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Net Metering Policies

Net Metering

Net metering programs serve as an important incentive for consumer investment in on-site renewable energy generation. Net metering enables customers to use their own generation from on-site renewable energy systems to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand, enabling customers to receive retail prices for the excess electricity they generate. Without net metering, a second meter is usually installed to measure the electricity that flows back to the provider, with the provider purchasing the power at a rate much lower than the retail rate.

Net metering is a low-cost, easily administered method of encouraging customer investment in renewable energy technologies. It increases the value of the electricity produced by renewable generation and allows customers to "bank" their energy and use it a different time than it is produced, giving customers more flexibility and allowing them to maximize the value of their production. Providers may also benefit from net metering because when customers are producing electricity during peak periods, the system load factor is improved.

As of November, 2010, net metering was offered in 43 states, Washington, D.C., and Puerto Rico (see map of state net metering rules from DSIRE). For a more detailed description of state net metering policies and links to the authorizing legislation, see the DSIRE database, which is a project of the Interstate Renewable Energy Council funded by the U.S. DOE and managed by the North Carolina Solar Center.

Relevant Literature

Carley, S. (2009) "Distributed generation: An empirical analysis of primary motivators." Energy Policy, Volume 37, Issue 5, May 2009, Pages 1648-1659.

Cook, C. and J. Cross. (1999). A Case Study: The Economic Cost of Net-Metering in Maryland: Who Bears the Economic Burden? Prepared by Maryland Energy Adminstration, Annapolis, MD.

Doris, E., Busche, S., Hockett., S. (2009). Net Metering Policy Development and Distributed Solar Generation in Minnesota: Overview of Trends in Nationwide Policy Development and Implications of Increasing the Eligible System Size Cap. Technical Report.

Forsyth, T.L., M. Pedden, and T. Gagliano. (2002). The Effects of Net Metering on the Use of Small-Scale Wind Systems in the United States. National Renewable Energy Laboratory, NREL/TP-500-32471. November. (PDF: 1.3 MB)

Hesse, P. (2000). Connecting a Small-Scale Renewable Energy System to an Electric Transmission System. Golden, CO: Energy Efficiency and Renewable Energy Clearinghouse. April.

NREL. (2005). Overcoming Net Metering and Interconnection Objections: New Jersey MSR Partnership. Million Solar Roofs (MSR) Case Study (Fact Sheet). 2 pp.; NREL Report No. FS-710-38666; DOE/GO-102005-2192.

Mills, A., Wiser, R., Barbose, G., Golove, W. (2008). "The impact of retail rate structures on the economics of commercial photovoltaic systems in California." Energy Policy, Volume 36, Issue 9, September 2008, Pages 3266-3277.

Starrs, T. (1996). Net Metering: New Opportunities for Home Power. Washington D.C.: Renewable Energy Policy Project.

Wan, Y. (1996). Net Metering Programs, NREL/SP-460-21651, Topical Issues Brief. Golden, CO: National Renewable Energy Laboratory. December.

Wan, Y. and Green, H.J. (1998). Current Experience with Net Metering Programs, Presented at WINDPOWER '98, Bakersfield, CA. April 27-May 1, 1998.

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