How Net Metering Leads to Low Energy Bills

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In my inaugural post, I went over why solar makes sense from a financial perspective. It is a sound investment that will provide you at least a 10 percent return on your initial investment for the next 30 years.  Now the question is, “Hey Chris, how do you make money on solar?”

The answer is that solar saves you money through a program called net metering.

To start off this explanation, it is good to review your utility bill.  Your utility bill has in it many line items for supply and delivery broken out into many different costs per kilowatthour (kwh). Kilowatt-hours are measurements of power used by you over a period of time, usually the billing cycle.

The simplest example is that if you leave the room and don’t turn off that lamp.  Say that lamp has a 60-watt bulb and you don’t return to the room to turn it off for two hours. You have just used 120 watt-hours.  We figure this out by taking the wattage of the bulb (60 watts) and multiplying it by the number of hours it was on (two hours):

60 watts X 2 Hours = 120 watt-hours

So what’s a kilowatt-hour?  A kilowatt-hour is 1,000 watt hours.

Are you getting the drift? Your utility charges you by the kilowatt-hour.

Next question: How much am I paying for my electricity?

Answer: Figure out how much you are paying per kilowatt-hour. Take your total electrical portion of the bill (ignore the gas/oil portions), which usually says something to the effect of “total electricity costs,” and divide this number by the number of kilowatt-hours listed on the bill.

So for example, the bill says $100 and the number of kilowatt-hours used that month is 500, then you are paying $0.20 per kilowatt-hour:

$100 / 500 kilowatt-hours = $0.20/kilowatt-hour

Now that you know how much you are paying per kilowatt-hour, you can figure out how much you can save by using solar energy.  But first, let’s go over how solar electricity saves you money.  By installing a solar electric (photovoltaic) system on your roof or in your backyard, you are producing your own electricity.  The electricity being produced is being used right away.  If that lamp is on during the day, then your solar system is powering that lamp.

Any excess power that the system creates during the day that is not being used will be sent back to the utility grid. In this case, your utility meter will (drum roll, please) spin backwards.

I cannot tell you how exciting it is to see the meter spin backwards.  All these years, the utility meter is spinning forward, racking up all these charges that will be sent to you on your bill. Now, it is your turn to declare your independence, create your own power, send it back to the utility and watch the meter spin backwards.

Through this program called “net metering”, the utility commits to buying back the power you create at the same rate that it is charging you for the power.  So during the day, your system produces power, sends the excess power back to the grid, and you receive credit for it.  Then at night, when the system is not producing power, your electricity will come from the utility grid.

You save money by producing your own power and receiving credit from your utility.  As utility prices go up,  you receive that much more money for power you produce.

To quote William Wallace in Braveheart, “Freedom!”

photo: Nico Macdonald

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