False: I should install lots of solar panels so the utility company will pay me for all the extra power

Sometimes folks who call SunRun are bursting with excitement. “I want to cover every inch of my roof with solar panels,” they exclaim, “And I’ll just wait for checks from the utility company to start rolling in!”

Unfortunately, it doesn’t quite work that way.

It’s complicated, but stick with me, and I’ll explain why not.

When you go solar, your utility company will swap out your current utility meter for a “net meter.” This is one that can spin both forwards and backwards. And, it allows you to reap the full benefits of solar.

Any time your solar system makes more energy than your home needs – in the middle of a summer day, for example – your meter will spin backwards. The extra energy gets dumped back into the grid and you get credited for it. Think of it like dropping coins into a piggy-bank.

On the other hand, when your solar system isn’t covering all your energy needs – at night and during parts of winter – your meter spins forward as you pull power out of the grid, just like it did before you installed a solar system.

At the end of the month, a utility representative will come out to check your meter, just like always. The number they’ll read off the meter that month takes into consideration all the spinning forwards and backwards your meter has done.

If your meter spun backwards more than forwards – like it will during the summer months – then you end up with a “negative” bill from the utility company for that month. If your meter has spun forwards more than backwards, you owe the utility company some money.

But, the utility doesn’t actually send you a bill at the end of the month; they just send a statement saying whether you have a positive or a negative balance. Then, at the end of the year, they’ll add up all your statements. If you had more in “positive bills” than in “negative bills,” you owe the utility some money. If you had more in negative bills than in positive bills, you owe the utility nothing.

But: they won’t EVER cut you a check. And, any remaining “credit” you had with them goes away at the end of the year. This is why you don’t ever want to install a system that will produce more energy than your home needs in a given year.

In other words, net metering allows you to effectively get credit for any energy you dump into the grid; you use it to “offset” your energy usage when your solar system isn’t producing the energy you need.

Of course, there’s one more complication. So far I’ve assumed that a unit of electricity (a kilowatt-hour, or kWh) at night is “worth” the same amount as one that your system dumps into the grid during the day. In other words, I’ve assumed that 1 extra kWh produced by your system at 2pm gets you 1 free kWh at 9pm.

This isn’t necessarily the case.

Often, when you install a solar system, you’ll switch to a billing set up called “time of use.” In this set up, all kWh’s aren’t created equal. Instead, kWh’s during the middle of the day are more expensive and kWh’s at night are the cheapest.

What this means: For every single solar kWh you feed into the grid in the middle of the day, you’ll be able to buy back several at night when the power is a lot cheaper.

So, overall, net metering makes sure that you don’t get jipped just because your solar system produces a lot more in the summer than in the winter. Cool, huh?

Posted by: Sydney Larson on October 1, 2008.