FAQ: Net Metering

The U.S. electrical grid is one of the most regulated and least sophisticated networks out there. Of course buying power off of the grid is easy enough, but what if you want to try to sell electricity back to the grid? It might not be too easy to simply sell your excess juice from your solar panels, depending on where you live. Here’s a primer on the issue of “net metering” and how it will allow individuals to power the grid.

What is net metering? Net metering is a regulatory policy that allows people to sell electricity back to the grid from their own renewable energy facilities, such as a solar array or a wind turbine, incentivizing renewable distributed energy generation projects. The Energy Policy Act of 2005 pushed utilities to adopt net metering as a policy but enforcement and program design has fallen mostly to the patchwork of state utility regulators.

How does net metering work? In selling electricity back to the grid, one method involves simply rolling the existing power meter backwards as excess energy is pushed back onto the grid. Another method involves installing a separate meter to measure just outgoing energy. As the grid smartens up, the market for smarter meters, like those from SmartSynch will grow as consumers and utilities demand more and information control of their meters.

Why is net metering important? Hailed as “providing the most significant boost of any policy tool at any level of government…to decentralize and ‘green’ American energy sources,” net metering makes every customer of electricity a customer for cleantech products. Allowing consumers to generate their own electricity through grid-connected renewable facilities could give the grid a new degree of stability via “distributed generation.” Net metering allows consumers to participate in greening the grid, helping states achieve their renewable portfolio standards and freeing the utilities to invest more in transmission and distribution.

Who is leading with net metering policy? As of September 2007, 39 states had adopted programs to compensate consumers with grid-connected renewable energy systems. According to the Network for New Energy Choices’ report “Freeing the Grid,” New Jersey, Colorado and Pennsylvania are leading the way by allowing customers to sell as much power back as they want from a variety of eligible renewable energy sources.

Being a “leader” in net metering means tackling not only the specifics of compensation but also ensuring that interconnection is easy. States regulate the process by which power generating systems can connect to the grid and in some states the fees and bureaucracy of interconnection effectively block net metering.

Who in cleantech benefits from net metering? The growing sector of residential and commercial renewable energy hinges on the efficacy of net metering. Having clear and accessible net metering policy in place is critical for these installers to quote customers a reliable return on investment.

Solar commercial installers like Recurrent Energy, Akeena Solar, SolarCity and groSolar as well as residential solar installers like Citizenr? and Freener-g are at the forefront of relying on net metering for their business model as more and more customers want more than just a clear conscious for installing expensive solar arrays.

Residential wind could be up next as a number of startups are trying to cash in on wee wind by selling small turbines to landowners.

Battery companies are also taking note as adding battery storage to residential renewable energy projects could allow customers to maximize the amount of power they sell during peak hours while sorting energy at cheaper times throughout the day. Altairnano told us last month this is exactly what they are doing as part of a test with AES Corp. Altairnano has built a $1 million, 2 megawatt battery that is just sitting on the grid, charging off of the grid at night and then selling power back during peak hours.

A distributed network of grid-connected renewable energy systems with battery backup could drastically change the limitations and stability of the grid by allowing utilities to outsource to their customers peak demand response. This requires state-by-state policy review of net metering and interconnection regulation. Ensuring net metering on a national scale would boost residential renewable energy projects and allow cleantech to power America on the utility and user scales.

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