Net Metering: How Does it Work?
Outlined below is everything you need to know about how net metering works, how it benefits you, and what the are in your state.
What Net Metering?
To put it simply, net metering is an agreement between the solar system owner and the power company. How does the deal work? Essentially, if your solar energy system produces more electricity than your house can use, then the excess goes into the grid and the meter runs backwards, providing you a credit. According to the Solar Energy Industries Association, only about “20 40% of a solar energy system’s output ever goes into the grid.”
There are two different types of net metering: conventional and aggregate. Quoted from the National Conference of State Legislatures, the two definitions are:
- “Conventional net metering, sometimes referred to as individual net metering, connects a generating source to single meter, such as a house or building. The recent expansion of net metering policies allows generating sources to be connected to multiple meters or multiple properties.”
- “Aggregate net metering and virtual or community net metering have authorized net metering for new customer types, including non-profits, multi-unit residences, multi-property owners, renters, municipalities and others who cannot install distributed generation. Under conventional net metering, these customer types could not have benefited from net metering.”
For most of our customers reading this, you fall into the category of conventional net metering because it’s for a single house. Keep reading to see how you benefit.
How Do You Benefit from Net Metering?
We previously used an example of banking to describe the benefits of net metering, which you can check out in our last blog post. Going back to that example, net metering can be compared to banking. Let’s say you make $100 in July. After paying $80 in bills, you have $20 left over, which you deposit it in the bank to save for later. If, in September, you only earn $60, you can use the $20 from your savings to pay your bills. Net metering works the same way, only instead of a bank keeping track, it’s the utility company. This system prevents you from ever wasting the energy you produce, and saves you from paying if your solar system has over produced previously but under produces in the future.
Additionally, another positive of net metering is that the excess energy is automatically deposited into the grid without you having to do anything, like direct depositing your paycheck. Before net metering, homeowners had to install expensive batteries if they wanted to save excess solar production, or just dump the excess into the grid without getting a credit, so it was just giving electrical companies energy for free with nothing in return. Nowadays, any electricity the house doesn’t use is automatically deposited into the grid via the net metering system.
Living Off-the-Grid (or Not Net-Metered)
If you decide to live off-the-grid—meaning that you’re not connected to a power company and your solar panels only send energy directly to your home—then you can’t benefit from net metering. This means you must either store your solar energy locally, as in batteries, or the excess disappears because it goes unused.
Going back to our example of banking, when you store your money in a safe under your bed, you have to remember to put your funds in there. Otherwise that money gets wasted. If your check is direct deposit, like how net metering works, then your money is safe for later. Applying this to solar-generated electricity, net metering automatically deposits energy into the grid while local storage typically isn’t automatic. If you choose to store your power locally, you have to keep the battery charged for it to work, so it’s more of a short-term solution. Having your solar power connected to the grid/power company allows you to access energy whenever you need it.
That being said, if you’re interested in getting off the grid – give us a call! We’ve got several backup power solutions to help you get there.
The state of Massachusetts says that if you are a customer of a regulated electric company (listed in the table below), you’re allowed to net meter. Depending upon the electric company you contract with, there’s only a certain amount of energy that can be stored on the grid. Current laws requite the utility companies to provide net metering to all customers under 10 KWAC and commercial customers under 25 KWAC.
For a more specific breakdown of the qualifications, please refer to the Massachusetts government website: https://www.mass.gov/guides/net-metering-guide
The electric distribution companies (like Penelec) nameplate capacities of 500 kW or greater. According to the website, the state system capacities are 50 kW for residential, 3 MW for non-residential, and 5 MW for micro-grid and emergency systems. But, there is no aggregate capacity, which makes it easier for you to store your excess power.
Again, for more information, please refer to the Pennsylvania government website: http://www.puc.pa.gov/consumer_info/electricity/alternative_energy.aspx
Overall, net metering is a great way to store your energy and get it back when you need it later. Luckily, if you need help figuring this out, we’re always here to lend a hand. We have official resources and our company resources below.