Blog Post

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.

17 Responses to “FAQ: Net Metering”

  1. Joey Go


    Maybe you can checkout where Thailand have legislated net metering since 2003. Maybe we can follow their model without having legislation.

    I am also in Manila and plan to put up grid connected solar panels if net metering is allowed.

    Hope you succeed. Good Luck.

  2. Gerald R. Martinez

    I am now in talks with Manila Electric Co. (Manila,Philippines) to adapt Net kw hr metering but have to do a lot of explaining, apparently they have no idea about it. What should I do to convince them? Do you have materials for me to present them?

  3. Green energy is definitely the best solution in most cases. Technology like solar energy, wind power, fuel cells, zaps electric vehicles, EV hybrids, etc have come so far recently. Green energy even costs way less than oil and gas in many cases.

  4. Credit full price? Where in the US does that happen?

    Certainly, not here in sunny New Mexico where PNM credits back the wholesale price – while selling to us at retail.

    Of course, they also are getting ready to increase rates for residents because they “need to build more capacity” – while exporting coal-generated electricity to beautiful California.


  5. Utilities don’t really like net metering because they are expected to credit full-price for a resource that has no baseline capacity. Batteries or other backup storage can help with this, but that is expensive.

    Usually batteries are referenced by energy storage (meagawatt-hour, not megawatt) A $1M 2MW-hr battery (assuming good for 2,000 cycles) would add 25 cents for every kW-hr stored in it. Not a bargain in any sense of the word.

    Intermittent renewable energy sources are best offset with intermittent sinks, like smart HVAC or PHEVs, not battery packs (unless they are in a car….).

  6. Here in Canada NET metering means that you can only roll your meter back the equal amount of your consumption (rolling your bill down to Zero amount owing), but you will not actually get paid for any energy beyond that. This is the main issue why people do not invest in renewables here.
    In Germany on the other hand, you can actually sell your energy beyond the one that you do use, which pushes the renewable energy business forward.

    I thought I’d point that out. The politics behind such a systems (NET metering) here in Canada are so counter productive.

    Cheers, Hans