Excess Energy Compensation
Net metering, export rates, and feed-in tariffs (FIT) are mechanisms that define how solar energy and electric companies interact with customers who generate their own electricity through solar panels. These systems govern how excess energy is compensated and incentivize the adoption of renewable energy. Here's how they're related:
Net Metering
Net metering allows customers with solar panels to send excess electricity they generate back to the grid. The utility then compensates them by offsetting their electricity bills.
The panels produce DC power
AC power goes into the home after the inverter
Sunny hours of the day will produce more energy than the home uses.
Extra energy is pushed into the grid through the net meter.
The Net Meter is a bi-directional meter. Electricity can flow both ways.
During daytime the meter goes goes backwards as you push power into the grid
When the sun goes down, the net meter draws like a normal meter from the grid back into the home.
The hope is the number of credits you push into the grid gets you to a net zero where you are not paying for electricity.
Example of Net Metering
A home needs 50 kW hours in a day
The solar array produces 70 kW hours in a day
20 kW hours pushed into the grid
The next day the home consumes 50 kW hours
The solar array produces 30 kW hours
This puts the system at net zero
Some utilities don't give full credits for energy pushed into the system.
Most systems are designed to try and achieve net zero over the course of the year.
True-Ups: How often a utility trues up excess solar production and what happens to the excess can vary wildly between utilities. Always work to understand your local utilities and how they operate.
Non-Bypassable Charges: These special charges are based on the amount of electricity purchased from the utility regardless of the net usage. Special charges can change often and can be different between local utilities.
Mandatory Post-Solar Rate Plans: Some utilities require that customers move to specific rate plans, typically with time-of-use rates, once they go solar. Helping a customer understand this process will help avoid any buyer's remorse or sticker shock.
Export Rates
Export rates are payments utilities make to solar customers for electricity sent back to the grid.
Export rates can be set at a lower price than the retail rate of electricity, unlike traditional net metering.
These rates might be time-of-use (TOU)-based, paying more during peak demand times and less during low demand.
This type of Export Rate structure can also be referred to as a "net billing" arrangement. Customers in export utilities are required to sign a disclosure form outlining how this type of plan works.
With Export Rate billing, solar production is first routed to the home for use. Any production that is not used by the home instantaneously is then exported back to the utility grid. Each exported kWh earns the customer a credit that can then be applied against the customer's bill.
In most instances, the rate paid for excess solar production is less than the retail rate.
Feed-In-Tariff (FIT) Utilities
A FIT is a long-term contract where utilities agree to purchase electricity generated by renewable sources (like solar) at a set rate, typically higher than the market rate, for a fixed period.
How It Works:
Customers sell all electricity their solar system generates to the utility at the agreed FIT rate.
FIT systems often do not allow customers to directly use the electricity they generate.
These utilities completely separate usage and production, often measuring them through different meters.
Usage is charged at one rate while all production is credited at a different rate.
Solar production does not power the home under a FIT rate plan but rather is fed directly to the utility grid. Feed-in-tariffs are also commonly referred to as "buy-all, sell-all" rate plans.
Depending on the utility, the FIT rate can be fixed for a certain time frame or can vary from month to month. In some cases such as in Rhode Island and Connecticut, the FIT rate can be higher than the retail rate, though this is not always the case.
Feed-In-Tariff Utilities. In most instances, customers under a FIT rate plan cannot benefit from storage batteries since solar production is not routed to the home. In utilities where the FIT rate is low, customers are required to sign a disclosure form outlining how this type of plan works.
Find the Billing Type
How to Check Utility Billing Types
Freedom's Sales Lookup Tool contains a wealth of information about specific zips and utilities, including the Post Solar Billing Type.
You can find this tool in the left action menu in your LIGHTSPEED Portal.
Just enter the zip code, city, and utility to learn more!