In the 1970s, the most common application of photovoltaic (“PV”) technology was off-grid. But today, more than 95% of solar installation is on-grid, or “grid-tied.” Certainly, falling PV costs have helped accelerate grid-tied solar, but the other driving factor was the adoption of Net Metering legislation by 40 US states, including California.
Net Metering is an electricity policy for utility customers who operate their own on-site “self-generation” power systems such as photovoltaic systems. PV systems are connected to the utility grid via the customers’ main service panel and meter and, when generating more power than is needed at the site, return excess electricity to the grid through the power meter, reversing the meter from its usual direction. As a result of the meter working in both directions – one way to measure power purchased (when on-site demand is greater than on-site power production), the other way to measure power returned to the grid – the customer pays the “net” of both transactions.
In California, there are two important characteristics of Net Metering policies that are particularly relevant to solar power-owning utility customers.
“Avoided Cost” for Energy Exported to the Grid
When excess electricity is fed through the meter and returned to the utility grid in California, the customer will receive wholesaleprice as credit to be applied to future purchases. To facilitate this, Net Metering customers are on an annual billing cycle as opposed to the usual monthly billing cycle – and the credits received are reconciled with the purchases made annually on the anniversary of the local utility approval of the system installation.
Only Generate What You Need
At the time of this annual reconciliation, there are three possible outcomes. First, if the utility customer has purchased more power than they’ve returned to the grid, they will be billed for the “net”. Second, the “net” could be zero, although this is unlikely since power use varies somewhat from year to year as does weather which impacts PV system performance, so the odds are pretty low that the bill would be exactly zero.
The third possible outcome, which our designs typically prevent, is that the solar power system generates more power than needed in total over the course of twelve months and there’s excess credit. This could happen if the PV system is over-designed or if the customer’s usage declines significantly. Regardless of the reason, if there is excess credit on account, as per California’s Net Metering policies the credit will be paid to you as Net Surplus Compensation, a rate at which there is a negative return on investment.
Precise Modeling Yields Precise Forecasts on Solar Savings
Making a decision about solar power for your business requires trust. Trust that the products proposed are quality products that will last decades. Trust that the installer will do what they say they’ll do. Trust that the system will produce the kWh promised, and trust that this will translate to the forecasted amount of savings.
This is why Sunlight Electric developed proprietary tools that use your 15-minute detailed interval usage data, marries that with hour-by-hour solar production forecasts powered by the National Renewable Energy Laboratories’ highly precise weather modeling, and then overlays specific utility rate schedules to omptize system design and accurate forecast savings in any Net Energy Metering environment. These tools, first pioneered in 2008, have been validated and refined by scores of real-world systems’ performance data.
The end result is a commitment — in terms of production and savings — you can rely on. But don’t ask us, ask our customers!