If you’ve just considered making the move to solar, you may have just recently learned about the concept of net metering — a system that allows homes and businesses to remain on the public utility power grid while reaping the benefits of solar power.
For many homeowners and companies, net metering in solar power has been a game-changer. It not only allows individuals, families, and businesses the ability to cut their power bills, but it sometimes even makes solar energy profitability possible.
This article will answer all of your questions about what is net metering in solar, how it works, its costs, reliability, safety, availability, and much more.
How Net Metering Works
Net metering connects a renewable energy system — in this case, a solar panel system — to a two-way net meter stationed at your home or business.
When you produce more energy than you use, it flows through the solar meter to the power grid, where other consumers can use it. During periods when you use more power than you produce, you can draw electricity from the grid.
For example, if you’re like many homeowners who work in an office during the day, your home electricity usage is relatively low. The daytime also happens to be the time when your solar panel system will be generating electricity. During these hours, your system is producing more electricity than you need.
At nighttime, the reverse happens. You’re home using lights, cooking, recharging your devices, etc., but there’s no sunlight to power the solar panels. At nighttime, you consume electricity, and that comes from the utilities.
The meter tracks energy flow in both directions. If your overall solar power production exceeds your usage, you are a net energy producer. If you use more electricity than your solar system makes, you are a net consumer.
The good news is that you either make money by selling back your solar energy or paying a substantially reduced power bill.
Benefits of Net Metering in Solar Power
Moving to a net-metered solar panel system can be advantageous to both homeowners and commercial property owners.
Reduced Power Bills
Net metering provides credits for the unused energy that your system produces. These credits can be applied in times when you draw more from the grid than your system is producing.
For example, if your solar panel system produces 120% of the power you use, that extra 20% goes back into the grid. Your extra kilowatt-hours are credited at whatever rate your utility pays.
In some cases, property owners receive money back from the power companies in an annual settlement.
Reliable Power Connection
Many consumers are under the impression that installing a photovoltaic system means disconnecting from the grid. This is not the case. Net-metered systems remain connected to the grid.
As long as the grid itself is functional, the property will have electricity, even at night and during inclement weather.
Rapid Return on Investment (ROI)
With federal, state, and local tax incentives and competitive financing, installing a solar panel system requires little or no upfront cost. With a net-metered system, energy consumers enjoy deeply reduced power bills immediately. In most cases, the power bill discount more than offsets the system’s monthly payments.
Solar Energy is Green Energy
Solar energy is renewable and does not produce greenhouse gases. Many of the components of solar panels are recyclable as well.
According to a PV energy payback analysis generated by the DOE’s National Renewable Energy Laboratory, solar panels “pay back” the excess energy that goes into their production in the first few years and work decades beyond.
“With energy paybacks of 1 to 4 years and assumed life expectancies of 30 years, 87% to 97% of the energy that PV systems generate won’t be plagued by pollution, greenhouse gases, and depletion of resources.” – PV FAQs, The National Renewable Energy Laboratory (a DOE national laboratory)
Reduced Strain on the Power Grid
If you’re concerned about the increased strain on the power grid that services your community, owning a net-metered photovoltaic panel system will make your home or business part of the solution.
Policy and Regulatory Landscape
Solar power net metering is a heavily regulated industry. Federal, state, and local laws and agency regulations can affect the viability and profitability of installing a net-metered photovoltaic panel system.
It’s important to acknowledge that the laws and agency regulations affecting net metering systems vary by state and region and change with political cycles. With this in mind, here are some of the significant legal factors affecting net metering.
Tax Incentives
Currently, the U.S. Federal Government allows up to a 30% tax credit for installing a home solar panel system. A tax credit is deducted from your overall tax bill — as opposed to a refund, which reduces your taxable income.
Some states offer additional incentives. For example, Florida residents are exempt from paying increased property taxes for the portion of their property value increase resulting from the installation of a solar panel system. In addition, there is no state sales tax on the purchase of a solar panel system.
Net Metering Rates
The connected utility is often responsible for establishing the rates at which they purchase kilowatt hours from their net-metered clients.
In Florida, for instance, there are 54 different power companies. Some of these offer credits at retail rates, while others buy electricity at a discounted rate. Some utilities sell kilowatt hours at a higher rate than they purchase them. Naturally, this is a factor in the profitability of a net-metered solar system.
If your home or business is dependent on a utility that doesn’t offer a retail rate, you may consider battery installation. Instead of selling your power back to the power company for a lower rate than you pay, you can store electricity during the day and draw from the battery at night. Because you’re still connected to the grid, you can switch it back on if your battery drains before you can recharge it.
Net Metering Regulation
Among other things, the Energy Policy Act of 2005 states that “each electric utility shall make available upon request net metering service to any electric consumer that the electric utility serves.”
However, several states have adopted unfriendly policies toward net metering. In the states where Go Solar Power operates, net metering is widely available to our customers.
Net Metering in Practice
It’s helpful for consumers to understand how net metering works and how it will affect their household or business. This section will describe the process.
1. Evaluation and Estimate
When you contact Go Solar Power, a representative will analyze your current energy usage, determine your power needs, and assess whether your property is suitable for a photovoltaic panel system.
They will also ensure that net metering is available in your area. Your estimate will include initial costs and projected savings.
2. Installation
There are no one-size-fits-all panel systems, and all solar panel system installations are custom jobs. Specialists will measure, order, and install your panels, along with your bi-directional meter.
3. Usage
Once your system is operational, it will begin generating energy. When you produce more than you’re using, electricity will flow out to the power grid.
When you use more energy than your system produces, like at night, you will draw power from the grid, or if you have a hybrid system, from the battery. If you are drawing from the grid, the meter keeps track of your usage.
4. Billing
You should notice a difference in your power bill for the first period the system is in use. You may also see credits in your statement.
These will be automatically deducted from future bills. In some states, the company will cash out your credits once per year.
Solar Power Economics
Over the years, solar panels have improved in efficiency and decreased in costs, making them an increasingly attractive alternative for individuals, families, and businesses.
But how do the economics of net energy metering work for the consumer? There are several factors that affect how a solar power system can impact the bottom line:
- The Size of the System – As a rule, the larger the building is, the greater its power needs, which means that it will require more panels to power it.
- The Cost of Installation – This is the total initial cost of the system, including labor, materials, and miscellaneous fees. Some of this cost may be offset by the federal tax credit and other incentives.
- Terms of Financing – If you are financing your solar power system, the interest rate and the length of the loan will affect your monthly payment.
- Cost of Electricity – Currently, the cost of a kWh ranges from 10 to 20 cents, depending on which state you live in. The average cost of a kWh in South Florida is about 15 cents, which is close to the state’s average.
- Utility Purchase Price – Many Florida utilities offer a retail rate for the kilowatt hours produced by private solar panel systems. This means that they credit accounts at the same rate that they charge for kilowatt hours. Other utilities pay less than they charge, which means you could still end up with a power bill, even if you produce enough energy for your needs. One way to avoid this situation is to incorporate a battery, which allows you to switch off from the grid and draw energy from the battery.
- Net Usage – This is your usage minus your production. If it’s a positive number, you’re a net consumer. Net producers have a negative number.
The key is working with a company that can determine your needs and provide you with a system that pays for itself over time.
Go Solar Power will help you create a viable solar savings plan that is remarkably accurate. You will see savings on the first billing period after your system is installed.
Integrating Battery Storage with Net Metering
Many consumers who install a net-metered solar power system also opt for battery storage. This is a particularly popular option for utilities that pay lower rates than they charge. The battery allows you to switch off from the grid and use your own stored power at night.
Additionally, batteries like the Tesla Powerwall and the Enphase IQ Battery qualify for the federal tax credit.
If your system has a battery attached, excess electricity will be stored in the battery before it goes out to the grid. Once the battery reaches capacity, the system will transfer excess electricity to the grid unless you switch off the connection.
Many business owners and residents prefer the battery because it also backs up the grid. If there is a power outage, they can draw power from the battery without interruption. It’s more efficient and seamless than a backup generator, which is why so many businesses are investing in large-scale battery systems like the Tesla Megapack.
Ask your Go Solar representative about incorporating a battery power backup into your solar power system.
Net Metering Frequently Asked Questions
These are some of the most commonly asked questions about solar power net metering. For answers to your specific questions about net energy metering, solar panel installation, and more, contact Go Solar Power today.
Is Net Metering a Good Idea?
Net metering is sustainable, environmentally friendly, and offers consumers an attractive return on investment. For these reasons, net metering is a good choice for most households and businesses. If you’re uncertain that it’s a good idea for your property, contact us for a free consultation.
What Are the Cons of Net Metering?
While the advantages are numerous, there are several cons. To begin with, net metering for solar power is not available in all areas. Additionally, some premises may not be suitable for solar power. For example, if you live in a condo or lease space in an office building, you may not have access to enough sunlit roof space. It’s also important to note the fact that unless you have battery storage or a hybrid inverter, your power will go out if the grid goes down.
How Do You Make Money From Net Metering?
While net metering for profit is possible, most homes and businesses only aim to mitigate their bills. However, if you have enough solar power capacity or you only use your space part of the time, you can turn a consistent profit if your utility and the laws of your state permit it.
What is the Best State for Net Metering?
Some states make net metering more attractive than others. They offer additional financial incentives in addition to the federal tax credits. As we previously mentioned, Florida does not charge its 6% state sales tax on the purchase of solar power systems. Additionally, your county can’t increase the assessed value of your property to match the increase from the solar system. The Florida Public Service Commission requires investor-owned utilities to offer net metering, so it’s widely available throughout Florida!
Go Solar Power operates in Florida, Texas, California, Georgia, and South Carolina, where there is ample sunshine to power homes and businesses. Contact us to learn more about net metering for solar power in these states.
If you want to substantially reduce your power costs and reduce your carbon footprint by becoming part of the solar power revolution, contact Go Solar Power today!
