Umair Gaines
Net metering is a utility bill management strategy that allows customers to generate their own electricity cleanly and efficiently, using solar panels or wind turbines. This electricity can then be sent back to the grid, and customers receive a credit for their excess energy, which can reduce their future electric bills. Net metering is a controversial topic, as some utilities view it as a lost revenue opportunity, while others see it as a way to promote the use of renewable energy and create jobs. As of 2022, 34 states in the US, plus Washington, D.C., and Puerto Rico, have mandatory net metering rules in place, with some variation in the specifics of these rules. For example, Georgia allows but does not require net metering, while Florida's net metering rules only apply to Investor-Owned Utilities (IOUs).
| Characteristics | Values |
|---|---|
| Definition of Net Metering | Net metering is a utility bill management strategy that allows customers to generate their own electricity cleanly and efficiently and offset their energy use by transferring energy back to their electric companies in exchange for a bill credit. |
| How it works | Customers with eligible generation facilities such as solar panels or wind turbines can connect to a meter that measures their net electricity usage. When they use electricity from the electric company, their meter spins forward. |
| Legality | 34 states plus Washington, D.C., and Puerto Rico have mandatory net metering rules in place. However, some utilities view net metering as a subsidy because they pay retail rates for power from rooftop solar panels when they could purchase wholesale power more cheaply. |
| Examples of Companies that Allow Net Metering | Xcel Energy, Georgia Power, TECO, Clay Electric Cooperative, Jacksonville Electric Authority, National Grid, Eversource, Unitil |
| Caps and Limitations | Some states and companies have caps on the amount of generation specific to each electric company service territory. For example, Georgia Power is limited to 5,000 rooftop solar customers or 32 MW of capacity. |
| Costs and Savings | Net metering can result in substantial economic benefits for customers by reducing their future electric bills. However, some utilities have argued that it increases their fixed costs. |
| Policy and Implementation | The debate around net metering has led to policy changes and proposals at the state level, with some states enacting or considering laws to dismantle or restrict net metering programs. |
| Impact on Renewable Energy | Net metering has been a major driver of small, distributed renewable power generation, particularly for homeowners with solar panels. It increases demand for solar energy, creating jobs in the solar supply chain. |
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What You'll Learn
Net metering in Massachusetts
Massachusetts law allows net metering for any kind of generation technology (even non-renewable), up to 60 kW in capacity. Solar, wind, and anaerobic digestion facilities are eligible for much higher caps, depending on whether they are privately or publicly owned. Privately-owned generation facilities must be under 2 MW, and publicly-owned ones must be under 10 MW. The total cap on net metering was established in state law in April 2016. For the private sector, it set the cap at 7% of the historic peak load, and for the public sector, the cap is 8% of the historic peak load. These values are calculated for each electric company in the state, so the net metering cap is different in different parts of the state. For example, the cap for private generation on Nantucket is only 3.5 MW, but for western Massachusetts, it is 59.78 MW.
The design, installation, and interconnection of a net metering facility can be complex, and it is recommended that you consult a professional familiar with Massachusetts rules. The DPU does not regulate installers and developers and cannot endorse any companies. It is your responsibility to ensure that your net metering facility complies with the net metering rules and regulations.
Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume, and net metering allows them to export that power to the grid and reduce their future electric bills. Net metering provides substantial economic benefits in terms of jobs, income, and investment. It increases demand for solar energy, which creates jobs for installers, electricians, and manufacturers in the solar supply chain.
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Net metering in Florida
Net metering is a policy that supports the adoption of solar energy. It allows utility customers to generate their own electricity cleanly and efficiently, and to export any excess power to the grid, reducing their future electric bills. Net metering has substantial economic benefits, including creating jobs, increasing income, and encouraging investment.
In Florida, net metering is offered to customers of the four investor-owned utilities (IOUs) that cover about 79% of Floridians. The remainder are covered by municipal electric companies or rural electric co-ops, some of which have enacted their own form of net metering. For example, the Jacksonville Electric Authority offers a "distributed generation program" that pays the fuel rate for all excess generation, and a battery rebate program for those who want to store excess electricity. The Orlando Utilities Commission and Lee County Electric Cooperative offer full-retail rate net metering, but resolve excess credit at the end of the year by paying the wholesale rate. Clay Electric Cooperative offers full-retail rate net metering with indefinite carryover of credits.
Despite these challenges, net metering in Florida currently provides customers with the ability to offset their energy requirements by connecting approved renewable generation systems, such as solar panels, to the grid. Before installing a rooftop solar system, customers must apply to become a net metering customer and have their electric meter replaced with one that measures excess power supplied to the grid. This helps calculate the net impact on their bill, allowing them to reduce their energy bills and optimize the use of generated solar power.
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Net metering in Georgia
Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume. Net metering allows them to export excess power to the grid and reduce their future electric bills.
Georgia allows but does not require net metering adopted by utilities. Georgia Power, the state's largest utility company and the only investor-owned power company in Georgia, offers net metering to its customers. In a 2019 rate case, the Georgia Public Service Commission required Georgia Power to offer net metering to 5,000 rooftop solar customers or 32 MW of capacity, whichever comes first. Georgia Power customers are eligible to participate in the utility's Solar Buy Back program, which is similar to net metering, to reduce their electricity bills with solar. Participating customers who are connected to the grid and generate electricity from home solar systems can sell their excess electricity back to Georgia Power in exchange for bill credits. Any excess solar energy generated in a month will carry over to the next month.
Georgia Power does not offer credits worth the full retail rate of electricity for excess solar power sent back to the grid. Instead, the excess generation is credited at the solar avoided cost (the cost the utility would have spent to supply or purchase the power itself). The Instantaneous Netting program allows customers to be compensated for excess solar production sent to the Georgia Power grid. Energy Offset allows customers to maximize the amount of energy they offset without any system size limitations. Solar systems that meet the requirements to participate as a Qualifying Facility may sell the excess or 100% of the solar generation to Georgia Power. Excess energy generated by a participating customer’s solar panels is credited at the annual Solar Avoided Energy Cost Rate plus an additional 4¢ per kilowatt-hour (kWh), summed on a monthly basis and then used to reduce the customer’s total monthly bill.
The state of Georgia has a cap on the amount of solar that can subscribe to net metering, which is set at 0.2% of a utility’s peak electricity demand from the previous year. There is also a cap on the size of solar systems that wish to sell their electricity back to Georgia Power.
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Net metering in Hawaii
The "grid-supply" option is similar to the previous NEM arrangement, except that it pays customers a reduced rate for any energy exported to the grid ($0.15-0.28 per kWh compared to the state's average residential rate of $0.38 per kWh in 2014). This rate is still considered favourable for solar PV, and it is expected that these new tariffs could open the door for technology and business models that leverage demand flexibility and battery storage. The "self-supply" option does not allow customers to export any rooftop PV energy back to the grid, except for very limited amounts for a short duration.
Hawaiian Electric offers programs for customers installing both traditional rooftop PV systems and systems with emerging energy-storage technologies. The Net Energy Metering Plus (NEM Plus) program is available to current NEM customers, allowing them to add non-export capacity without affecting their NEM status. Customers can install new panels, battery storage, or a combination of both. The output from the NEM Plus system is used solely on-site and is not exported to the grid.
The end of NEM for new solar customers in Hawaii has raised concerns about a potential negative impact on the state's rooftop solar market, particularly for low- and middle-income customers. Prior to the change, Hawaiian Electric's NEM process provided customers who connected their renewable PV system to the utility grid with credits to offset electricity purchases, access to permitting information, interconnection requirements, and guides to going solar.
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Net metering in Louisiana
Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume, and net metering allows them to export excess power to the grid and reduce their future electric bills.
Louisiana utilities are required to continue accepting net metering applications until a cap is met. The Louisiana Public Service Commission's rules for distributed generation and net metering were initially approved in 2005. They were designed to incentivize distributed generation, particularly solar, by allowing customers to reduce their monthly electric bill with energy generated by a qualifying distributed generation system on their property. The LPSC's rules apply to residential systems up to 25 kilowatts and commercial systems up to 300 kilowatts, which are not connected to any other generator on the grid.
Net metering policies have substantial economic benefits in terms of jobs, income, and investment. They increase demand for solar energy, creating jobs in the solar supply chain, and allow utilities to better manage their peak electricity loads.
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Frequently asked questions
Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume; net metering allows them to export that power to the grid and reduce their future electric bills.
As of 2022, 34 states plus Washington, D.C. and Puerto Rico have mandatory net metering rules in place. Some of the states include Massachusetts, Georgia, Hawaii, Louisiana, Mississippi, Colorado, and Florida.
Some electric companies that allow net metering include Xcel Energy, Georgia Power, TECO, Clay Electric Cooperative, and Jacksonville Electric Authority.
