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Why Net Metering Helps Make Solar a Great Investment

Why Net Metering Helps Make Solar a Great Investment

You have probably heard a lot about solar batteries. If you are like me, you may be thinking solar batteries are necessary to store the energy your solar energy system produces so that you will have energy even when the sun isn’t shining. Thanks to California’s net metering policy, PG&E customers have a net metering agreement that helps manage electricity production without the need for a solar battery. Electricity is measured in kilowatt-hours (kWh). The concept of a kWh is a bit abstract so try to visualize a kWh as a bucket of energy. 

Your solar energy system starts producing energy when the sun rises. Early in the morning, the sun is low on the horizon and so your solar energy system produces less buckets of energy per hour than in the middle of the day when the sun is highest in the sky and the most buckets of energy per hour are generated. So while your solar energy system may generate the number of buckets of energy that your household or business uses over the course of a day, it isn’t going to match your usage hour by hour. At night and in the early morning, you may have a higher demand for energy than what your solar energy system generates. In the middle of the day, you may have less demand for energy than what your solar energy system generates. So how does your household or business get the energy it needs during low production times and what happens to the extra energy during high production times?

Here is where the net metering agreement comes in. A net metering agreement spells out how the owner of a solar energy system will be compensated when they produce more energy than they use. Imagine your household or business is consuming electricity at a rate of five buckets an hour and your solar energy system is producing at a rate of ten buckets an hour – you have a surplus of five buckets each hour that rate is maintained. The utility company will buy your surplus of five buckets an hour in the form of energy credits on your bill. What this means for the owner of a solar energy system is you will use the solar energy as it is produced and get the rest of your energy needs from the utility company. 

It gets a little more complicated because time-of-use (TOU) electricity rate plans are being rolled out to all homes in 2019. With a TOU rate structure, the cost of electricity varies throughout the day and even throughout the year, with rates being highest during periods there is the greatest demand for energy across the utility grid. Are you familiar with the adage of “buy low, sell high”? Sometimes this can be a further benefit for the solar owner. If your solar energy system is producing more buckets of energy than you need during these peak hours, you are able to sell these buckets of energy for the higher rate laid out in your net metering agreement. If you then purchase energy from the utility grid at lower rate times, you can end up buying energy for a lower price than you are selling it for. 

Net metering is a big part of why an investment in solar energy makes economic sense. In fact, net metering helps Shade Power solar pergolas typically pay for themselves in less than ten years and allows homeowners to go on to save tens of thousands of dollars over the life of their solar pergolas.

 

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