Net metering has emerged as a valuable tool for companies seeking to reduce their energy costs while embracing sustainable practices. By allowing commercial solar system owners to receive credits for the surplus electricity they generate, net metering enables them to offset their energy consumption and spin the utility meter backward. With net metering, companies can offset their energy consumption and minimize their reliance on the grid. In addition to reducing costs, net metering promotes sustainable energy practices.
In this article, we will delve into the workings of net metering, highlighting its benefits and offering insights on how businesses can maximize their advantages. Whether you’re new to the concept or seeking ways to optimize your commercial solar system, this comprehensive guide will provide you with the knowledge you need to navigate the world of net metering successfully.
Understanding net metering
Net metering is a regulatory policy and incentive program that enables commercial solar system owners to receive credits for excess electricity they generate and feed back into the grid. These credits offset their energy consumption and effectively spin the utility meter backward.
Net metering encourages companies to invest in renewable energy sources like solar power and generate their own energy.
Read: What is Net Metering?
How does net metering work?
When a solar system generates more energy than the building requires, the excess electricity flows back into the grid. A bi-directional meter measures the net difference between energy consumed and energy generated. The facility is then credited for any surplus energy generated, called solar credits.
Companies are free to pull electricity from the grid as needed, such as at night when solar systems generate less energy. The credits from the net amount consumed will be subtracted, and the facility is billed only for its net energy consumption.
How is net metering different from gross metering?
It’s important to understand the difference between net metering and another billing arrangement known as gross metering. Gross metering is an agreement where commercial solar system owners are billed for their total energy consumption and separately compensated for their total energy generation based on a pre-determined feed-in tariff rate.
Net metering provides credits and allows for a simplified, single bill. Gross metering provides compensation and requires separate billing and compensation systems.
Benefits of net metering for commercial solar systems
There are numerous benefits to net metering, including:
1. Reduced energy bills
The most obvious benefit of net metering is reduced energy bills. The amount saved depends on the facility’s energy consumption and the solar system’s size and output. The credits can result in significantly reduced energy bills, making solar power a worthwhile investment.
2. Environmental sustainability
Net metering promotes environmental sustainability. It’s a way to incentivize companies to adopt renewable energy sources. By self-generating clean energy, companies can reduce their reliance on fossil fuels and decrease greenhouse gas emissions.
3. Energy independence
Another benefit of net metering is energy independence. By generating their own energy, commercial solar system owners are less reliant on the grid and, therefore, less affected by energy price fluctuations, outages, and grid failures.
4. Revenue stream
Net metering can create a revenue stream for companies with excess energy production. Credits for surplus energy can offset initial investment costs, contribute to ongoing expenses, and generate additional income.
Maximizing the benefits of net metering
Here are five ways you can maximize the benefits of net metering for your commercial solar system:
1. Proper sizing and design of solar systems
Before investing in a solar system, it is important to first conduct an energy audit. You should understand your facility’s peak periods, current consumption, and overall energy needs. This will help calculate the optimal solar system size. Many factors are involved in this decision, such as rooftop and ground space, shading issues, and local climate conditions.
Future expansion plans and changes in energy needs should also be considered. Ideally, the solar system should be sized to accommodate future growth to reduce the need for pricey upgrades or additions in the future.
If you’re interested in planning your commercial solar project, start with these 8 simple steps.
2. Optimizing solar system performance
You should research and opt for high-quality solar panels and equipment. Like any equipment, investing in higher quality components upfront will save money down the road. Go with reputable and trusted brands that will stand the test of time.
Once your solar system is installed, it’s important to provide regular maintenance and upkeep. This involves cleaning the panels, inspecting electrical connections, and ensuring that inverters and other equipment are functioning properly. With routine maintenance, any issues can be addressed quickly to maximize performance.
The orientation and positioning of solar panels will drastically impact energy production. They should be installed at the optimal tilt and azimuth angle to receive the maximum amount of sunlight throughout the day.
Remember to note any shading from trees or nearby buildings, as it will impact performance. Use shading analysis tools to help determine the best placement of the panels.
3. Understanding utility policies and regulations
Research net metering policies in your area, as they differ by state, region, and utility company. Each state offers incentives for solar power, which can change over time – some states offer more favorable policies than others. These policies include power limits, maximum annual compensation amounts, and monthly rollovers.
Become familiar with interconnection requirements and agreements, which outline the specific technical and contractual aspects of connecting your solar power system to the grid. The Environmental Protection Agency (EPA) offers this State Energy and Environment Guide for interconnection and net metering.
Because each state determines its net metering policies, staying updated on regulation changes is key. Sites like DSIRE, U.S. Department of Energy, and the Federal Energy Regulatory Commission (FERC) offer updated information on policies.
4. Efficient energy management and consumption
Implementing energy-saving measures and technologies is essential in maximizing net metering benefits. This includes upgrading to energy-efficient lighting and HVAC systems and using proper weather sealing and insulation.
Analyze your energy usage to see your high consumption times. This historical data can help make informed decisions about aligning energy use with peak solar production times.
For example, energy-intensive processes like running machinery or operating equipment should be done during peak daylight hours when the solar system generates the most power.
5. Explore additional incentives and financing options
Various federal and state incentives are available to companies interested in renewable energy. Rebates, grants, and tax credits can all help to offset installation costs and increase ROI. For example, the Energy Policy Act’s solar investment tax credit (ITC) saves companies on the cost of solar power installation.
There are other options if you cannot afford or are not interested in managing a solar system. One popular option is a Solar Purchase Power Agreement (PPA). A solar PPA involves a third-party installing and managing the solar system while you purchase the electricity generated from the solar power at a set rate.
Leasing agreements are also common, where you rent the solar equipment as opposed to purchasing it upfront. Both of these options still allow you to take advantage of net metering.
Not sure if solar power is within your budget? Break down the components of a commercial solar budget here.
Interested in net metering for solar?
The cost of electricity is only increasing, and climate volatility is growing. Protect yourself against these rising costs with solar power and net metering. EnergyLink can design, build, and finance commercial solar panels tailored to your needs.
EnergyLink is a certified Energy Service Company (ESCO) specializing in energy projects for commercial and industrial entities. We have a wealth of experience in complex installations and offer financial modeling and project financing. Our experts will partner with you through every stage of your energy project.
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