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PV Systems and Net Metering

Net metering is a policy that allows homeowners to receive the full value of the electricity that their solar energy system produces. The term net metering refers to the method of accounting for a photovoltaic (PV) system's electricity production, for example. Homeowners with PV systems can thus offset their electric bill with any excess electricity they produce. As the homeowner's PV system produces electricity, the kilowatts are used first to meet any electric requirements (e.g., appliances, lights) in the home. If more electricity is produced from the PV system than the home needs, the extra kilowatts are fed into the utility grid.

Under federal law, utilities must allow independent power producers to be interconnected with the utility grid, and utilities must purchase any excess electricity they generate. Many states have gone beyond the minimum requirements of the federal law by allowing net metering for customers with PV systems. With net metering, the customer's electric meter will run backward when the solar electric system produces more power than is needed to operate the home or business at that time. An approved, utility-grade inverter converts the dc power from the PV modules into ac power that exactly matches the voltage and frequency of the electricity flowing in the utility line; the system must also meet the utility's safety and power-quality requirements. The excess electricity is then fed into the utility grid and sold to the utility at the retail rate.

In the event of a power outage, safety switches in the inverter automatically disconnect the PV system from the line. This safety disconnect protects utility repair personnel from being shocked by electricity flowing from the PV array into what they would expect to be a "dead" utility line.

At the end of the month, if the customer has generated more electricity than that used, the utility credits the net kilowatt-hours produced at the wholesale power rate. But if the customer uses more electricity than the PV system generates, the customer pays the difference. The billing period for net metering may be either monthly or annually. In some states, the excess generation credits at the end of each billing period are carried over to the next billing period for up to a year.

Net metering allows homeowners who are not home when their systems are producing electricity to still receive the full value of that electricity without having to install a battery storage system. Essentially, the power grid acts as the customer's battery backup, which saves the customer the added expense of purchasing and maintaining a battery system.

Generally, the preferred method of accounting for the electricity under net metering is with a single, reversible meter. An alternative is dual metering, in which customers or their utility purchase and install two non-reversing meters that measure electrical flow in each direction. This adds significant expense to a PV system, however. The current trend around the country is toward a single, reversible meter.

Some utilities are opposed to net metering because they believe it may have a negative financial impact on them. However, a number of studies have shown that net metering can benefit utilities. These benefits include reductions in meter hardware and interconnection costs, as well as in meter reading and billing costs. Grid-connected PV systems can also help utilities avoid the cost of additional power generation, increase the reliability and quality of electricity in the grid, and produce power at times of peak usage, when utility generation costs are higher and they often need the extra power.

Additional information:

• For detailed information on the availability of net metering in each state, visit the Green Power Network Web site.

• For information about other incentives for solar energy systems, visit the Database of State Incentives for Renewable Energy (DSIRE) site.