the customer with full
retail value for all the electricity produced.
Under existing federal law (PURPA, Section 210) utility customers can use the
electricity they generate with a solar PV system or wind turbine to supply
their own lights and appliances, offsetting electricity they would otherwise
have to purchase from the utility at the retail price. But if the
customer produces any excess electricity (beyond what is needed to meet the
customer’s own needs) and net metering is not allowed, the utility purchases
that excess electricity at the wholesale or ‘avoided cost’ price, which is
much lower than the retail price. The excess energy is metered using an
additional meter that must be installed at the customer’s expense. Net
metering simplifies this arrangement by allowing the customer to use any
excess electricity to offset electricity used at other times during the
billing period. In other words, the customer is billed only for the net
energy consumed during the billing period.
Why is net metering important?
There are three
reasons net metering is important. First, because solar and wind energy
are intermittent resources, customers may not be using power as it is being
generated, and net metering allows them to receive full value for the
electricity they produce without installing expensive battery storage systems.
This is important because it directly affects the economics and pay-back
period for the investment. Second, net-metering reduces the installation
costs for the customer by eliminating the need for a second energy meter.
Third, net metering provides a simple, inexpensive, and easily-administered
mechanism for encouraging the use of small-scale solar and wind energy
systems, which provide important local, national, and global benefits to the
environment and the economy.
What are the benefits and costs of net
provides a variety of benefits for both utilities and consumers.
Utilities benefit by avoiding the administrative and accounting costs of
metering and purchasing the small amounts of excess electricity produced by
small-scale solar and wind energy facilities. Consumers benefit by
getting greater value for some of the electricity they generate and by being
able to interconnect with the utility using their existing meter.
The only cost
associated with net metering is indirect: the customer is buying less
electricity from the utility, which means the utility is collecting less
revenue from the customer. That’s because any excess electricity that
would have been sold to the utility at the wholesale or ‘avoided cost’ price
is instead being used to offset electricity the customer would have purchased
at the retail price. In most cases, the revenue loss is comparable to
having the customer reducing electricity use by investing in energy efficiency
measures, such as compact fluorescent lighting, efficient heating and cooling
equipment, or other highly-efficient appliances.
Can I really use my existing meter to
take advantage of net metering?
standard kilowatt-hour meter used for most residential and small commercial
customers accurately registers the flow of electricity in either direction.
This means the ‘netting’ process associated with net metering happens
automatically — the meter spins forward (in the normal direction) when the
customer needs more electricity than is being produced, and spins backward
when the customer is producing more electricity than is needed in the home or
building. The meter registers the net amount of energy produced or consumed
during the billing period.
What is the current status of net
Currently, net metering is offered
in more than 42 states. For a detailed
description of state net metering policies and links to the authorizing
legislation, see the
database, which is a project of the Interstate Renewable Energy Council
funded by the U.S. DOE and managed by the North Carolina Solar Center.
Click on map to enlarge