IN SOLAR SYSTEMS INSTALLATIONS
Net metering is a billing system designed for solar installations that allows customers who generate their electricity to use it when they want, rather than when it is generated.
How Net Metering works?
In On-Grid solar systems, when solar panels generate more electricity than customers may need during the day, their electric meter rotates backward. It sends the excess energy back to the grid. The utility company credits the customer's billing account for the energy sent back to the grid, “normally” at a retail rate, typically the rate the customer pays the utility for the electricity used.
At night, when the solar panels are not producing electricity, they can use these credits to power their load from the utility. If the customer uses more electricity than they send, the utility company bills them for the difference.
This means that in many countries where net metering is regulated (fortunately not all of them but still others with many restrictions), customers with On-Grid solar systems can sell the energy they produce to the utility. Since net metering is an agreement between the utility and the customers, the electricity “returned” to the utility can be compensated in several ways depending on the agreement.
Let's look at this with a simple example: If a customer consumes 1000 kilo-watt hours in one month from the grid and their On-Grid solar system generates 900 kilo-watt hours that are returned to the utility, they would receive a bill for only 100 kilo-watt hours instead of the 1000 kilowatt hours consumed during this period. Don't you agree It is a great way to save money?
Although net metering can help customers reduce their electricity bills, the specifics of these agreements depend too much on the utilities. Then, there may be some disadvantages that must be carefully taken into account for a correct calculation of return on investment:
- Net metering agreements may be complicated because of local policies and rules and usually vary by location.
- In some areas, surplus electricity credits may not be fully monetized, which may limit financial benefits.
- Different net metering programs may have different rules, such as whether credits renew monthly, annually, or indefinitely; the value of the credits and time-of-use rates.
- Another policy is a feed-in tariff, in which the producer is paid for each kilowatt hour delivered to the grid through a special rate based on a contract with the distribution grid or other electrical authority. The higher this rate is and becomes a fixed cost of service, the more difficult it is to obtain an adequate Return on Investment ROI.
Although the investment in solar On-Grid systems is less than that of a hybrid one, all the disadvantages already explained regarding net metering are making the market turn towards the preference for hybrid solutions seeking independence from the utility.
Our business model based on the Integration Coefficient IC will help you to choose the most appropriate solution. Please do not hesitate to Contact Us.
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