Net metering in the United States

Net metering in the United States

Net metering is an electricity policy for consumers who own (generally small) renewable energy facilities (such as wind, solar power or home fuel cells) or V2G electric vehicles. "Net", in this context, is used in the sense of meaning "what remains after deductions" — in this case, the deduction of any energy outflows from metered energy inflows. Under net metering, a system owner receives retail credit for at least a portion of the electricity they generate. Most electricity meters accurately record in both directions, allowing a no-cost method of effectively banking excess electricity production for future credit. However, the rules vary significantly by country and possibly state/province; if net metering is available, if and how long you can keep your banked credits, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. Unlike a Feed-in Tariff or time of use metering (TOU), net metering can be implemented solely as an accounting procedure, and requires no special metering, or even any prior arrangement or notification.[1]

Net Metering is generally a consumer-based renewable energy incentive. While it is important to have Net Metering available for any consumer that interconnects their renewable generator to the grid, this form of renewable incentive places the burdens of pioneering renewable energy primarily upon fragmented consumers. Often over-burdened energy agencies are not providing incentives on a consistent basis and it is difficult for individuals to negotiate with large institutions to recover their Net Metering credits and/or rebates for using renewable energy.

In the U.S.A., as part of the Energy Policy Act of 2005, under Sec. 1251, state utility regulatory commissions must consider requiring the public electric utilities under their jurisdiction to make net metering available to their customers upon request.[2] Specifically, they must consider whether to adopt the following resolution:

‘‘(11) NET METERING.—Each electric utility shall make available upon request net metering service to any electric consumer that the electric utility serves. For purposes of this paragraph, the term ‘net metering service’ means service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating

facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period.

Several bills are pending in Congress to institute a federal requirement that utilities provide net metering. They range from H.R. 729 which allows up to 2% net metering to H.R. 1945 which has no limit, but does limit residential users to 10 kW, a low limit compared to many states, such as New Mexico, with an 80,000 kW limit, or states such as Arizona, Colorado, and Ohio which limit as a percentage of load. Current as of May 2010, only four states do not allow net metering, and twenty plus Washington D.C. have no limit on the number of subscribers using net metering. Only two, Arizona and Ohio, have no specific wattage limit on the power limit for each subscriber (see table). Colorado, Maryland, New Jersey and Pennsylvania are considered the most favorable states for net metering, as they are the only states to receive an "A" rating from the Network for New Energy Choices in 2007, 2008 and 2009.[3]


By State


Consumer Net Metering is available in California and is presumed to be highly favorable to smaller systems that displace the highest cost electricity, and systems wherein the user's demand load may be managed so that there is a net production of electricity during high cost periods. This can be done, for example, by chilling water during off-peak times for air conditioning use during high demand periods, or by pre-cooling the thermal mass of the building during low cost periods.

A hiccup has occurred in California legislation (SB1 - 2006), in that new (after Jan. 1, 2007) residential solar systems are singled out to be billed on TOU schedules, and at least one utility (Southern California Edison (SCE)) has rate structures which are punitive to the solar customer, particularly for smaller systems that cannot keep up with peak demands. This faulty legislation created a disincentive to new solar installations, and/or windfall profits to SCE. This has since been remedied through legislation.

Passage of AB920 and SB32 signed into law by Governor Arnold Schwarzenegger on October 11, 2009 and effective January 1, 2010, enhances wind and solar net metering programs in California. Customers generating more electricity than they use will be paid for the excess at a rate set by contract between the generating customer and their utility. The bill requires utilities to devise a payment structure by January 1, 2011 allowing customers to either receive payments or carry forward credits into subsequent years. Upon payment for excess generation, any renewable Energy credits become the property of the utility.

The purpose of the legislation is to encourage conservation and efficient power use by providing the incentive of payment for excess generation. Under prior rules, a customer could carry forward credits, subject to an annual true-up at which any excess credits were lost to the customer.[4] Combined with time–of–use net metering (TOU Net) it now becomes practical for existing California solar households to invest in air conditioning "load shifting", the use of heat pumps and thermal storage that consume cheap nighttime power and using the chilled water for afternoon cooling, while selling the much more valuable afternoon electricity into the grid. Such heat pump systems are also applicable to winter heating, using either solar assist or ground heat extraction, or various combinations.


No limit on enrollment, system size is limited to 2 MW, excess is credited to customer's next bill; utility pays customer at end of calendar year for excess kWh credits at the average hourly incremental cost for that year.[5]


Passed by Florida Public Service Commission 4 March 2008, system size is limited to 2 MW, with compensation up to the account's electrical consumption as trued up at end of calendar year. Excess production is not compensated.[6]

New Jersey

No limit on enrollment, system size is limited to 2 MW, excess is credited to customer's next bill at retail rate; purchased by utility at avoided-cost rate at end of 12-month billing cycle.[7]

North Carolina

In North Carolina initial net metering rules were put in place in 2005 to prohibit systems that include backup battery power, but due to consumer feedback the restriction was lifted in July 2006.


In Texas' deregulated electricity market, credit for electricity exported to the grid is awarded at the discretion of the Retail Electric Provider (REP), the company responsible for the retail sale of electricity to end-use customers.[8] Green Mountain Energy offers to purchase up to 500kwh per month at full retail rate with additional outflow compensated at 50%.[9] Austin Energy buys back exported energy at the "current fuel charge" and participants in the GreenChoice program are compensated at the Green Power rate of charge.[10]

The limit on system size is 100 kW for qualifying facilities; 50 kW for renewables. The treatment of net excess is purchased by utility for a given billing period at avoided-cost rate. It applies only to all integrated IOUs (Investor Owned Utilities) that have not unbundled in accordance with Public Utility Regulatory Act § 39.05; does not apply to municipal utilities, river authorities and electric cooperatives.[11]

State Subscriber limit
(% of peak)
Power limit
Alabama N/A N/A N/A N/A
Alaska 1.5 25 yes, indefinitely retail rate
Arizona no limit 125% of load yes, avoided-cost at end of billing year retail rate
Arkansas no limit 25/300 yes, until end of billing year retail rate
California 5 1,000 yes, can be indefinitely varies
Colorado no limit 120% of load or 10/25* yes, indefinitely varies*
Connecticut no limit 2,000 yes, avoided-cost at end of billing year retail rate
Delaware 5 25/500 or 2,000* yes, indefinitely retail rate
District of Columbia no limit 1,000 yes, indefinitely retail rate
Florida no limit 2,000 yes, avoided-cost at end of billing year retail rate
Georgia 0.2 10/100 no determined rate
Hawaii 1 or 3* 50 or 100* yes, until end of billing year retail rate
Idaho 0.1 25 or 25/100* no retail rate or avoided-cost*
Illinois 1 40 yes, until end of billing year retail rate
Indiana 0.1 10 yes, indefinitely retail rate
Iowa no limit 500 yes, indefinitely retail rate
Kansas 1 25/200 yes, until end of billing year retail rate
Kentucky 1 30 yes, indefinitely retail rate
Louisiana no limit 25/300 yes, indefinitely avoided cost
Maine no limit 100 or 660* yes, until end of billing year retail rate
Maryland 1500 MW 2,000 yes, until end of billing year retail rate
Massachusetts** 1 60, 1,000 or 2,000 varies varies
Michigan 0.75 150 yes, indefinitely partial retail rate
Minnesota no limit 40 no retail rate
Mississippi N/A N/A N/A N/A
Missouri 5 100 yes, until end of billing year avoided-cost
Montana no limit 50 yes, until end of billing year retail rate
Nebraska 1 25 yes, until end of billing year avoided-cost
Nevada 1 1,000 yes, indefinitely retail rate
New Hampshire 1 100 yes, indefinitely retail rate
New Jersey no limit 2,000 yes, avoided-cost at end of billing year retail rate
New Mexico no limit 80,000 if under $50 avoided-cost
New York 1 or 0.3 (wind) 10 to 2,000 or peak load varies avoided-cost or retail rate
North Carolina no limit 1000 yes, until summer billing season retail rate
North Dakota no limit 100 no avoided-cost
Ohio no limit no explicit limit yes, until end of billing year generation rate
Oklahoma no limit 100 or 25,000/year no avoided-cost, but utility not required to purchase
Oregon 0.5 or no limit* 10/25 or 25/2,000* yes, until end of billing year varies
Pennsylvania no limit 50/3,000 or 5,000 yes, "price-to-compare" at end of billing year retail rate
Rhode Island 2 1,650 for most, 2250 or 3500* optional slightly less than retail rate
South Carolina 0.2 20/100 yes, until summer billing season time-of-rate use or less
South Dakota N/A N/A N/A N/A
Tennessee N/A N/A N/A N/A
Texas*** no limit 20 or 25 no varies
Utah varies* 25/2,000 or 10* varies* avoided-cost or retail rate*
Vermont 2 250 yes, until end of billing year retail rate
Virginia 1 10/500 yes, avoided-cost option at end of billing year retail rate
Washington 0.25 100 yes, until end of billing year retail rate
West Virginia 0.1 25 yes, up to twelve months retail rate
Wisconsin no limit 20 no retail rate for renewables, avoided-cost for non-renewables
Wyoming no limit 25 yes, avoided-cost at end of billing year retail rate

Note: Some additional minor variations not listed in this table may apply. N/A = Not available. Lost = Excess electricity credit or credit not claimed is granted to utility. Retail rate = Final sale price of electricity. Avoided-cost = "Wholesale" price of electricity (cost to the utility). * = Depending on utility. ** = Massachusetts distinguishes policies for different "classes" of systems. *** = Only available to customers of Austin Energy or Green Mountain Energy.[12]


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