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.
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.
According to the Database of State Incentives for Renewables and Efficiency (DSIRE, dsireusa.org), as of July 2016, 41 states had mandatory net-metering rules. Two states do not have mandatory rules, but have utilities that allow net metering (Idaho and Texas); four states have statewide compensation rules other than net metering (Georgia, Hawaii, Mississippi, and Nevada); and three states have no net metering in place (Alabama, South Dakota, and Tennessee).