“Net Metering” vs “Buy-All-Sell-All” How North Carolina Treats Residential Solar Installations
Updated
It’s been over a year since I first wrote this blog post about “net-metering” vs “buy-all-sell-all” and it’s time for an update.
There is no national standard yet when it comes to small generators of renewable energy, i.e. wind and solar, which prompted this original post a while back. To further complicate matters, how these systems are treated varies not only state to state, but even within a state, variations exist between energy service providers. To get the installation that’s best for you, it’s important that your installer look at your particular situation and determine the most advantageous set up.
Let’s start with a few upfront assumptions: 1) since I’m writing from central North Carolina, most of our customers are interested in solar, but how our utilities treat wind powered generators is very similar 2) we are talking about grid-tied systems, not battery based systems, see my other post about when it makes sense to use a battery based system.
Next, before we talk about the difference between “net-metering” and “buy-all-sell-all” you need to first understand that renewable energy production is made up of two parts, each attributed a financial value: 1) the actual electrons produced, measured in kWh and 2) the “clean energy credits” assigned to these electrons, called “RECs” or “Renewable Energy Credits”. While it differs state to state, most states have something called a Renewable Energy Portfolio Standard, which mandates that electric utilities produce some portion of the electricity they sell to customers from non-polluting, renewable energy sources. These mandates vary in each state and typically increase over time. Utilities have two options to meet these mandates, they can either produce clean energy themselves through large scale wind or solar farms, or they can purchase RECs produced by many small generators such as homeowners and small businesses. These RECs can be traded and purchased on an exchange and the price for RECs varies widely depending on where you live and the applicable regulations governing the sale of RECs in your state.
So now for some definitions:
Buy-all-sell-all means, you buy all of your electricity from the grid and you sell all of your electricity to the grid – which means you have two meters, one to measure what you produce (sell) and another to measure what you consume (buy). While the utilities sell you power at retail prices (anywhere from $0.11/kWh to $0.15/kWh) they are only required to purchase it from you at wholesale prices (about $0.07/kWh). You get a bill from your utility for the power you consume and you get a check from the utility for the power you produce.
Net metering is used with an electric meter that turns both ways, forward (consumption) and backwards (production) and where you are billed or compensated based on whether you use more or less than you produce. Your financial incentive here is “avoided costs”. A special meter is required for this, in order to track production vs consumption. In some cases this can be advantageous, as you are able to “sell” your power at the higher retail price since you are essentially building up “power credits” by “rolling back” the meter during the day.
Depending on your utility, you may also be able to sell the RECs to the utility on top of “avoided cost” rates, but this varies utility by utility. Unless the utility is willing to buy back the RECs, your only other option in North Carolina currently is to sell your RECs to NC Green Power.
While they last, NC Green Power provides incentives to North Carolina residents who sell their power back to the utilities, in the form of payments to the homeowner per kWh generated, above and beyond what the utilities pay you for the actual electrons. Customers combine this amount to the amount paid by the utility and get an average return of approximately $0.17/kWh.
There are many programs in the state depending on the utility and there are many options for customers when it comes to grid-interconnected system. As you can see by the brief explanation above, it pays to ask questions and to have an installer who understands the differences between them. If you would like to have someone from Sundogs Solutions talk to you about your solar options you can give us a call or send us an email.
The current economics of Solar in our state are very good. With the right combination of tax credits, the steadily falling price of solar, the incentives provided by NC Green Power and the looming increases in electric rates, there has never been a better time to install solar on your home. For small businesses, the economics are even more favorable as these systems can be depreciate as well. Payback on systems can be as low as 5 years for small businesses and average about 8 years for residential customers, while most systems are warrantied to produce a minimum of 80% of they initial production 20 years later. With the rising price of power and the looming threat of climate change, solar makes a lot of sense.
