Net Metering Explained

What is net metering?

Net metering, also known as net energy metering, or NEM, is a solar incentive that allows utility customers with solar power systems to store energy in the electric grid. When their solar power system produces more electricity than they need, the excess energy is sent to the grid in exchange for credits. At night or other times when solar panels are under-producing, energy is pulled from the grid and the credits are used to offset the costs of that energy.

Net metering is a financial benefit of installing a solar power system that allows you to save money on energy costs by selling excess energy to the utility company and drawing on that excess energy at a later date when your system isn’t producing as much electricity. Net metering is just one of the benefits of going solar. You can learn more about the Benefits of Solar here.

Net Metering and Your Solar Power System

When you work with Star Solar Specialists to design your solar power system, we will calculate the size of a system needed to meet your home’s electricity use for the entire year. The amount of electricity your solar panels produce will vary throughout the year. Net metering can help you account for these differences by crediting you for the excess electricity your panels produce so you can use it later. Current net metering policies in Indiana and Kentucky allow for excess energy to be sold to utility companies at the same price customers pay. However, there are limits to these policies and changes on the horizon.

Net Metering in Indiana

Net Metering in Indiana

Customers with solar power systems installed before December 31, 2017, will receive the full retail credit for their excess electricity production until 2047. This means you get a 1-to-1 credit for the electricity you send to the grid at the same price that you purchase it from your utility company.

However, SB 309 passed in 2017 changed Indiana’s net metering rules for systems installed after January 1, 2018. New net metered systems are eligible to receive the full retail rate net metering. The current full retail net metering credit will be available for systems installed after January 1, 2018 until 2032.That means that Indiana solar power customers can sell excess energy to electric utilities for the same price they pay for the next 12 years.

Net Metering in Kentucky

Kentucky’s current net metering policy allows customers to be grandfathered in for the full retail rate for 25 years from the date that their solar power system was brought online. In 2019, at the request of the electric utilities, the Kentucky General Assembly passed SB 100 requiring the Kentucky Public Service Commission to determine the net metering rates at which residential solar customers are compensated. The solar industry protested, arguing that newer rates  would unfairly benefit the utility companies and hurt the burgeoning solar industry in Kentucky.

While it looked as if the current policy would expire December 31, 2019 with new rates being assigned to future solar power customers, the deadline has been pushed back while legislation regulating net metering remains in limbo.

Representative Jim DuPlessis, R-Elizabethtown, introduced House Bill 323 proposing a 10-year delay in the controversial new rules set by SB 100 for residential solar panel owners in Kentucky who want to sell their excess energy to utility companies. Under HB 323, anyone who has solar panels installed by December 31, 2024, could operate under current net metering rules, which allow solar customers to sell excess energy to electric utilities for the same price they pay when they buy energy. The bill would extend the current net metering rates for solar customers through the end of 2029.

Net Metering in Kentucky

JUNE 2020 UPDATE FOR LOUISVILLE GAS & ELECTRIC CUSTOMERS:

Due to Coronavirus COVID-19 closures and the shortened 2020 legislative session in Kentucky, LG&E has not pursued changes to its net metering policy at this point. This means that at least through the end of 2020, LG&E customers who install solar power systems will be grandfathered in for the full retail rate for 25 years from the date that their solar power system was brought online.

Extending Net Metering Policy

Extending current net metering policies can boost the solar industry by stabilizing rates for customers. This makes investing in solar power more appealing to homeowners by allowing them to lock in the costs and benefits of adding a solar power system for a certain number of years.

Utility providers are fighting to pay customers less for the excess energy they provide to the grid and are spending millions lobbying against federal and state tax incentives for solar. The utility companies want to maintain their monopoly by limiting access to solar power installations. Net metering is one way of balancing the scales a bit, especially in areas where homeowners are required by law to be tied to the grid. 

Gain the Full Benefit of Net Metering

While there will always be benefits to adding a solar power system to your home, the full net metering incentive won’t always be available. If you’ve been considering adding a solar power system to your home, act now to gain the maximum financial benefit! Get started today by requesting a free solar power estimate below!

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