How net metering boosts the ROI of your solar PV installation
Learn how to leverage a solar incentive that turns excess energy generated by your solar PV system into a potential revenue stream.
Net metering is one of the most popular solar incentives ever created. Unlike solar tax credits or rebates which provide valuable one-time benefits to lower the upfront costs of your solar PV system, net metering delivers on-going dividends over the lifetime of your solar PV installation.
But what is net metering? And more importantly, what benefits do commercial solar customers receive by enrolling in this solar incentive?
What is net metering?
Net metering is a billing mechanism available in many states that credits organizations for excess solar electricity that their solar PV system generates and sends back to the grid. While net metering programs vary from state to state, the overall process is fairly straightforward.
Under net metering, commercial solar customers sell excess solar electricity to their local utility company at a profit and are credited for the amount of solar electricity they add to the grid – these credits are applied to their monthly electric utility bill, lowering their future energy costs and business’s operating expenses.
During the day, many solar customers produce more electricity than their operations can consume in a day. This excess solar energy can be stored in an onsite battery for later use to increase site resilience and provide power during times of peak spend – or it can be fed back into the grid to reduce future utility bills. A bi-directional meter is installed with the solar PV system to measure the amount of energy consumed and exported to the grid:
- When electricity is purchased from the grid, the meter runs in one direction.
- When excess solar electricity is exported to the grid, the meter runs backwards to log a credit against grid electricity consumed at night or periods where your site usage exceeds your solar system’s output.
At the end of each billing cycle, solar customers are only responsible for the “net” difference in electricity bought and sold.
Net metering creates a revenue stream and yields shorter solar payback periods.
Installing a solar PV system and leveraging the net metering program can yield a powerful business advantage. You are unlocking value from existing assets like your roof, parking lot or empty land space to generate clean and efficient solar power to be used onsite, stored for later use if you have a battery, or sold to the grid through net metering – optimizing your energy and turning it from a cost to a source of revenue. Going solar will immediately reduce your utility bill and, as a result, your operating expenses. And with net metering allowing you to sell excess solar electricity into the grid, you can actually monetize your excess solar energy and create an additional revenue stream for your business.
With the monetization of your excess solar energy through net metering, this incentive can actually speed up the payback period and boost the return on investment (ROI) from your solar PV system. You are not only saving money on your energy expenses by using less energy from the grid – your excess solar energy serves as additional revenue to be used to lower future energy bills from the grid, maximizing your solar investment. This makes it easier to recoup any upfront costs and enjoy decades of truly efficient, clean electricity.
Net metering reduces strain on the grid
When your solar PV system sends excess energy into the grid through net metering, the exported energy is used to serve nearby customers’ loads. Because your system is generating electricity near the point of consumption, there is less demand and strain on the grid’s distribution and transmission infrastructure. It also minimizes energy loss that can happen through transmitting voltage over long distances from the power plant.
The future of net metering in the US
Net metering is undoubtedly one of the most successful solar incentives in the United States. However, states are at varying levels of energy sophistication, and while many states have passed net metering policies, support and availability vary widely from state to state. You can learn more about net metering in your state by visiting the Database of State Incentives for Renewables & Efficiency (DSIRE).
Similar to any solar incentive, it’s important to take advantage of net metering before policies and requirements are adjusted. The sooner you go solar and apply for net metering, the greater your chances of enjoying the benefits outlined above. Fortunately, net metering is free to join in most states, and enrollment comes standard with all Centrica Business Solutions solar PV installations.
To learn more about optimizing your energy and creating a revenue stream with solar power and net metering, contact us today for a consultation.