Solar Basics: What Is Net Metering?

Besides being good for the planet, solar energy can be very beneficial to your finances. One cost-benefit you may have heard about is net metering, but what is it? And, more importantly, how can it save you money?

Net Metering and How It Works

When the electricity produced by a grid-connected photovoltaic solar system outpaces the total electricity consumed by the site, the energy surplus can be sent back into the power grid and redistributed to neighboring customers. This causes the energy meter at the site to actually run in the opposite direction, giving the user a credit that can be applied to their next utility bill. Some utilities actually require two meters, “in” and “out” meters, to measure the energy flow in both directions. In essence, the customer only pays for the net energy (the energy produced minus the energy used), hence the term net metering.

In New York State, credits can be applied to an offsite location, so long as the host site (where the electricity was generated) is a commercial account. This practice of sharing energy credits to an offsite location is called remote net metering. While less common than net metering, remote net metering allows for increased flexibility when a company wants to go solar at a location that has less ideal characteristics for an onsite system.

Net metering helps customers save on their electricity bills, and they have the flexibility to use their credits wherever they want — not just when the system is producing energy. This can help diversify the energy matrix and alleviate stress on the grid during times of high consumption by sending power back into the network.

Net Metering Policies and Examples

As of October 2019, 39 states and the District of Columbia have mandatory net metering policies. These policies can differ from state to state, but some of the most common ones govern: capacity limits (how much electricity a system is permitted to generate from net metering, which ranges anywhere from 20 kilowatts to 10 megawatts to no limit at all), the use of utility bill credits (if they can be rolled over month to month or if they expire), and claiming of renewable energy credits (whether the utility customer or the utility company is entitled to an REC).

Among the states that have enacted net metering policies are California and New York, where PowerFlex has executed more than 70 commercial projects. In Tracy, CA, PowerFlex installed a 3.8-MW roof-mounted solar system atop an Amazon fulfillment center. Amazon purchases the solar-produced electricity from the site’s landlord, Prologis, and uses it to offset nearly 80% of the site’s total energy use. Additionally, PowerFlex developed a 1.5-MW roof-mounted solar system with Bloomberg in the New York City borough of Queens that provides solar energy credits to the company’s global headquarters and data center in Manhattan through remote net metering. This multi-building system was the largest rooftop solar array in Queens and the first project to use remote net metering to power a New York City skyscraper.

With more than 10 years in the industry, PowerFlex has built its reputation on providing turnkey solar and energy storage solutions — including ones that leverage net metering — that help lower energy costs, increase property value, and meet sustainability goals. Contact us today for a free solar assessment.