Net-Metering in a Nutshell

Let’s take a moment to get you up to speed on what net-metering is, and why it is important for the democratization of the energy grid.

What is net-metering?

Net-metering describes how energy companies credit solar owners for the energy they produce and feed into the grid. When a home or business installs solar, it typically remains connected to the grid because during the day, the solar array is producing a lot of energy – much more than the building is likely using – and this unused energy flows to the grid to be used by other consumers. At night, when the solar array is not producing energy, the home or business draws from the grid again. Because energy you produce during the day is supplementing the energy in the grid that companies like Duke or CenterPoint are selling to your neighbors, the energy company credits you for that energy.

What is SEA 309?

Signed into law in 2017, SEA 309 allows energy companies to credit solar owners with only a fraction of the retail value of the energy they produce. The same energy that was once valued at $0.11 per kWh is now valued at only $0.03. That means during the day you are producing energy that is valued at about a quarter of the cost of the energy you use at night. What does that mean for your energy bill? Well, you still have to pay the energy company full retail value for the energy you draw the grid, but they pay you only wholesale value. In short, you can expect to pay a lot more and take a lot longer to break even on your investment in a solar array.

But what about the energy company?

If you read an energy company’s side of the story, you might be told net-metering is unfair to them and their other customers. But actually, distributed solar (think “rooftop solar”) actually helps the grid and the energy company that manages it in several ways.

First of all, distributed solar reduces the distance between the production site and the consumption site, reducing ware and tear on the grid. Think of it this way. A central point of production like a power plant is typically far from the point of consumption, like a household on the other side of town, and for the energy to get there it has to travel across a long network of power lines. Distributed points of production, like the solar panels on your roof, only has to travel a short distance to reach the next point of consumption, likely your neighbor’s house.

Secondly, solar produces energy at peak demand times. To meet the daytime demand, energy companies often have to open “peaker plants” with a high operating cost during times where demand exceeds their usual production. Distributed solar, however, helps to meet that demand without additional cost or environmental impact.

And finally, why should you sell your energy at a loss? Your rights as a property owner allow you to increase your energy independence, and that shouldn’t mean selling your excess energy at less than you purchase it for.

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