Net metering

Net metering (or net energy metering, NEM) allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly important with renewable energy sources like wind and solar, which are non-dispatchable (when not coupled to storage). Monthly net metering allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. Annual net metering rolls over a net kilowatthour (kWh) credit to the following month, allowing solar power that was generated in July to be used in December, or wind power from March in August. Net metering (or net energy metering, NEM) allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly important with renewable energy sources like wind and solar, which are non-dispatchable (when not coupled to storage). Monthly net metering allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. Annual net metering rolls over a net kilowatthour (kWh) credit to the following month, allowing solar power that was generated in July to be used in December, or wind power from March in August. Net metering policies can vary significantly by country and by state or province: if net metering is available, if and how long banked credits can be retained, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. Net metering uses a single, bi-directional meter and can measure current flowing in two directions.Net metering can be implemented solely as an accounting procedure, and requires no special metering, or even any prior arrangement or notification. Net metering is an enabling policy designed to foster private investment in renewable energy. However, according to an Opinion column in the Washington Examiner, net metering forces utility companies to buy back energy from solar customers at 'artificially high rates.' In turn, this expense comes at the expense of other poorer utility customers who cannot afford solar power. Net metering originated in the United States, where small wind turbines and solar panels were connected to the electrical grid, and consumers wanted to be able to use the electricity generated at a different time or date from when it was generated. Minnesota is commonly cited as passing the first net metering law, in 1983, and allowed anyone generating less than 40 kWh to either roll over any credit to the next month, or be paid for the excess. In 2000 this was amended to compensation 'at the average retail utility energy rate'. This is the simplest and most general interpretation of net metering, and in addition allows small producers to sell electricity at the retail rate. Utilities in Idaho adopted net metering in 1980, and in Arizona in 1981. Massachusetts adopted net metering in 1982. By 1998, 22 states or utilities therein had adopted net metering. Two California utilities initially adopted a monthly 'net metering' charge, which included a 'standby charge', until the Public Utilities Commission (PUC) banned such charges. In 2005, all U.S. utilities were required to offer net metering 'upon request'. Excess generation is not addressed. As of 2013, 43 U.S. states have adopted net metering, as well as utilities in 3 of the remaining states, leaving only 4 states without any established procedures for implementing net metering. However, a 2017 study showed that only 3% of U.S. utilities offer full retail compensation for net metering with the remainder offering less than retail rates, having credit expire annually, or some form of indefinite rollover. Net metering was slow to be adopted in Europe, especially in the United Kingdom, because of confusion over how to address the value added tax (VAT). Only one utility company in Great Britain offers net metering. The United Kingdom government is reluctant to introduce the net metering principle because of complications in paying and refunding the value added tax that is payable on electricity, but pilot projects are underway in some areas. In Canada, some provinces have net metering programs.