What is net metering?

If you're just getting started or are already well on the way to starting a solar installation on your property, one thing that we (at DPI Solar) try to touch on and ensure you understand is: Net Metering.


Maybe you've heard of it? Maybe you've even had it explained? Regardless of your previous exposure to this term, we will always ask you to explain it back to us so we know where you are in your exploration of this process.


Why?


Simply stated, Solar Net Metering is the SINGLE MOST IMPORTANT ASPECT OF YOUR LONG TERM INVESTMENT.


Sure - you're gonna get some great tax credits when you install solar.


Heck, maybe your electric company or state has some additional programs available to you that help lower the cost of the installation.


Regardless of those incentives, I still stand firm that Net Metering is the ONE thing you need to know and be aware of - for the duration you plan on keeping your solar panels online with the electric company.


Ok...ok...I've built it up. So let's get down to it:


Net Metering is nothing more than "roll-over power for your home".


Many of us have had a plan with the cell-phone companies (for data or...ahem...for the older set - like me - minutes) that allowed us to "roll-over" unused data or minutes to the following months for use there. The idea here is that you could take any of your unused data (or minutes) and use it as a credit the following month if you went over your allotted amount of data or minutes.


Net metering for power works very similar to this premise: on months (in the summer) when your solar panels produce more power than your property uses, the excess power (calculated in kilowatt-hours) is then put on your bill as a kilowatt-hour CREDIT to use the next month (or months) towards your bill.


In Oregon (and most of the US), your solar panels will produce the majority of their power during the summer months (typically, 70% of the total power you'll generate during the year will be generated during the months of April-early October). What this means for your bill is that you'll start accumulating kilowatt-hour credits that keep adding up, month after month as you head into the winter months.


In Oregon (when our monsoon season starts in the late fall), we will watch the sunshine vanish for most days, replaced with clouds and rain. It is during these months that we see the solar production of your panels significantly decrease.


This is where the real magic of Net Metering kicks in: those roll-over credits that you built up during the summer months start to apply towards your monthly electric bills where the solar panels failed to make all of the energy you used during that month.


Here's one of the most important (and BEST) things about net metering: the electric company is going to credit your account in kilowatt-hours (as opposed to $$). Why does this mean so much? Well, stated as plainly as I can - getting credits towards future electric bills in kilowatt-hours means that the kilowatt hour you generated in July of this year is equal to a kilowatt hour you'll use in February of next year.


What if the cost/rate per kilowatt hour goes up between July and February? It matters not my friends! That's the absolute beauty of this program: your kilowatt-hour is going to be worth whatever the electric company charges you in the future. So, if your electric company is currently charging you 13.5¢ per kilowatt hour, yet they decide to raise their rates to 15¢ per kilowatt hour next month, guess what? Your kilowatt-hour generated today (at a value of 13.5¢) will be worth the future value of 15¢ when that day comes!


This is why it is SO valuable and important: because having the electric company give you credits in kilowatt-hours (rather than $ money) ensures that your solar panels continue to keep up with your power demands and continue to offset your electric bill at the same rate they did on day one.


A few things to be aware of:


1) Nearly all net metering contracts have an annual start/end date. For most of Oregon, that date falls around April 1st of each year. If you have any leftover kilowatt-hour credits sitting on your account, those credits are typically wiped out (and donated to low-income assistance programs) thus leaving you to start your new net metering year at zero credits (every year) on or around April 1st of each year.


2) Unless you live in or use power from an electric company that has "avoided cost" net metering*, you'll never receive any sort of cash reimbursement from your annual over-production.

* Avoided Cost Net Metering is when the utility company reimburses you for your excess generation. They pay you exactly what they would have paid Bonneville Power for the electricity (which is substantially less than they charge you for it. Avoided Cost Net Metering is only somewhat valuable to you from a cash perspective if the electric company pays you out annually (rather than monthly) but still allows you to "roll over" your excess generation month-to-month. Candidly, this is not as great of a program when compared to a net metering program offered by PGE or PP&L.


3) There are no net metering programs in Oregon that favor customers who generate more than 100% of their annual usage. Even with avoided cost net metering, you'll end up getting paid less than the full retail value of the kilowatt-hours you over-generated.


Finally - and maybe most importantly: Net Metering agreements can and do change. Sometimes there are special interest groups that will outright try to eliminate net metering in a specific state (with nobody grandfathered in). This attack has happened in states like Hawaii, Arizona, California, and New Jersey. It is very important that you as a consumer use your voice via emails, phone calls, or meetings to speak up against such moves that these groups attempt to take. Although it would take a lot of effort and money for these groups to succeed, they will spend it knowing that they are trying to prevent customers like you from generating their own power. So when the day comes that you get contacted by your installer to sign and send an email to preserve your net metering rights, do so!


Tax Credits and local incentives are the short term benefits of a solar installation.

Net Metering it the long term benefit of your investment. Make sure you not only understand it, but be ready to preserve it when the time comes!


Have more questions about net metering?


Call us at (503) 857-0099 and let us walk you through it in person or over the phone!