A Guide to Net Metering and Solar Incentives

Solar net metering is a popular way for homeowners and businesses to save money on their electricity bills while also reducing their carbon footprint. This process involves installing solar panels on your property and connecting them to the electric grid through an inverter. With net metering, any excess energy your solar panels produce is sent back to the grid, and you receive credits on your electricity bill for the energy you contribute. Let’s take a closer look at the basics of solar net metering, how it works, and the benefits it brings.

What is Solar Net Metering?

Net metering is a system that allows homeowners and businesses with solar panels to feed excess energy they produce back into the central power grid. The excess energy is then credited to the customer's account, a credit which can be used to offset future electricity bills and/or usage.

To start net metering, you need a few key components available from PowerStore. Our solar inventory contains everything you need, including solar panels, inverters, and bi-directional meters. The solar panels collect energy from the sun, which is converted into direct current (DC) electricity by the inverter. The bi-directional meter measures both the amount of energy your solar panels produce and the amount of energy you use from the grid. When your solar panels generate more electricity than you use, the excess is sent back to the grid and you receive credits. The credits can then be used to offset your electricity consumption during periods when the panels are not generating enough power, such as at night or during overcast days.

Net metering is particularly beneficial for those who generate more electricity than they use, as the credits they receive can offset future bills. Areas that offer full retail credits will have shorter payback periods than places that don’t, making it possible for homeowners to realize higher savings on their electric bills and recoup their solar investment costs faster.

What Are the Benefits?

One of the most significant benefits of net metering is the potential cost savings. By producing your own electricity, you reduce, or even eliminate, your dependence on the grid. And, because the excess energy you produce can be credited to your account, future electricity bills may be lower.

Keep in mind, though, that net metering policies vary by location and utility provider. For example, some states have a one-to-one net metering policy, where the utility company must compensate the homeowner at the retail rate for every kilowatt-hour of excess energy produced. Other states have a value-of-solar tariff, where the utility company pays the homeowner based on the value of the energy they produce, which considers factors such as the time of day the energy is produced and the environmental benefits of using solar power. Additionally, some states have caps on the amount of solar energy that can be net metered, while others do not. Understanding these regulations and incentives is important, as they have a significant impact on the overall financial benefits of the investment.

Beyond the financial benefit is the positive impact you’ll have on the environment. By using solar energy, you reduce the amount of greenhouse gas emissions that come from traditional power generation.

What are Time-of-Use Rates?

Time-of-use (TOU) rates are a pricing structure in which the price of electricity varies depending on the time of day, usually divided into peak, off-peak, and sometimes shoulder periods. During peak hours, typically in the afternoon and early evening when demand for electricity is highest, electricity rates are at their highest. Off-peak hours, usually during the night and early morning, have the lowest rates. Shoulder periods are the periods immediately before and after peak hours, where the rates are slightly higher than off-peak hours but lower than peak hours.

TOU rates can have a significant impact on the financial impact of solar net metering. If your utility company has TOU rates, the value of the credits you receive for solar energy generation over usage will vary depending on the time of day. In some cases, excess energy produced during off-peak hours may not be worth as much in credits as energy produced during peak hours. This is because the credit value for excess energy is often based on the retail electricity rate, which varies based on TOU rates. As a result, homeowners with solar panels need to consider the TOU rates of their utility provider when deciding when to use electricity and when to feed excess energy back into the grid.

It's worth noting not all utility companies have TOU rates and those that do have different time periods for peak and off-peak hours. Therefore, it’s important to understand the specific rates and policies of your utility company to maximize the benefits of solar net metering.

How Can PowerStore Help?

A solar energy consultant, such as those at PowerStore, can help you navigate these complexities and provide guidance on how to optimize your solar energy system to best suit your energy needs and local regulations. Our team of solar energy professionals will help you determine if net metering is right for you and guide you through the process of installing solar panels and connecting them to the grid. We can also help you understand your utility's net metering policies and TOU rates, so you can maximize your savings and reduce your carbon footprint.

The Bottom Line

Solar net metering can be a prudent way to save money on your electricity bills and recover your investment on a solar power system. Producing your own electricity lets you reduce or even eliminate your dependence on the grid and receive credits to your account for any excess energy you generate. While regulations and incentives vary by location and utility provider, the basic concept of net metering remains the same. With the right knowledge and equipment, net metering can be a smart and financially beneficial choice for those interested in renewable energy.

The team at PowerStore can help. Give us a call today to talk to an expert and find out how.