In the interest of encouraging small-scale renewable energy production, the concept of net metering was developed. Net metering enables customers to use their own electricity generation to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand. This offset means that customers receive retail prices for the excess electricity they generate. Without net metering, a second meter is usually installed to measure the electricity that flows back to the provider, with the provider purchasing the power at a rate much lower than the retail rate or paying the individual in supplier credits that can only be used to purchase future grid power.
Net metering can help the energy providers by utilizing the power produced by individuals’ renewable sources to supplement their own output during peak consumption periods, e.g. solar cells become more productive during the longer daylight hours of summer when air-conditioning use is at its highest, thus helping to alleviate the peak power load on the grid. In addition, it has been shown that customers with net metering systems tend to be much more aware of their energy consumption, so they usually consume less energy than the average retail customer.
Over thirty states have already recognized the environmental benefits of net metering and have passed legislation allowing the interconnection of small-scale renewable energy systems to the state’s power grid. Austin’s electricity supplier, Austin Energy, pays rebates to homeowners who install and operate photovoltaic arrays. Excess power is fed back into the grid and the individual receives credit on their electricity bill for all excess power withdrawn. But a problem with credit emerges when a member of the grid produces so much power that they deliver more power than they purchase, receiving only worthless electricity bill credits in return. Texas has yet to pass a law forcing suppliers to pay power producers in cash rather than credits, thus stifling the renewable power investment of residences and small-scale businesses and discouraging complete electrical independence.
All in all, net metering is a low-cost and easily administered method of encouraging customer investment in renewable energy technologies. But proper economical incentives are needed before this system of small-scale power producers pays off.
Solar Rebate Program FAQ, http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Rebates/faq.htm
Net Metering – Introduction, http://www.serconline.org/netmetering/index.html
Incentives/Policies for Renewables & Efficiency, http://www.dsireusa.org/incentives/