How NET METERING works?

NET METERING is a way of trading electricity from renewable sources. This would be the reason for the construction of your own RES (renewable energy source). It can be defined as "spinning the meter in both directions".

In many countries it is a common method of financing RES, especially small ones. Together with renewable resources is NET METERING the subject of fierce debate.

History 
NET METERING originated in the USA at the beginning of the 80s, when the owners of small solar and wind power units desired to use the electricity generated at a time other than at the time that it was made​​.Minnesota, as one of the first states to answer the call of manufacturers, has, since 1983, offered all manufacturers up to 40 kW 'creating energy' credit which they could either transfer to the next billing period, or cash in. NET METERING now operates in most of the USA, Canada and Australia. In Europe, NET METERING is expanding slowly, pioneered by Denmark, Italy and Spain. Recently NET MERETING was approved in Slovakia and Poland.

How it works?

The basic principle is simple – the producer (supply owner) has on the roof of his house for example a photovoltaic power unit and simultaneously is connected to the grid. They use both sources, so if the sun shines, they take electricity from photovoltaics and if they need more power or during the night, they take it from the network. If they produce an excess the electricity is feed into the grid, "spinning the meter on the other way" this "performs a virtual storage using the grid". The electricity bill, which the individual manufacturer pays is then calculated by the difference in their production and consumption for any given period. A more precise term, sometimes used, is "net billing".

Local rules for NET METERING are determined by law or regulated by the decree of the local regulator.

The particular form of net metering depends on the agreement between the customer (and also producer of electricity from their own unit), the electricity trader and local utility company. If the monthly consumption is higher than the production of solar unit, the user will pay the standard electricity bill, minus the produced power. If the monthly consumption is the same as the production of solar unit, the user won´t pay for electricity, but the connection fees, distribution fees etc. remain. If the monthly production of solar unit is higher than consumption, the surplus is transferred as a credit to the next month, much like unused minutes with a standard mobile phone contract.

A more complex situation arises with yearly surplus. This is solved differently in different countries, eg .:

  • surplus is paid to the owner of the unit and the new period starts again from zero,
  • surplus is paid to the owner of the unit, but only to a certain limit (eg. 25% of its annual consumption),
  • surplus is transferred to the next period,
  • surplus remains with the distribution company. The owner of the unit won´t pay anything for the electricity, but doesn´t get anything extra and the new billing period starts again from zero.
  • there are other variants but the above are the main solutions.

Similarly, there are many methods to fix the price of electricity produced from RES. For example:

standard retail price – electricity is sent to the grid for the same price as if it was at the time purchased (according to the tariff during peak or off-peak). This charging method is called "time-of-use metering", "TOU".

wholesale market price "market rate net metering" – the distribution company can record what the market price of electricity was at the time when the surplus was sent to the grid.

price fixed by decree – the local regulator provides a fixed price for surplus from NET METERING (this is a fixed purchase price).

price "avoided cost" – the unit owner saves energy costs by producing electricity for the utility companies, which produce power from conventional sources, and therefore the unit owner receives compensation to the amount of these costs.

The best for producers (and least favourable for energy companies) is the sale for the retail price. In particular, photovoltaics power is mostly produced during peak hours, which is also the highest retail electricity price. Other forms of payment are not so advantageous for the producer, the payment is often several times lower than the retail price of the electricity. These payment methods are more favourable for the energy companies..


Benefits
Unlike the guaranteed purchased prices NET METERNIG is used primarily to reduce or to "offset" electricity bills. The aim is therefore to save rather than make a profit and production from renewable energy sources is supposed to compensate for the seasonal variances in annual production and consumption, rather than to cover immediate consumption at any given time of day. These circumstances allow customers to install smaller - and therefore cheaper - units. This would be the reason for the construction of your own RES.
Benefits of NET METERING

  • immediately reduces electricity bills,
  • supports the development of renewable energy and energy savings at the level of households and firms,
  • extends the period of use of electricity from its own resources without needing self-storage,
  • to sell electricity to the grid it is not necessary to install an additional meter,
  • it's administratively simple,
  • reduces the risk of investment,
  • requires little or no support from the government,
  • reduces the cost of the acquisition of self-sourced electricity

Virtual (group) NET METERING
Benefits of NET METERING are not only for single owners of RES. A power plant can be owned collectively by a group of people who create a cooperative or corporation. This means that a group of customers connected to the grid agree to pool their resources to invest in the construction of renewable energy sources which can be operated in modules of NET METERING. The amount of electricity produced by the RES is deducted from electricity bills of the RES investors, depending on the size of their investment. Unlike standard NET MERETING the owners of the plant doesn´t have to physically remove power from the RES, NET METERING is only virtual. The advantage of this method is again to lower the cost of acquisition of self-sourced electricity. Even if an individual can´t afford his own RES, or doesn´t have an appropriate roof, he may join with other people to co-finance the RES at a suitable location. Acquisition costs are much lower than if they had to finance the RES themselves. The investment means savings on his electricity bill.

Disadvantages
Not all actors but Net Metering advantageous. In the US, most often heard against energy companies (abroad generally called "utility"), which lose profits from the sale of electricity. First, selling less electricity and, secondly, there must from customers to purchase their excess electricity. With falling revenues while reducing the ability of energy companies to provide their services and maintain the infrastructure at the appropriate level. To maintain profits must increase distribution fee and other charges, which carry costs Net Metering for customers who still do not use the Net Metering. This, however, further motivate the customer to have purchased alternative sources of electricity, whose price continues to decline. So there is a further reduction in the profits of energy companies and fee increases. Net Metering is in this case support regressive, since actual sources of electricity usually takes people who are doing better financially. Fees course, applies to customers who can not afford their own power and Net Metering utilized.

States address this question usually different kinds of regulation Net Metering. These include capping power sources annually connected via Net Metering, determine the maximum amount redeemed or electricity purchase prices adjustable according to the size of the source.

However, as pointed out by "pro-renewable" organization, the problem is not so much Net Metering itself, as a general increase in the use of renewable energy sources in private ownership. Energy companies, namely does not operate any form of renewable energy sources, if they themselves do not own. However, as shown by studies in California organization Vote Solar (prepared in accordance with the methodology of the California regulator CPUC), if next immediate costs off against other factors, not only energy companies, but also the taxpayers Net Metering eventually earn. I for energy companies is Net Metering (and the associated development of decentralized renewable energy sources) is advantageous at least in terms of reducing losses in the grid, the supply of cheap electricity at peak times or savings in the production of electricity from conventional sources. In terms of state (and hence taxpayers), then decrease the cost of reducing CO2 emissions and develop renewable energy.

General benefits and costs
Benefits
Costs
saving of unused fossil fuels, resulting emission reductions the cost of managing NET METERING
reducing costs in the transmission and distribution system reduction in income for the energy companies that have infrastructure maintenance costs
reduction of electricity losses in the grid  
cost reduction and compliance to CO2 emission obligations and the development of renewable energy  

Net Metering is to support renewable energy sources not only simple, accessible and socially acceptable, but above all effective. The rapid development of private RES and decentralized electricity generation on a large scale begins to make wrinkles energy companies. The problems are so far mainly economic - decentralized renewable sources in conjunction with energy savings begin to significantly reduce the demand for electricity from central sources. This trend is likely to continue, but in the foreseeable future energy sources can not do without central. Through Net Metering this creates additional pressure to find functional solutions coexistence of renewable and conventional sources - not only economic, but also technical.

 

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