What is net metering?

As an eligible customer with a PV or small renewable energy system, net metering allows you to interconnect with your utility and feed your surplus electricity to the utility grid. You can use an equivalent amount of electricity later without additional cost to you.

Net metering allows your electricity meter to spin forward when electricity flows from the utility into your building, and backward when your system produces surplus electricity that is not immediately used. Your excess electricity is "banked" on the utility grid.

Net metering simplifies the metering process in two ways: it eliminates the need for a second meter, and it streamlines the accounting process by eliminating the need for payments from your electricity provider.

How does net metering affect me?

Net metering allows you to get more value from your generated electricity by offsetting your future retail electricity purchases, rather than selling your excess electricity to your utility at the lower wholesale, or "avoided cost," price.

Without net metering, you would lose much of the value of your excess electricity. The electricity you generate from your own PV system would supply your own immediate needs, and you would purchase any shortfall from the utility at the retail rate. Without net metering, any electricity you generated and did not immediately use would be sold back to the utility at the "avoided cost" rate, which is much lower than the retail rates.

At a residence or small business, net metering can usually be accomplished by using your existing electricity meter. For large commercial and industrial customers who generate their own power, a "dual metering" arrangement is still the norm.

What is an interconnection agreement?

Interconnecting your PV system to the utility transmission grid will require you to enter into an interconnection agreement or net metering agreement (if applicable), and, in the case of larger than 10 kW PV systems, a purchase and sale agreement. The interconnection agreement defines the terms and conditions under which your PV system will be connected to the utility grid, including the technical requirements necessary to ensure safety and power quality. Other items in the agreement include your obligation to obtain all necessary permits for the system, maintain the system in good working order, and generally be responsible for the system's safe operation. The interconnection agreement also specifies the metering arrangements and any other related issues.

The language in these agreements should be simple and straightforward. If you are unclear about your obligations, you should contact your utility or electric service provider for clarification.

What should I know about Utility Interconnection Standards?

Recent progress has been made in developing nationally recognized standards for utility interconnection of PV systems. Although these standards are not necessarily binding on utilities, many utilities are adopting them rather than developing their own.

The most important standard focuses on inverters. Traditionally, inverters simply converted the DC electricity generated by PV arrays into AC electricity that is used in your home. More recently, inverters have evolved into remarkably sophisticated devices to manage and condition power. Many new inverters contain all the protective relays, disconnects and other components necessary to meet the most stringent national standards.

Two of these standards are particularly relevant:

1. Institute of Electrical and Electronic Engineers, P929: Recommended Practice for Utility Interface of Photovoltaic Systems. Institute of Electrical and Electronic Engineers, Inc., New York, NY (1988 with a revision finalized in 2000).
2. Underwriters Laboratories, UL Subject 1741: Standard for Static Inverters and Charge Controllers for Use in Photovoltaic Power Systems (First Edition). Underwriters Laboratories, Inc., Northbrook, IL. (December 1997).