Solar Terminology

What is a Kilowatt-hour?

What is a Kilowatt-hour?kilowatt hour
Firstly a kilowatt (kW) is a unit of power now a kilowatt-hour (kW-hr) is a unit of energy because it takes into account time. If we took 10 light bulbs each with a power rating of 100 Watts (W) (total power rating of the 10 light bulbs is 1000 W or 1 kW) and turned them all on for one hour you would have used 1 kW-hr of energy. This is how the utility companies charge you, in kW-hrs. So if you want to know how much it costs to run your appliances take a look on the back of say your blender and see how many Watts it is rated. In my case I have a 1,500W blender. So for every hour that I operate my blender I am using 1,500 Watt-hours which is 1.5 kW-hrs. Now if I am being charged 10 cents/kW-hr from the utility it costs me 15 cents for each hour I run the blender. Sounds pretty cheap but if I left a 100 W light bulb on continuously for 1 year, it would cost me $100. So remember turn off those lights.

What is Net-Metering?net metering
Net-metering is a confusing term that really isn’t very self-explanatory. Firstly, net-metering is very important for home solar power systems that are grid-tied (which means that you have a electrictity line running from your house to the power lines at the street) because otherwise you would have to give the excess power you generate in the daytime to the local utility for free or store all that energy in batteries which is extremely expensive and very inefficient.  Net-metering laws require utility companies to give you credit for any excess electricty that you generate and put onto the grid.
So here is how it works:
  • 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.

What is Net Excess Generation (NEG)?
NEG or Net Excess Generation is linked to net-metering and simply refers to that additional electricity that your home solar power system produces and you don’t use. This NEG is usually tallied up over a month and then rolled over into the next month. In many cases you can keep rolling over these aditional electricity credits, however, in some states, after 12-months the utility will claim all outstanding NEG credits. In others they will pay you for the NEG you have produced. You can find out what happens in your state here.

What is Feed-in Tariff (FiT)?
Feed-in Tariff is another type of incentive program that has been used widely in places like Germany. Basically it means that utilities are required to purchase a certain amount of renewable energy from solar, wind and geothermal to name a few. The rates that the utility pays for this power varies by technology and has been determined through scientific studies. In any cases the rates are usually quite high are are aimed at achieving grid parity (which is when renewable energy is is equal to or cheaper than grid power). In addition, FITs offer a guaranteed purchase for electricity generated from renewable energy sources within 15 to 25 year contracts and are generally offered to anyone who is interested in being a renewable energy producer. There are currently not many FiT programs in the US. Net-metering and Time of Use have been more widely adopted and are still offer pretty good deals in most cases.

What is Time of Use?solar terms
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.

What are Tiered Rates?
Some utilities like PG&E have tiered rate pricing.  If we take PG&E as an example, it has five tiers that range in price from $0.12 to $0.44.
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.
Therefore, the more you spend on electricity now, the more you save and the higher your return on your solar investment. For a more detailed explanation check out this post on our blog.

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.