Net Metering & Overproduction

Summary:

  • It is not currently beneficial to produce more power than you historically consume.
  • However, your system may produce more power than you need at a given moment. This power is applied to your ongoing annual need through a process called Net Metering.

Detail:

One of the most frequently asked-about topics in solar is the complex relationship between solar owners and utility companies.

Intro

When you produce solar power, you offset power you would have had to buy from the utility company.

Let’s just jump right into an example. Pretend for a moment that your historical energy usage is 20,000 kilowatt hours (kWh) per year. Now let’s pretend you’ve just added a solar system that produces 10,000 kWh per year, 50% of your historical consumption. Your annual utility bills will now total just 10,000 kWh and you will have cut your bill in half over the course of a year*. Remember solar produces differently throughout the year, so we must consider at least a full year rather than a shorter time period.

Net Metering

We have now determined that this solar system does not produce more than you need in a year, but you would agree there will be moments where your system is producing more than you need in a given moment. What happens to this power? It is called Net Metering.

Click here to read more about Net Metering.

Overproduction

So now you are wondering, “what if I install a system that produces 30,000 kWh per year though I only need 20,000!?”. Unfortunately, there is not yet a system in place that pays us well for excess generation. At the end of the 12 month period, if you have produced more power than you used, it is simply purchased at a wholesale rate. Though the idea of producing enough solar electricity to send to others is wonderful one, this does not provide an effective return on investment.

* This is a simplified calculation that ignores a few details but it gets the point across.