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Net metering (or net energy metering, NEM) is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly important with renewable energy sources like Wind power and Solar power, which are non-dispatchable (when not coupled to storage). Monthly net metering allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. Annual net metering rolls over a net kilowatt-hour (kWh) credit to the following month, allowing solar power that was generated in July to be used in December, or wind power from March in August.
Net metering policies can vary significantly by country and by state or province: if net metering is available, if and how long banked credits can be retained, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly rollover of kilowatt hour credits, a small monthly connection fee, require a monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. Net metering uses a single, bi-directional meter and can measure the current flowing in two directions. Net metering can be implemented solely as an accounting procedure, and requires no special metering, or even any prior arrangement or notification.
Net metering is an enabling policy designed to foster private investment in renewable energy.
Utilities in Idaho adopted net metering in 1980, and in Arizona in 1981. Massachusetts adopted net metering in 1982. By 1998, 22 states or utilities therein had adopted net metering. Two California utilities initially adopted a monthly "net metering" charge, which included a "standby charge", until the Public Utilities Commission (PUC) banned such charges. In 2005, all U.S. utilities were required to consider adopting rules offering net metering "upon request" by the Energy Policy Act of 2005. Excess generation is not addressed. As of 2013, 43 U.S. states have adopted net metering, as well as utilities in 3 of the remaining states, leaving only 4 states without any established procedures for implementing net metering. However, a 2017 study showed that only 3% of U.S. utilities offer full retail compensation for net metering with the remainder offering less than retail rates, having credit expire annually, or some form of indefinite rollover.
Net metering was slow to be adopted in Europe, especially in the United Kingdom, because of confusion over how to address the value added tax (VAT). Only one utility company in Great Britain offers net metering.
The United Kingdom government is reluctant to introduce the net metering principle because of complications in paying and refunding the value added tax that is payable on electricity, but pilot projects are underway in some areas.
In Canada, some provinces have net metering programs.
In the Philippines, Net Metering scheme is governed by Republic Act 9513 (Renewable Energy Act of 2008) and its implementing rules and regulation (IRR). The implementing body is the Energy Regulatory Commission (ERC) in consultation with the National Renewable Energy Board (NREB). Unfortunately, the scheme is not a true net metering scheme but in reality a net billing scheme. As the Dept of Energy's Net Metering guidelines say, "Net-metering allows customers of Distribution Utilities (DUs) to install an on-site Renewable Energy (RE) facility not exceeding 100 kilowatts (kW) in capacity so they can generate electricity for their own use. Any electricity generated that is not consumed by the customer is automatically exported to the DU's distribution system. The DU then gives a peso credit for the excess electricity received equivalent to the DU’s blended generation cost, excluding other generation adjustments, and deducts the credits earned to the customer’s electric bill."
Thus Philippine consumers who generate their own electricity and sell their surplus to the utility are paid what is called the "generation cost" which is often less than 50% of the retail price of electricity.
An independent report conducted by the consulting firm Crossborder Energy found that the benefits of California's net metering program outweigh the costs to ratepayers. Those net benefits will amount to more than US$92 million annually upon the completion of the current net metering program.
A 2012 report on the cost of net metering in the State of California, commissioned by the California Public Utilities Commission (CPUC), showed that those customers without distributed generation systems will pay US$287 in additional costs to use and maintain the grid every year by 2020. The report also showed the net cost will amount to US$1.1 billion by 2020. Notably, the same report found that solar customers do pay more on their power bills than what it costs the utility to serve them (Table 5, page 10: average 103% of their cost of service across the three major utilities in 2011).
A 2014 report funded by the Institute for Electric Innovation (which engages in lobbying for the benefit of its member electricity companies) claims that net metering in California produces excessively large subsidies for typical residential rooftop solar photovoltaic (PV) facilities. These subsidies must then be paid for by other residential customers, most of whom are less affluent than the rooftop solar PV customers. In addition, the report points out that most of these large subsidies go to the solar leasing companies, which accounted for about 75 percent of the solar PV facilities installed in 2013. The report concludes that changes are needed in California, ranging from the adoption of retail tariffs that are more cost-reflective to replacing net metering with a separate "Buy All - Sell All" arrangement that requires all rooftop solar PV customers to buy all of their consumed energy under the existing retail tariffs and separately sell all of their onsite generation to their distribution utilities at the utilities' respective avoided costs.
Thirteen states swapped successor tariffs for retail rate net metering programs in 2017. In 2018, three more states made similar changes. For example, compensation in Nevada will go down over time, but today the compensation is at the retail rate (meaning, solar customers who send energy to the grid get compensated at the same rate they pay for electricity). In Arizona, the new solar rate is ten percent below the retail rate.
The two most common successor tariffs are called "net billing" and "buy-all-sell-all" (BASA). "Net billing pays the retail rate for customer-consumed PV generation and a below retail rate for exported generation. With BASA, the utility both charges and compensates at a below-retail rate."
Net metering only requires one meter. A feed-in tariff requires two.
Market rate metering systems were implemented in California starting in 2006, and under the terms of California's net metering rules will be applicable to qualifying photovoltaic and wind systems. Under California law the payback for surplus electricity sent to the grid must be equal to the (variable, in this case) price charged at that time.
Net metering enables small systems to result in zero annual net cost to the consumer provided that the consumer is able to shift demand loads to a lower price time, such as by chilling water at a low cost time for later use in air conditioning, or by charging a battery electric vehicle during off-peak times, while the electricity generated at peak demand time can be sent to the grid rather than used locally (see Vehicle-to-grid). No credit is given for annual surplus production.
In Victoria, from 2009, householders were paid 60 cents for every excess kilowatt hour of energy fed into the state electricity grid. This was around three times the retail price for electricity at that time. However, subsequent state governments reduced the feed-in in several updates, until in 2016 the feed-in is as low as 5 cents per kilowatt hour.
In Queensland starting in 2008, the Solar Bonus Scheme pays 44 cents for every excess kilowatt hour of energy fed into the state electricity grid. This is around three times the current retail price for electricity. However, from 2012, the Queensland feed in tariff has been reduced to 6-10 cents per kilowatt hour depending on which electricity retailer the customer has signed up with.
Australian smart grid technologist, Steve Hoy, originated the opposing concept of "True Zero", as opposed to "Net Zero", to express the emerging capability to trace electricity through net metering. The meter allows consumers to trace their electricity to the source, making clean energy more accessible to everyone.
Areas of British Columbia serviced by BC Hydro are allowed net metering for up to 100 kW. At each annual anniversary on March 1 the customer is paid a market price, calculated as daily average mid-Columbia price for a previous year. FortisBC which serves an area in South Central BC also allows net-metering for up to 50 kW. Customers are paid their existing retail rate for any net energy they produce. The City of New Westminster, which has its own electrical utility, also allows net metering.
New Brunswick allows net metering for installations up to 100 kW. Credits from excess generated power can be carried over until March at which time any excess credits are lost.
SaskPower allows net metering for installations up to 100 kW. Credits from excess generated power can be carried over until the customer's annual anniversary date, at which time any excess credits are lost.
In Nova Scotia, in 2015, 43 residences and businesses began using solar panels for electricity. By 2017, the number was up to 133. These customers’ solar systems are net metered. The excess power produced by the solar panels is bought from the homeowner by Nova Scotia Power at the same rate that the utility sells it to its customers. “The downside for Nova Scotia Power is that it must maintain the capacity to produce electricity even when it is not sunny.”
The Netherlands has net-metering since 2004. officielebekendmakingen.nl, Wijziging van de Elektriciteitswet 1998 en de Gaswet ter uitvoering van richtlijn nr. 2003/54/EG (in Dutch) Initially there was a limit of 3000 kWh per year. Later this limit was increased to 5000 kWh. The limit was removed altogether on January 1, 2014. officielebekendmakingen.nl, Wijziging van de Elektriciteitswet 1998, de Gaswet en de Warmtewet en de Warmtewet (in Dutch)
Italy offers a support scheme, mixing net-metering and a well segmented premium Feed-in tariff.
Slovenia has annual net-metering since January 2016 for up to 11 kVA. In a calendar year up to 10 MVA can be installed in the country. uradni-list.si, Uredba o samooskrbi z električno energijo iz obnovljivih virov energije (in Slovene)
In 2010, Spain, net-metering has been proposed by the Asociación de la Industria Fotovoltaica (ASIF) to promote renewable electricity, without requiring additional economic support. Net-metering for privately owned systems will be established in 2019, after Royal Decree 244/2019 boe.es Boletín Oficial del estado was accepted by the government on April 5. eldiario.es; Guía de las nuevas reglas de autoconsumo: cómo ahorrar con unas placas solares en casa
Some form of net metering is now proposed by Électricité de France. According to their website, energy produced by home-owners is bought at a higher price than what is charged as consumers. Hence, some recommend to sell all energy produced, and buy back all energy needed at a lower price. The price has been fixed for 20 years by the government.
Ireland is planning to implement a net metering system, under the "Micro-generation Support Scheme".
Under the proposed scheme, micro-generators can sell 30% of the excess electricity they produce and export it back to the grid. The price that electricity will be sold at is being formulated during the consultation process.
Poland has introduced net metering for private and commercial renewable energy sources of up to 50 kW in 2015. Under this legislation energy sent to grid must be used within one year from feed-in, otherwise it is considered as lost. The amount of energy that was exported and can be taken back by the user is subtracted by 20% for installations up to 10 kW, or by 30% for installations up to 50 kW. This legislation guarantees that this net metering policy will be kept for a minimum of 15 years from the moment of registering renewable energy source. This legislation together with government subsidies for microgeneration created a substantial boost in installations of PV systems in Poland.
Portugal has a very limited form of "net-metering" that is constrained to 15 minute periods where the excess injected in the grid is not compensated when above the consumption from the grid within each 15 minute period. Only the injected energy up to the consumed energy within the same 15 minute period is netted out of the final monthly bill. In fact the old analog electricity meters that would allow for true net-metering are immediately replaced when a consumer installs solar pv.
To avail of net-metering in the country, the consumer is required to submit an application with the local electricity distribution company along with the planned rooftop solar project and requisite fee. The distribution company reviews the application and the feasibility of the solar project, which is either approved or rejected. If approved, another application for registration of the rooftop is submitted to the distribution company. An agreement is signed between the consumer and the company, and the net-meter is installed.
The Indian states of Karnataka and Andhra Pradesh have started the implementation of net metering, and the policy was announced by the respective state electricity boards in 2014. After review and inspection by the electricity board, a bidirectional meter is installed. Applications are taken up for up to 30% of the distribution transformer capacity on a first-come, first-served basis and technical feasibility.
Since September 2015, Maharashtra state (MERC) has also had a net metering policy and consumers have started installation of Solar Rooftop Grid Tie Net metering systems. MERC Policy allows up to 40% transformer capacity to be on Solar net metering.
The various DISCOMs in Maharashtra namely MSEDCL, Tata, Reliance and Torrent Power are expected to support net metering.
As of now MSEDCL does not use the TOD (Time of The Day differential) charging tariffs for residential consumers and net metering. Export and import units are considered at par for calculating Net Units and bill amount.
Under this arrangement, two uni-directional meters are installed—one records electricity drawn from the grid, and the other records excess electricity generated and fed into the grid. The user pays retail rate for the electricity they use, and the power provider purchases their excess generation at its avoided cost (wholesale rate). There may be a significant difference between the retail rate the user pays and the power provider's avoided cost.
Some countries, such as Germany, Spain, Ontario (Canada), and some states in the United States, compensate the generated electricity at a fixed rate, in a scheme called feed-in tariff (FIT). With the FIT, customers get paid for any electricity they generate from renewable energy on their premises. The actual electricity being generated is counted on a separate meter, not just the surplus they feed to the grid. Germany once paid several times the retail rate for solar but has reduced the rates drastically while actual installation of solar has grown exponentially at the same time due to reduced cost of solar installations. Wind energy, in contrast, only receives around a half of the domestic retail rate, because the German system pays what each source costs (including a reasonable profit margin).
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