Utility Net Metering vs. Utility Net Billing - Eagle Point Solar

Utility Net Metering vs. Utility Net Billing

While these two terms seem similar at first glance, they have a different impact on the financial performance of your solar array. Both, net billing and net metering, offset buying power from your utility through the use of credits that are applied to your account due to the overproduction of electricity from your solar array. However, the primary difference is the pricing and time frames associated with the collection and use of these solar credits.  

 

Net Metering

solar metering infographic
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This utility billing mechanism allows customers who generate their own electricity, through the use of solar, to be metered. By using a bidirectional utility meter, energy is tracked as it is pulled from the grid or sent back to the grid. Any energy created by the solar array which is not consumed by the property is sent back to the grid, also known as net energy. This excess energy is accepted by the utility in return for energy credits. These credits are then applied to the customer’s account and banked at full retail cost per kilowatt-hour and can be used against future consumption.

Net metering is mandated by the legislators of many states to be offered by investor-owned utilities (IOU) such as Alliant Energy, MidAmerican Energy, and We Energies (a map of current Net Metering states is available here). Based on your utility, net metering credits will typically zero out (or true-up) once a year. Credits are stored and used as needed during the month. Any excess credits are carried over month by month until the end of the true-up month. At that point, the customer’s account is reset to zero. The true-up month is typically determined by the utility. However, some utilities offer their customers a choice between two months to select from. 

 

Net Billing

solar metering graph
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Customers of a utility that offers net billing can use solar energy and send back excess the same way as net metering customers by using a bidirectional meter. However, the biggest difference is that net billing customers receive an avoided cost price per kilowatt-hour from their utility versus a credit at retail cost. The avoided cost price which the utility pays for your solar overproduction (per kilowatt-hour) is often equal to or less than the wholesale price which the utility pays for purchasing energy from other energy power plants. In other words, it is the “avoided costs” the utility does not have to pay to produce or purchase the same amount of power. When excess solar energy during the month is sent to the utility, each kilowatt-hour is calculated and credited at the avoided cost rate to the customer’s monthly bill. Rural Electric Co-ops and Municipal utilities typically offer net billing to their customers because they are not required to follow IOU policies for net metering.

In Conclusion

As a solar owner, it is recommended to know and understand your utility’s solar policy. Each utility varies with regard to their net metering credit allowances and avoided costs wholesale rates. Solar can certainly be a sound financial investment no matter which policy your electric utility uses. The key is finding the right balance between creating your own low-cost, renewable energy and working within the policy guidelines of the utility.

utility bill

Have questions? Connect with an Eagle Point Solar Energy Consultant to learn more about your utility’s solar energy policy.

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