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Use Net Metering To Get the Most Out Of Your Solar System

Jessica PirroJune 12, 2019830

With the solar community gaining more attention in the U.S., homeowners are now hearing more about the solar incentive called “virtual net metering.” Which begs the question what is net metering and how does it work? 

Virtual net metering

Why is net metering such a unique system? When you are on-grid, if you produce any extra energy, you will be able to sell it back to your utility company. If it’s a snowy day and you need to get some energy from your utility company, you will be able to recoup those costs by selling them right back for excess energy later that month. If you have enough energy generated from your system, you may never have to pay another utility bill again.

Virtual net metering refers to when solar isn’t used on-site but instead it is externally installed and will be shard among subscribers. You’ll receive credits on your electric bill for excess energy that is produced by your share of a solar garden.

Virtual Net Metering (VNM) works in community solar situations, where subscribers share portions of a solar array on top of an apartment building or some other large structure nearby, or a solar farm located some distance away.

Those subscribers receive bill credits based on the amount of energy produced by their shares of a community solar project.

There are different arrangements for community solar installations. In some, the persons can rent or share a portion of the panels and receive credits on their electric bill for the power generated by that piece of the solar array.

Some pilot projects in New York are even allowing subscribers to trade solar power among themselves. 

While net metering and VNM share many similarities, the biggest difference is that in the latter the solar panels are not connected to the meters of the subscribers. The solar panels don’t directly provide power to the consumer; instead, all the electricity produced goes to the grid in exchange for credits on the electric bill. 

The amount of credits will be determined by your portion of the solar array. If you buy a 10% share of the solar farm, you’d receive 10% of the power it puts out.

If your monthly energy usage amounts to 1,000 kWh and the solar array produces 5,000 kWh, then you’d be entitled to 500 kWh in virtual net metering credits. Those would be subtracted from your bill; you’d pay for the remaining 500 kWh.

While it seems like a great program to benefit renters who otherwise wouldn’t have access to net metering, VNM is not available across the U.S. About 45 states have net metering policies. About half that have virtual net metering. You would have to call or access your utility’s website to find out if it’s available in your area. 

In those states where VNM is active, there are often some requirements associated with it. In most cases the meters that will be aggregated need to be in the same customer name, in the same utility service territory, and within a certain distance from each other (typically 2 miles). In some situations, additional monthly billing costs may apply, which a customer would be responsible for paying.

Virtual net metering vs. Regular net metering

If you want to dig further into a new and very appealing solar incentive, there are two very relevant concepts that are mentioned above: everyday net metering and community shared solar.

Community solar provides an alternative for rooftop solar for homeowners that don’t qualify to have solar installed on their roof or would prefer not to have a solar system installed on their roof. It is sometimes referred to as ‘shared solar’, where homeowners collectively pat for a solar system that provides power that is used in multiple households.

Community solar is something that homeowners can in sorts “subscribe” to. A large scale, off-site solar panel installation typically offers energy that is available to hundreds of homeowners.

In most cases, as community solar array can be built to power a whole town. A resident can either own a few of the community solar array’s or they can choose to rent them out in order to get discounted energy rates without having to make any up front purchase. There are not any issues such as maintenance, warranties or equipment that are factors because those are all handled by the owner.  

How do bill credits work?

Net metering is a solar incentive where the homeowner will receive credits for any excess power that their solar panels produce. Since the excess power it delivered to the grid and net metering can be thought of as a solar storage solution that will allow you to push and pull the energy to and from the grid and not have to pay any extra costs for a home battery to provide backup.

The amount of the virtual net metering credits you will receive will depend on the size of your share in the community solar system. If you own 25 percent of a community solar array, you will be credited for 25 percent of the production if that system.

The credits will appear on your electrical bill, offering a significant cost reduction of your energy spending without a hassle if having panels installed and maintained on your own roof. The massive solar array in which you hold stock which will provide virtual energy to your home and virtual net metering credits are how you account for the energy.

Why is net metering beneficial?

Net metering is beneficial for a lot more than just one reason. If you have solar power, you’re probably conscious with your finances, getting to offset your utility costs is a massive benefit for you.

One of these benefits is helping your power grid by reducing stress on the system. When you provide more energy to your power grid, the grid functions a lot better for a long time, but it doesn’t have to output a lot of energy and get’s no input in return.

On top of that, you’ll be helping your neighbors. The reason the utilitycompany wants your extra energy is so that they can provide that extra energy to the other consumers. By producing excess energy and giving it to your utility company, you’re helping to ensure everyone in your community has all the energy they need.

The Best States for Virtual Net Metering?

Before anyone is able to construct a community solar array in your state, your government needs to approve legislation to enable virtual net metering. Every state doesn’t have virtual net metering, but there is a growing number of developing virtual net metering rules to make room for community solar options. These are some of the states that offer virtual net metering:

  1. California
  2. Colorado
  3. Massachusetts
  4. Minnesota
  5. New York
  6. Vermont
  7. Washington D.C.
  8. Maine
  9. New Hampshire
  10. Pennsylvania
  11. Rhode Island

The top performers for community solar is where the majority of the activity in the solar industry segment are occurring. In general, community solar and virtual net metering are resoundingly popular in the Northeast. It is expected that community solar programs that will be established across the nation as awareness grows. As the “sharing economy” expands in the U.S., more homeowners are exploring the opportunities within their communities that help them make the most of their resources.

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