On your house you have a utility meter that records the amount of electricity you use in your house.
A net meter is a different type of meter that can spin forwards and backwards and will record the amount of electricity that you generate and put onto the grid (in the daytime when you are at work) and the electricity that you pull from the grid (at night when you are home making dinner and watching TV).
- In the daytime, the electricity that your solar panels are producing and putting onto the grid will cause the meter to spin backwards and generate credits with the local utility. The electricity you produce will be used by other homes or local businesses in your neighborhood. At night when you come home and use electricity your meter will spin forward and you will be using those credits that were generated in the day.
- If you end up with excess credits at the end of the month, utilities will allow you to carry those credits over to the next month for up to a year.
- At the end of the year your utility company will send you a statement that will show the amount of electricity you generated and used.
- If your system has been designed correctly you will have a very small bill which might be as low as $100 for the entire year.
- CAUTION: If your system is designed to generate more electricity than you actually use (over the entire year) then in many states the utility will not pay you for the additional power you generated. However, in some states (FL, CT, CO) the utility will pay you for the additional power at varying rates. Best bet is to check out our state rebate pages to check the rules in your area.
- Some utilities do charge a small monthly fee ($5) to be able to net-meter and in some states (but not many) the utility will require you to pay for the installation of the net-meter.
Time of Use (TOU) is one of the more descriptive solar terms out there but is still a little esoteric. TOU is a type of solar electricity rate that some utilities offer to their customers. To take advantage of TOU you need to have a special smart meter that can assess charges for the electricity you use based on the time of the day. What this means for solar generators is that when you put electricity onto the grid during peak periods (daytime) you are compensated with additional energy credits. The idea is to conserve energy during on-peak rate times, so the meter spins backwards as fast as possible and to use energy at off-peak times when it is cheapest. If your family is away from home during the day, this rate structure is practical and maximizes energy generation credits with minimal need to change energy use habits based on time of day.
This is how they work:
- If you only use a small amount of electricity in your home, you may be able to get all your energy needs at the lowest, Tier 1 rate.
- As your energy use rises, you pay Tier 2 rates then Tier 3, etc.
- When you install a solar system you eliminate the top tiers first.
What is a Renewable Portfolio Standard (RPS)?
A Renewable Portfolio Standard (RPS) is a regulation put in place by state governments that requires utility companies to generate a certain portion of their electricity from renewable energy sources like solar, wind, geothermal, and biomass. As mentioned, states control RPS regulations and therefore there is variation from state to state. In California for example the is an RPS target that says 33% of the state’s energy must come from solar and other renewable energy sources by 2020.
So why should you care about your states RPS regulations.
- RPS standards mean that local and state government will encourage residents to install renewable energy systems like solar and wind power systems.
- States and utilities will offer you incentives in the form of rebates and tax credits to make installing home solar power systems more affordable.
- In some states, once you are generating clean renewable energy, you can take advantage of Renewable Energy Credit (REC) programs, and actually make money by selling RECs. Find out more here.