Net Metering Overview
Net metering or net energy metering (NEM) allows electricity customers who wish to supply their own electricity from on-site generation to pay only for the net energy they obtain from the utility. NEM is primarily used for solar photovoltaic (PV) systems at homes and businesses (other distributed generation (DG) customers may have access as well). Since the output of a PV system may not perfectly match the on-site demand for electricity, a home or business with a PV system will export excess power to the electric grid at some times and import power from the grid at other times. The utilities bill customers only for the net electricity used during each billing period. Alternately, if a customer has produced more electricity than they have consumed, the credit for that net excess generation will be treated according to the NEM policy of the state or utility.
Benefits of Distributed Solar
DG solar systems offer benefits to families, businesses, utilities and the economy.
- PV solar systems generate the most electricity during the middle of the day, when demand and the cost of electricity are highest. With net metering, individual PV systems can offset expensive peak electricity purchases by the utility, resulting in lower electricity bills for all customers.
- Since all net metered PV systems deliver electricity at or near the point of consumption, they reduce the need to expand transmission grid capacity, a long and expensive process.
- Net metering PV systems allow families and businesses to fix a portion of their utility expenses for years at a cost lower than they would have paid otherwise.
- NEM provides a critical component to the formula that allows for the development of a solar energy market and the jobs that come with it. Local jobs in the solar industry are those in the hard hit construction industries, especially roofing and electrical trades.
Prevalence of Solar Net Metering
Currently, 43 states plus D.C. have implemented net metering policies. While many states have adopted net metering, types of NEM policies vary significantly by state. Vote Solar put together an index that grades each state by the effectiveness of their respective NEM policy. The map below, taken from www.freeingthegrid.org, shows each states grade.
The charts below show the number of solar NEM customers and installed capacity of NEM solar PV systems by state as of YE 2011, as well as its Freeing the Grid NEM grade. Over 219,000 customers had NEM solar PV systems, which totaled 2,873 MW, at the end of 2011. (All Figures from EIA 861 and 826 Data)
While net metering is certainly driving significant growth in the DG solar market, 219,000 customers represents an extremely small percentage of overall utility customers. In California, the leading solar state, only .77% of total utility consumers had net metered solar installations. In other strong solar markets, such as Arizona, Colorado, New Jersey, Nevada and Pennsylvania, net metered solar customers made up less than .5% of total utility customers in each state. The only state in which solar net metered solar customers made up more than 1% of the entire state’s utility consumer base was Hawaii, with 2.06%.