How Net Metering Works
Let’s say Florida Solar One installed your solar energy system. While you’re away, your house is generating energy but you’re not using it so what happens to the excess energy? Meanwhile at night, when you have the lights on, your solar system is idle but you still need energy so it must come from the grid. Instead you could install a battery to store the extra energy you generate during the day so you can use it at night, but there’s another option that allows you to sell your extra power to the grid in exchange for monthly cash credits (or payments). This is called net metering.
When your home is equipped with a solar energy system, it sends the excess energy that’s generated back into the grid where it can be used to power other homes. An electrical devise called an inverter turns the solar panel energy which is DC (direct current) into useable household power which is AC (alternating current). This power must match the voltage of the electricity flowing through the power line and all of this happens automatically.
As that excess energy is being generated, your power meter counts the units of energy sent to the grid as a credit that you can use to pay for your energy from the grid. In some markets you can roll over excess electricity to your next bill, just as many cell phone companies let you roll over minutes. In the Florida Keys all excess solar energy is purchased as a credit on your month’s bill.
In all markets if you’ve generated more energy than you’ve used at the end of the year, your electric company will “settle: the balance and credit your account at the full retail rate. If you have market-rate net metering, like we do in the Florida Keys – the utility company will buy this excess at their off set cost of generation only. This is less than retail so you won’t earn you anything extra, but you’ll still save on your overall power bill.
Benefits of Net Metering
- You can reduce the amount of money you spend each year on energy. You can even make money if you produce more than you consume and your utility company pays you for that excess energy at the retail rate.
- The system is easy and inexpensive. It enables people to get real value for the energy they produce, without having to install a second meter or an expensive battery storage system.
- It allows homeowners and businesses to produce energy, which takes some of the pressure off the grid, especially during periods of peak consumption.
- Each home can potentially power two or three other homes. If enough homes in a neighborhood use renewable energy and net metering, the neighborhood could potentially become self-reliant.
- It encourages consumers to play an active role in alternative energy production, which both protects the environment and helps preserve natural energy resources.
- Homes that use net metering tend to be more aware of, and therefore more conscientious about their energy consumption.
- It saves utility companies money on meter installation, reading and billing costs.
The amount of money homeowners can save with net metering depends on how much energy they produce. A 10-kilowatt residential wind energy system can save a consumer an estimated $10 to $40 a month [source: American Wind Energy Association].
Not everyone is sold on the idea of net metering, however. To the utility companies, the idea of consumers buying less power from them (and even having to pay consumers for the energy they produce) means shrinking profits. For that reason, they have opposed many proposed state legislation that would have made it easier for consumers to use net metering.