With Net Metering now in place in South Carolina, on-site solar electricity generation can have an immediate and significant impact on your bottom line. The solar energy you produce is sent back to your utility and credited to your electric bill. This credit is received through a billing mechanism called ‘Net Metering.’ Net metering allows the exchange of power produced by your solar installation with your utility, enabling the lower-cost, clean energy produced by your system to significantly reduce your facility’s utility bill….for decades. To learn more about Net Metering, read this blog and its downloadable Q&A Document.
What is net metering and how can it benefit your bottom line? This Q&A is designed to help South Carolina organizations understand how this billing mechanism works for them.
Q: What is Net Metering?
A: Net Metering is a Billing Mechanism that Credits Solar Energy System Owners for the Electricity they add to the Grid.
For example, if a customer has a solar energy system on the facility’s rooftop, it may generate more electricity than the facility uses during daylight hours. If the facility is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the facility’s electricity use exceeds the system’s output. Customers are only billed for their “net” energy use. On average, only 20-40% of a solar energy system’s output ever goes into the grid. Exported solar electricity serves nearby customers’ loads.
Whenever the customer’s solar energy system produces more electricity than is being consumed, the electric meter cumulatively records the amount of the surplus generation in kilowatt-hours (kWh), just as it records consumption. It is usually implemented with a bi-directional meter (as shown above) that separately registers incoming and outgoing energy flows.
At the end of each billing period, the utility bills the customer for net usage:
Net Usage = Electricity Consumed From the Grid – Electricity Production from Solar
If the customer produced a surplus for the period, a energy credit is added to their account. This credit, in kWh, is carried over to future billing periods – effectively “banking” the customer’s surplus production at the full retail rate.
(Demand Charges, measured in kw, are not directly impacted by Net Metering, and potential savings have not been captured in our calculations).
Q: How do I reduce my bill with Net Metering?
A: Net Metering “Nets Out” the Difference Between Energy Generated and Energy Consumed on a Monthly Basis.
In the simplified example below, the electric utility bills shows how Net Metering “nets out” the difference between energy generated and consumed on a monthly basis, although the utility company billing practices may not follow this example exactly. The customer’s monthly carry-over is displayed at the bottom of the front page of the electric bill, though the format may vary from one utility company to another.
Example Net-Metering Billing
Q: Do we get Paid for Excess Generation?
A: If there is Banked Energy Remaining after the 12-Month Period
If there is banked energy remaining after the 12-month period ending with the billing cycle that is complete immediately prior to the end of April, the customer is compensated for the dollar value off that net excess generation by the utility company.
Q: Will We Get a Check or a Bill Credit for our Excess Generation Payment?
A: This Varies.
If the amount is small, it may be applied as a credit toward your account. Your utility may choose to send you a payment regardless of the amount. This compensation is frequently referred to as the “annual true-up,” which should occur during the subsequent billing cycle.
Q: At what Rate are we Compensated for Excess Generation Paid out in April?
A: Compensation is Calculated at the Average Generation or Commodity Portion of Your Rate.
Compensation is calculated at the average generation or commodity portion of your rate for the previous 12 months charged by your utility company or by an electricity supplier (your system will be designed to avoid end of cycle excess generation).
Excess generation will be compensated as follows:
Q: Are there any caps on the system size for net metering?
A: The System may not Exceed 100% of the Eligible Customer’s Estimated Maximum Kilowatt Demand
The electrical energy (kWh) produced on an annual basis by an eligible customer-generator’s generating system may not exceed 100% of the eligible customer’s estimated maximum kilowatt demand.
It is recommended to size systems to meet all or most (e.g. 90%) of a facility’s annual energy usage to maximize the customer’s return on investment through retail electricity rate offsets.
The nameplate capacity of an electric generating system, as described below, used by an eligible customer-generator for net metering may not exceed 1,000kW.
Q: Does Net Metering Apply to Facilities Under Solar Leases?
A: South Carolina Law Permits Third-Party Ownership Structures through Leases
In addition to outright ownership of the clean energy system, South Carolina law permits third-party ownership structures through leases. Third-party ownership is a financing arrangement that allows a net-metering customer to host a renewable system that is owned by a separate investor, who can take advantage of tax benefits. Third-party ownership can be attractive to entities tat lack either initial investment capital to purchase a renewable system, or the desire to own and maintain a system.
Under a third-party financing arrangement, an investor monetizes available incentives, such as tax credits, rebates, and depreciation deductions.
Q: What is Remote Net Metering?
A: The Practice of Combining Multiple Meter Readings from a Single Customer
In several states, net metering ahs evolved to include “Aggregate Net Metering” (“ANM”) – the practice of combining multiple meter readings from a single customer.
Q: Is Remote Net Metering Available in South Carolina?
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