Net Metering 101: Revisited

The following blog was originally published in November 2015. It has been updated for clarity and to reflect recent policy changes.

Do you ever wonder how people can use solar power without having solar panels on their roof or property? Or what happens to solar energy not immediately consumed? It all comes down to net metering.

Net metering is a mechanism that enables solar energy system owners to feed excess electricity back to the grid, and receive a credit for the amount of electricity contributed. For example, if a property owner installs solar on their roof, it may generate more electricity than is used and the electricity meter will run backwards to provide a credit towards their utility bill. Net metering ensures that solar array owners receive a fair value for the energy that is being added to the grid.

Net metering can also be applied through virtual net metering (VNM). Virtual net metering enables property owners, renters and communities to access solar energy, even if they cannot put solar on their roofs or do not have suitable land for a solar array. In its most basic form, VNM allows you to generate solar power in one place and use it in a different place. VNM is applicable in scenarios where an organization or homeowner wants to install solar, but does not have suitable property conditions (small roof, too much shading, in need of repair, structural issues, etc.) for on-site solar.

Community solar projects are a great example of VNM in action. For these projects, electricity is produced at an off-site solar array and then purchased by multiple shareholders in that community. Community solar is great for cities or towns who wish to power entities such as a school, town hall, police station or other facilities, and is also beneficial to individual homeowners, condo owners, and others to wish to offset their existing electric bill with solar energy.

Between power generation and final use, the solar energy produced from an array is measured and tracked in a series of steps:

  1. Sunlight reaches the solar panels at the host array, which converts the sunlight into electricity. As it is generated, the electricity that is not immediately consumed on-site enters the grid.
  2. The utility meter at the host array measures the balance of electricity produced, by calculating total electricity produced minus the electricity (if any) consumed on-site at the host array.
  3. The utility company takes the output data from the meter, and uses it to calculate the amount of net metering credits earned, assigning the appropriate dollar amounts to the energy balance.
  4. The solar array owner tells the utility where (which energy user’s account) to apply the calculated net metering credits by filling out a Schedule Z form.
  5. The net metering credits are applied according to the Schedule Z form, and are applied as a credit against energy consumed by the end user.

Virtual net metering eliminates many of the traditional barriers to broader solar power usage. VNM  enables public entities, including low income housing authorities and municipalities, to take part in solar development, even if they lack adequate space for on-site, behind the meter, solar projects.  Or, VNM can encourage a wide range of new solar adopters – from large companies in highly populated areas (such as the Bloomberg building in New York City), to renters, to homeowners with shady roofs – who can all now benefit from the power of the sun.

So how does VNM compare to behind-the-meter solar? Behind the meter solar means that the solar panels provide electricity that is fully consumed on-site. The whole generation and consumption process occurs at one meter, so no schedule Z form is typically required.

Generally, during normal business operating times all solar electricity produced is consumed on-site without needing to enter the grid. Outside of normal operating times (such as on the weekends), the solar panels are still converting sunlight into electricity although there is very little being consumed by the site.  The electricity produced during these times enters the grid through a utility meter, which measures the amount of solar energy contributed. Conversely, at times the solar panels are not producing at top capacity  with standard levels of energy consumption, the site will pull electricity from the grid, and will be credited back any electricity that had previously entered the grid.

The main difference between virtual net metering and behind the meter solar is where the electricity is produced compared to where it is consumed. In both cases, the electricity is generated and interacts with the grid, but the final destination of the energy determines how the process is classified. Both are excellent means with which to reduce energy costs and save the environment!

The Challenge

Net metering, used in both systems scenarios described above, allows solar energy owners to be credited at the retail price for the energy a solar array produces. However, some people don’t believe it is necessary or fair for solar energy owners to be compensated for energy produced at the same rate they are charged and current net metering regulations cap this compensation in the Commonwealth.

The net metering  caps in Massachusetts were first hit in the summer of 2015, meaning the utility companies recieving excess solar energy generated did not have to compensate for that energy at retail rates. This began a year-long debate over the policy in the state. In April 2016, the Massachusetts state legislature voted to extend the caps, raising them by 3% across the board. The Department of Public Utilities enacted the cap raise on Monday, May 16, 2016. That same day the caps in National Grid territories were fully subscribed, meaning 171 communities in the state are once again without net metering.

In order to keep solar compensation fair in the state, it is imperative that we find a long-term solution for solar net metering. Net metering is not an incentive, it is a system of fair compensation. The Massachusetts state legislature is scheduled to discuss an omnibus energy bill this spring to address key energy policies in the state; this is the platform with which to address net metering, but in order to make a difference we need your help.

You can make a difference by sharing your voice with your state Senator and Representative.

Reach out to your legislators and let them know that solar policy, specifically net metering, is something you care about and support. Encourage your state representatives and senators that they need to vote to lift net metering caps completely. Together, we can keep solar strong in Massachusetts.

For more information on how to share your voice on solar policy, visit www.solarisworking.org/get-involved.