Net metering programs serve as an important incentive for consumer investment in renewable energy generation. Net metering enables customers to use their own generation to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand. This offset means that customers receive retail prices for the excess electricity they generate. Without net metering, a second meter is usually installed to measure the electricity that flows back to the provider, with the provider purchasing the power at a rate much lower than the retail rate.
Net metering is a low-cost, easily administered method of encouraging customer investment in renewable energy technologies. It increases the value of the electricity produced by renewable generation and allows customers to “bank” their energy and use it a different time than it is produced giving customers more flexibility and allowing them to maximize the value of their production. Providers may also benefit from net metering because when customers are producing electricity during peak periods, the system load factor is improved.
Currently, net metering is offered in more than 35 states. For a more detailed description of state net metering policies and links to the authorizing legislation, see the DSIRE 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.
Another way to explain this:
When the meter reader from your utility company comes to your house, they look at the numbers on your meter. If you’ve been using electricity to run your household appliances, TV, electric heaters, etc., the meter has been moving forward and the numbers that represent “kilowatt hours” have been increasing since your last meter reading. You are charged for those kilowatt hours at the retail rate on your next electric bill. When you install a Solar Electric (PV) system at your home, the PV system is connected into your breaker box in most cases. During the day, if no one is home and no electricity is used, the PV system is producing electricity that will feed backwards into your breaker box. The electricity then flows backwards through your breaker box, through the electric meter, and then back into the power lines (also known as “The Grid”) outside of your home. This makes your electric meter run backwards, and reduces the number of kilowatt hours on the meter (it’s a beautiful sight). When you get home that night, and turn on your appliances, you hope that you don’t use as many kilowatt hours as your PV system produced that day, which will keep the number of kilowatt hours that register on your electric meter from going up from the last meter reading. If this would be the case every day, you would have no kilowatt hours to pay for on your next electric bill. At this point in time in New York State, you will probably always be making a payment to your utility company because the kilowatt hours you are charged for are only a part of your electric bill. There are other charges for line use fees, etc., but if your PV system is able to produce as many kilowatt hours as you use, the cost of your electric bill could be as little as $30.00 per month, or less.
Tax and Other:
This subject is covered in detail on our “Financial Incentives” page. Also, be sure to check our Residential, Commercial, and School/Municipalities/Not for Profit pages for more information regarding your specific category. Please keep in mind that your unique financial situation will make a difference in the financial and tax benefits you might be eligible for.
From the US Department of Energy’s National Renewable Energy Laboratory (NREL):
Q): Producing electricity with photovoltaics (PV) emits no pollution, produces no greenhouse gases, and uses no finite fossil fuel resources. The environmental benefits of PV are great. But just as we say that it takes money to make money, it also takes energy to save energy. The term “energy payback” captures this idea. How long does a PV system have to operate to recover the energy—and associated generation of pollution and CO2—that went into making the system in the first place?
A): PV systems can repay their energy investment in about 2 years. During its 28 remaining years of assumed operation, a PV system that meets half of an average household’s electrical use would eliminate half a ton of sulfur dioxide and one-third of a ton of nitrogen-oxides pollution. The carbon-dioxide emissions avoided would offset the operation of two cars for those 28 years.
- An average U.S. household uses 830 kWh of electricity per month. On average, producing 1,000 kWh of electricity with solar power reduces emissions by nearly 8 pounds of sulfur dioxide, 5 pounds of nitrogen oxides, and more than 1,400 pounds of carbon dioxide. During its projected 28 years of clean energy production, a rooftop system with a 2-year energy payback and meeting half of a household’s electricity use would avoid conventional electrical-plant emissions of more than half a ton of sulfur dioxide, one-third a ton of nitrogen oxides, and 100 tons of carbon dioxide. PV is clearly a wise energy investment that affords impressive environmental benefits.
- If a household used around 7,200 kilowatt hours per year, this would be equal to 12,240 pounds of coal burned to generate that electricity and 8,000 pounds of CO2 emissions resulting from burning the coal.
- We would need only 10 million acres of land—or only 0.4% of the area of the United States to supply all of our nation’s electricity using PV. Only .75% of the land area in New York State, if covered with PV modules, would produce all of the electricity we consume.