In a perfect world, your home's solar energy system would precisely match your electrical needs, neither more nor less. In actuality, there will be days when your solar panels create more electricity than you need (sunny summer days) and days when they do not produce enough (cloudy winter days) (shorter, cloudier days and nights). When this occurs, net metering and net billing allow you to use the grid as a storage facility; surplus energy generated by your solar panels is transferred to the grid in exchange for credits. When your solar system cannot satisfy your energy needs and you must draw power from the grid, you can utilize these credits to make a difference.
This post discusses the distinction between net metering and net billing compensation structures, the many forms of net metering and net billing, and the states that provide these programs.
Net Metering vs. Net Billing
While comparable, net metering and net billing are not interchangeable. Both programs compensate solar panel owners for transferring excess energy to the grid when their panels overproduce; however, how participants are compensated differs. Net metering credits often correspond to the retail power rate (what you, as a utility customer, pay for electricity). In contrast, net billing credits correspond to the wholesale rate (what your utility company pays for electricity).
With net metering, you receive bill credits, but there is typically no monetary exchange. Instead, the credits you earn through net metering are "banked" for use on cloudy days when you need to draw power from the grid. Net metering credits are often a one-to-one exchange; a kilowatt-hour (kWh) produced by your solar panels is valued the same as a kWh provided by the utility grid. This simplifies your energy bill, as you will only be charged for your net energy consumption, which is your energy use minus your energy output.
Net metering systems are an excellent way for solar panel owners to "store" the energy their panels produce. The one-to-one form of net metering increases the value of residential solar systems. However, utility providers contend that because retail rates include business expenses in addition to the value of electricity, net metering credits exceed the value of electricity and delivery.
Instead of "banking" the surplus energy generated by your solar panels, net billing schemes allow you to "sell" it to the utility, often wholesale.Net billing is a monetary exchange in which the energy produced by your residential solar system is regarded similarly to that of a large-scale solar installation. However, your compensation rate will often be lower with net billing than with net metering.
Programs for solar compensation
Net metering and billing policies differ from state to state and utility to utility. As the renewable energy industry develops and matures, many net metering and billing plans have emerged.
Retail net metering
Retail net metering is the traditional net metering scheme in which participants receive bill credits for the electricity their solar panels generate at the retail rate. This often raises the value of residential solar systems but reduces utility corporations' income. Typically, retail rates include at least a portion of utility staff, maintenance, and other expenses and energy prices. Therefore, some utility companies are attempting to change net metering laws to compensate solar energy system owners at rates significantly below the retail rate.
Virtual net metering
Participants in shared renewable energy projects, such as community solar, can profit from virtual net metering. It provides the same remuneration as net metering but does not require the solar system to be situated on the participants' properties. Typically, community solar subscribers are assigned a piece of a large-scale solar array. When their piece of the array produces more energy than their home consumes, they will earn the same credit through virtual net metering as if the panels were really mounted on their roof.
Unlike most retail net metering projects, avoided-cost bill credits do not result in a 1:1 compensation structure. Instead, participants receive credits equal to the utility saved by not providing electricity to their residences. Avoided-cost rates are defined as net billing rather than net metering because the transaction is monetary and not a one-to-one exchange.
How solar rebate schemes influence solar savings
In addition to the energy savings you gain from producing your electricity with a solar panel system for your house, net metering and net billing increase the potential savings for solar panels. Instead of "wasting" the additional energy your system generates on a sunny day, you may "store" it and use it when you need it, such as on a gloomy or dark day. Net metering typically results in cheaper electricity costs, a shorter payback period, and a higher rate of return on investment.
Net billing can also contribute to a faster payback period and increase total savings, but it is less beneficial to solar owners than net metering. To maximize your savings regardless of your local compensation scheme, you can always change your energy consumption and consider adding a solar battery to store your excess energy rather than relying on your utility.
Explore solar possibilities on the QuestGreens
Solar energy is a long-lasting, cost-effective, emission-free source of electricity that continues to evolve to satisfy the demands of ratepayers and the natural environment. With incentives and compensation systems such as net metering across the nation, the solar investment is more lucrative than ever. QuestGreens provides qualified price comparisons from local installers to assist you in locating a solar system that meets your energy and financial requirements. Sign up for quotations from competent, pre-screened experts so you can begin the solar installation process immediately.