What Is Net Metering?

Whether you’re considering switching to a renewable source of energy, or you’re looking to make your home more energy-efficient, net metering is a key component of the equation.

Net Metering Explained

In states that offer net metering – and Maine does – you can sell your excess solar energy back to your utility company in exchange for credits that offset the cost of your energy usage. You may generate excess solar power when it is clear and sunny out, but obviously you will not be generating any power at night. By selling your excess energy back to the utility grid, you’ll be able to use the credit to cover the cost for any electricity you need to use from the grid. You end up paying only for the “net” energy usage, or stated another way, the difference between how much excess power you sold to the grid and how much power you purchased from the grid.

Bi-Directional Metering for Solar Systems

Using a bi-directional energy meter for your solar system will allow you – and your power company – to measure the electricity you are generating and sending back to the utility.

In some states, a bi-directional meter must be installed before solar panels can produce electricity. The bi-directional meter measures the flow of electricity in both directions, and the data is stored in a separate register. The information is viewed on two screens: one shows the amount of electricity coming in, the other shows the amount of electricity going out. If your bi-directional meter is equipped with an RS485 communication interface, you can access the data remotely. You can also adjust your electricity usage habits using the IHD (In Home Display).

The amount of electricity that you generate and send back to the utility is called Renewable Energy Credits, or RECs. These numbers are kilowatt-hours (kWh). They are not reset at each meter reading, so they will accumulate over time. However, in Maine, these credits expire after 12 months if not used.

Unlike a standard meter, a bi-directional meter measures the reverse flow of electricity, so it can be programmed to measure the amount of solar energy that is sent back to the utility.

Advantages of Net Metering

Whether or not you have solar panels, net metering is a smart policy. It reduces strain on the power grid and encourages distributed energy generation. It also helps increase solar adoption and creates jobs in the solar supply chain. It reduces greenhouse gas emissions and helps to reduce the cost of electricity for households and businesses.

Many states have adopted net-metering policies, although there are a few states that do not yet have one. These are Alabama, South Dakota, and Tennessee. Several other states have also developed voluntary programs to encourage net metering.

The benefits of net metering include lower electric costs, air quality benefits, and increased local economic benefits. It also increases the reliability of the electric system. In addition, it provides incentives for people to use clean energy.

It’s a form of free energy storage

Currently, 17 states do not mandate net metering, while 33 states have net metering policies in place. Most states use net metering as a way to help balance the grid, send excess power to the grid when the price is low, and provide compensation for surplus power sent to the grid. But net metering policies are constantly changing in the U.S., and some states are phasing out net metering.

It’s a barrier to going solar

During the past few years, the cost of solar systems has decreased a noteworthy amount. As a result, more Americans are choosing to go solar. However, there are still some states that have policies that discourage solar adoption.

For example, many states have policies that limit the amount of electricity that a person can net meter. This means that if the home has a solar system and it produces more electricity than it uses, the excess electricity will go into the grid and not be used by the owner.

For example, California’s Public Utilities Commission (CPUC) has proposed updating its solar net metering policy. If the proposed decision passes, it would greatly reduce the benefits of rooftop solar. The decision would also create major barriers for battery storage.

In other states, utilities may also deploy barriers to encourage solar adoption. These may include confusing tariffs and lengthy approval processes. These processes can also drive up the soft costs of going solar.

The lesson to be learned is that just because our state currently has favorable laws and incentives, that may not always be the case. The political climate is not set in stone and varies from year to year.

State by State Directory of Net Metering Regulations

For comparison’s sake, listed below is a directory of all the Net Metering regulations by state. The information is in alphabetical order and handily available:

Alaska’s regulations on net metering are set according to the Renewable Energy Alaska Project.

Arkansas residents have access to net metering provided by Entergy Arkansas.

The Colorado Public Utilities Commission sets the standards for net metering in Colorado.

Eversource provides net metering for Connecticut residents.

In Delaware, net metering is available to any customer that generates electricity using solar, wind or hydro resources, anaerobic digesters, or fuel cells capable of being powered by renewable fuels.

Net metering allows FPL customers who connect approved, renewable generation systems such as solar panels to the electric grid to buy and sell electricity to FPL.

Net metering is available to customers of Iowa’s two investor-owned utilities, MidAmerican Energy and Interstate Power and Light (IPL). MidAmerican Energy’s net metering tariff is available here, and IPL’s tariff is available here

Kansas’ two IOUs—Evergy and Empire District—are required to offer net metering and to provide interested customers with a bi-directional meter (at no cost to the customer) on a first-come, first-served basis until the rated generating capacity of all net-metered systems equals 1% of the utility’s peak demand during the previous year.

The Maine Public Utilities Commission oversees and regulates Net Energy Billing for customers of Central Maine Power and Versant Power.

Maryland’s net-metering law has been expanded several times since it was originally enacted in 1997. The net metering rules apply to all utilities — investor-owned utilities (IOUs), electric cooperatives and municipal utilities. Residents, businesses, schools or government entities with systems that generate electricity using solar, wind, biomass, fuel cell, closed-conduit hydroelectric, and micro-CHP resources are eligible for net metering.

Massachusetts’ State law requires that the electric companies offer net metering, however, the law also requires that the electric utility companies must have separate net metering caps for public and private net metering facilities in the general net metering program.

The Minnesota Public Utilities Commission regulates net metering in the state, and sets the amount a customer is paid for the electricity they do not use.

Net metering in Missouri is required under the Net Metering and Easy Connection Act. This law applies to all regulated electric utilities (Ameren Missouri, Evergy Missouri Metro, Evergy Missouri West and Liberty), municipal electric utilities and rural electric cooperatives. 

Information on net metering in Montana can be found here.

Net metering in Nebraska is regulated by the Nebraska Public Power District.

Effective June 15, 2017, Nevadans who choose to net meter will fall under a rate structure set by the Nevada Legislature in Assembly Bill 405 (AB 405). This rate structure applies to renewable energy systems of not more than 25 kilowatts, which is typical of a rooftop solar system installed at a home or small business.

Net metering in New Hampshire is regulated by the New Hampshire Public Utilities Commission.

New Jersey’s net metering regulations are governed by the state’s Solar Act of 2012. Details can be found here.

All New Mexico utilities subject to Public Regulation Commission (PRC) jurisdiction must offer net metering. (Municipal utilities, which are not regulated by the PRC, are exempt.)

If you are an electric utility customer in North Carolina and are interested in generating your own renewable energy to offset your electricity bill, North Carolina law allows you to do so if you meet some basic criteria. Details can be found at the North Carolina Utilities Commission.

North Dakota’s net metering policy, adopted in 1991 by the state Public Service Commission (PSC), applies to renewable energy systems and combined heat and power (CHP) systems up to 100 kilowatts (kW) in capacity.

Ohio’s net metering rules, found in section 4901:1-10-28 of the Ohio Administrative Code, allow you to do so if you meet some basic criteria. Complete details can be found at the Ohio Public Utilities Commission.

In Oklahoma, net metering of Distributed Generation (“DG”) Resources is governed by 17 O.S. Section 156 and Commission Rules (OAC 165:40:9). Distributed Generation is another term for consumer generation such as rooftop solar or small wind generators. Complete details are located here.

Oregon’s net metering law allows all utility customers to generate their own electricity and reduce their electricity bills. If you install a solar electric system, your utility will come to your site and switch out your existing utility meter for a bidirectional “net” meter (there is no charge for the new meter). This meter keeps track of the power you acquire from the utility and what you supply to the grid. Each month, the power you use from your utility is offset by the power you send to the utility. You are only charged for the difference or the “net.”

In Pennsylvania, residential and commercial customers who own or operate an eligible alternative energy resource of up to 3,000 kW that generates electricity for their own use may qualify for net metering.

Rhode Island net metering requires electric distribution companies to credit power produced by renewable energy systems installed behind a customer meter. Net Metering allows customers with eligible renewable energy systems to receive bill credits for all power generated up to 125 percent of the on-site consumption during a billing period. To participate in net metering, a renewable energy system must be sited on the customer’s premises.

South Carolina’s source for solar information, including net metering, can be found at solar.sc.gov.

Vermont’s Public Utility Commission regulates the construction and operation of net-metering systems. The Commission also reviews and approves utility net-metering tariffs, which govern the terms and conditions of net-metering service. Details can be found at puc.vermont.gov.

Virginia’s regulations and policies pertaining to net metering in the state can be found by visiting scc.virginia.gov.