A net metering agreement is an administrative and billing agreement to track and bill the electricity you use from the grid and the electricity you store on the grid, allowing you to effectively ‘run your electrical meter backwards' to zero net electricity. This means if your renewable energy system produces more electricity during the day than you can use, you store that extra electricity on the grid until you need it later that night, on the weekend, or later that year.
Under a neter metering agreement, you can only store up to the same amount of electricity in the grid as you use from the grid in that billing period. During a billing period, if you store more electricity on the grid than you use from the grid, your utility does NOT compensate you (pay you) for it. Net metering is for reducing your electrical bill from the utility, NOT for selling a net amount of electricity to the grid.
Net metering can be established either by a utility or through legislation at a provincial government level. In many jurisdictions, net metering is considered a foundation for promotion of small wind and other distributed energy systems.
Since late 2003, more regional utilities in Canada have been developing and implementing net metering to allow customers to store some of their electricity on the national grid. Please call your local utility to find out their latest news.
Although net metering programs are reasonably common in North America, there are significant variations in their design from one jurisdiction to another. A net metering program will usually specify the following parameters:
- Electricity price. Specifies the price per kilowatt-hour you will buy electricity from the grid, after your "stored" electricity has been subtracted from your electricity used.
- Netting period. Specifies the period over which the net energy between generator and grid is calculated. The interval for netting and billing energy can range from monthly to annual.
- Disposition of excess generation. Determines who "owns" the excess electricity you store on the grid but do not use within your netting period. Most utilities assume ownership of this excess, but some allow you to carry over a certain amount of your excess stored electricity into your next netting period.
- Interconnection method. Specifies what standard may apply to connect the system, and what types of meters are required.
Say you use a total of 1,000 kWh of electricity in a year, which you normally buy from your utility via the electrical grid. If you install a turbine that generates 400 kWh in a year, but only 100 kWh of that electricity is produced at a time when you can use it (maybe when you're at home in the evenings and on weekends), then your turbine is producing another 300 kWh of electricity you need to store somewhere. By interconnecting your turbine to the grid and using a net metering agreement with your utility, you "store" that 300 kWh of unused electricity on the grid until you need it later, as if the grid were a huge battery. So you require a total of 1,000 kWh per year of electricity and 100 kWh of that is met WHEN YOU NEED IT by your turbine... therefore, at the end of the year, your electricity bill from the utility says you've used 900 kWh from the grid, but remember, you've also "stored" that extra 300 kWh of your turbine's unused electricity on the grid. Your utility takes the gross of 900 kWh you used, minus the 300 kWh you stored on the grid, resulting in 600 kWh of net electricity you used from the grid. Your utility charges you for 600 kWh and you've effectively 'run your electrical meter backwards'!