How Net Metering Works

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How Net Metering Works

Solar technology has come a long way from the its humble beginnings:

What once took many giant panels more than a day’s worth of sunlight to generate can now be generated by a few smaller panels in several hours.

What once was prohibitively expensive to most homeowners has now become not only affordable, but often incentivized by state and federal governments.

Modern solar technology continues to advance with each passing year. But one of the biggest and most beneficial advancements to consumers has nothing to do with the physical setup of the system or composition of panels, but rather the way in which the energy you generate is stored and utilized.
Net metering is the answer to this question likely asked by all curious about solar technology,

“What happens to the energy generated by my panels if it is more than I use?”

Several basics of a home solar installation are important to the explanation of what net metering is. Any home solar system is, in general, quite simple.

1. Solar panels are installed in the place or places which receive the most sunshine.
2. They generate power which is channeled through an inverter.
3. This energy then flows into a home electrical panel and can be used for anything that would normally be powered by the outside electrical grid.

What most home solar installations don’t currently include is a way for the homeowner to store excess or unutilized energy for later use. On days a home solar system doesn’t generate enough power to meet the demand, the outside electrical grid functions as it normally would, with no discernible difference.
Net metering was developed to allow owners of small wind turbines and solar panels an option or benefit for any excess energy they generated. The original law allowed anyone generating less than 40 kW to either roll over any kilowatt 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.” Idaho utilities adopted net metering in 1980. As of 2017, only four states offer no form of net metering. Any excess energy flows back into the utility grid, and is then delivered to other consumers.
In states without net metering, compensation for the excess energy is usually based around the “avoided cost” of electricity. This represents the rate the utility company would have had to pay to produce or purchase that energy from another source. In simple terms, utility companies frequently pay for the power at the wholesale cost. States that offer net metering frequently have laws that mandate any excess power be purchased by the utility company at the same retail price the homeowner paid for the electricity drawn from the grid. The price set for excess energy delivered back to the grid varies from state to state.

What are the benefits?


First, the system is extremely simple and requires almost no action on the part of the solar system owner after initial installation. Net metering offers a real value for excess energy, without any additional installation or other expensive storage system. Second, it serves as a way for homeowners and businesses to contribute energy and remove some of the pressure from the grid. This is especially true during peak consumption periods. Third, with net metering, one solar-equipped home can essentially power several other homes. On a larger scale, neighborhoods adopting solar systems could become self-sufficient. Fourth, it offers consumers a simple yet effective role to play in alternative energy production: Without doing anything different, solar installers can help protect the environment and preserve natural resources. Last, homes using net metering tend, on the whole, to be more aware of energy consumption, and reduce energy waste as a result.

So what about Idaho?


According to Idaho Power, “Idaho Power’s Net Metering tariff allows customers to install small-scale renewable generation projects on their property and connect to Idaho Power’s electrical grid. When customers generate more electricity than they consume, they earn a kilowatt-hour (kWh) credit that carries forward to the next month. Residential (Schedule 1) and small commercial (Schedule 7) customers may connect up to 25 kilowatts (kW) of generation. All other rate classes may connect up to 100 kW of generation."

Where to start?


The process of applying for net metering in Idaho begins with the customer submitting a completed application form and $100 application fee to Idaho Power. The customer will receive a notice of receipt from Idaho power, and within seven business days will provide the customer with the results of the feasibility overview. From here, the installation is either approved, or Idaho Power will work with the applicant to determine any upgrades needed to make the installation function properly with the existing grid. Once the system has been completely installed and passes the state electrical inspection, the customer must submit a System Verification Form detailing the final installed components of the net metering system. Idaho power will conduct its own inspection within 10 business days, and will then, pending approval, install a new meter programmed for net metering within 15 business days. All of the required documentation, as well as instructions and guidelines are available at Idaho Power’s website: www.idahopower.com.

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