Solar Net Metering

The Homeowner’s Guide to Solar Net Metering: NYC and Long Island

Plenty of homeowners considering solar power have asked their sales rep, “What happens when the sun goes down?”

This is an understandable question. After all, one of the historic shortcomings of solar power is that it’s an intermittent power source. Solar panels produce tremendous amounts of energy when the sun is shining, but they don’t produce anything at night.

The short answer, of course, is that most solar systems don’t directly power the home. Solar panels, by default, will backfeed the electric grid. The electric utility will install a special meter called a “net meter” which is capable of measuring the energy going into your home versus the energy coming out of your solar system.

In the solar industry, we also use “net meter” as a verb. So if you’re looking into solar energy, and you wonder, “What happens to my excess energy?” Or, “What happens if I use more than I produce?” The answer to both of those questions comes back to the same concept: net metering.

What is Net Metering?

“Net metering” is how an electric utility tracks the net usage of a property equipped with a renewable energy system. This concept applies to residential solar customers, commercial solar farms, community solar, wind farms — any interconnection with a give-and-take relationship with the utility will have a net metering arrangement, which is either set by law or by policy, and is standard within its class.

In other words, all residential solar systems within a territory will have the same net metering arrangement. All commercial solar systems within a territory will have their arrangement as well. A residential net metering policy might differ from a commercial net metering policy. This article will focus on net metering for residential solar systems — in other words, your home.

Quite a few people don’t really think about their electric meter — they simply pay the bill when it comes. So let’s start with the basics.

Where is my Meter, and What Does It Do?

Your electric meter is easy to find. It’s most likely outside of your house. If you go outside, take a look at where the electric wires meet your house. They’ll connect via service wire to the weatherhead, which connects to a service mast (usually encased in PVC or steel), which then connects to a metal box called the meter pan. Right there, in the middle of your meter pan, is the electric utility meter.

For a long time, all electric meters had one job: keep track of the electricity flowing into the home. That way, at the end of the billing cycle, the utility would know how much you used and they’d send you a bill. After all, electricity is an energy carrier; many utilities burn coal or natural gas to produce it and those fossil fuels cost money. Here in New York State, we have quite a bit of hydropower and some nuclear power, too.)It also costs money to maintain the grid and pay the utility employees. The more you use, the more you pay.

With renewable energy systems on the rise, traditional electric meters are being replaced. In the past, electric meters had analog dials (these meters were encased in a tempered glass bubble to keep the dials safe). Those meters are gradually being replaced with digital smart meters. These meters can be remotely read, so the utility meter readers don’t need to worry about locked gates or barking dogs.

Smart meters can also track electricity moving in two directions — to the house, which is traditional, and from the house, which is new. Again, renewable energy systems by default backfeed the electric grid. When you use electricity, the meter moves forward like normal. When you produce electricity, the meter moves backwards.

So with a solar system and a smart meter, the number on the meter will fluctuate. At the end of the billing cycle, the meter reader will check how the number compares to the number from the previous cycle. In other words, they’ll check your net consumption, hence the phrase “net meter.”

What’s My Utility?

You can read this on the meter itself. If you live on Long Island, the meter will say LIPA. That stands for Long Island Power Authority. There’s a history behind this, but suffice to say they’re a public entity, and they’ve contracted the Public Service Enterprise Group on Long Island, or PSEG LI, to service Long Island’s electrical needs.

In New York City, your utility is the Consolidated Edison Company of New York, or Con Ed. They service NYC and Westchester County with electricity, gas, and steam services. They’re a private entity. In any case, that’s why you get gas bills and electric bills from the same company.

Solar systems produce electricity, and not natural gas, so this type of net metering will not affect your gas bill. It only affects your electricity bill.

How Does Net Metering Work?

Electricity is measured in different units depending on how much is being moved. The smallest unit is a watt-hour. Homes use quite a bit of electricity, so their level of electricity is measured in kilowatt-hours (kWh). Commercial properties and solar farms would be measured in megawatt-hours (MWh), and so forth.

If you take a look at your electric bill, and search around, it will tell you how much electricity you used in kilowatt-hours. They will also tell you the rate you pay for each kilowatt-hour within certain thresholds. Whenever you turn on the lights, watch TV, plug in devices, and so on, you’re drawing kilowatt-hours from the electric grid; your electric meter measures them and you’ll be sent a bill at the end of the billing cycle (which is usually around a month long).

The electricity produced by a residential solar system is also measured in kilowatt-hours. When the sun is shining on a clear day, your solar panels will produce quite a bit more than you’re using. The digital net meter will monitor all the kilowatt-hours going into the grid and the numbers will count backwards. You probably aren’t using this energy because you’re at work or at school. The utility gives you a credit for these kilowatt-hours.

When you come home from school or work, and start using the appliances in the evening, the net meter will count forwards again. Your kilowatt-hour usage is measured against the kilowatt-hours your system produced during the daytime.

The utility doesn’t measure this on a daily basis. They’ll still look at your utility at the end of the billing cycle. They’ll check your net electrical usage (kilowatt-hours going out versus kilowatt-hours coming in) and they’ll send you the appropriate bill.

What Happens if I Produce More than I Use?

It’s possible that your system will have produced more electricity by the end of the billing cycle than what you used. You won’t lose this energy; in fact, both PSEG LI and Con Edison will continue counting your kilowatt-hour credits in your favor against your usage in the next billing cycle.

For example, let’s say in one month, your solar system produced 1,000 kWh. Your household consumption was 800 kWh. Your net consumption was -200 kWh; in other words, your solar system produced an extra 200 kWh more than what you needed that month. Your utility will credit your electricity account those extra kilowatt-hour credits for the next month, if you need them. It will be indicated on your bill as your “energy bank”.

Let’s say the next month your solar system produces another 1,000 kWh. However, your home uses 1,200 kWh. In this case, the utility will include the 200 kWh credit from the previous month. In this case, everything evens out, and they wouldn’t charge you for electricity, because your net consumption was zero.

If you happen to have additional excess electricity produced in the second month as well, you won’t lose the first month’s excess. Both PSEG LI and Con Edison will continue accumulating your kilowatt-hour credits until the end of the year. That’s where they differ — more on that later.

Net metering is especially useful for regions like the northeast, which have four distinct seasons. Solar systems in New York State produce more energy in the spring and summer, on average, than they do in the fall and winter. Net metering allows you to carry your excess power from the “bright” seasons into the “dark” seasons so your year-round average bill remains low.

It’s quite common that people don’t have excess power at all. You’re still being credited for your kilowatt-hour production either way. For example, if your solar system produces 800 kWh, and you use 1,200 kWh, the utilities will bill you for the difference — 400 kWh.

Your electric utility bill will be reduced by your solar system. How much you are paying for your solar system — which might vary depending on whether you’re financing or leasing your system — would depend on your arrangement with your solar contractor. If you’re currently reviewing your options, you might want to review how solar ownership works compared to solar leasing.

Are there Differences in Net Metering Between NYC and Long Island?

Con Edison and PSEG LI treat net metering the same on a month-to-month basis. In other words, your solar system’s kilowatt-hour production is measured against your household’s kilowatt-hour consumption in the same way.

Each utility sets their own rates per kilowatt-hour consumed, so their respective customers don’t pay the exact same charges. For example, if your solar system produced 1,000 kWh and your home used 1,200 kWh in that month, you might owe a different amount depending on where you live. However, if the reverse were true — your solar system produced more than you used — then in both cases, you wouldn’t be charged for electricity. This is because a kilowatt-hour is a unit of measurement, while the price-per-kilowatt-hour is determined separately.

Bear in mind that both utilities charge a basic service fee. This is a daily fee to remain connected to the grid. It’s unavoidable, even if your solar system produces more power than you use year-round. Check your bill for details.

There is an important distinction between Con Edison and PSEG LI. At the end of the billing year, Con Edison will write you a check for the wholesale rate of your kilowatt-hour energy bank (if you have excess energy remaining) plus 6.6%. The wholesale rate will be less than what you normally pay for electricity, but it may help cover the basic service charges. At the end of your billing cycle, your energy bank is returned to zero.

PSEG LI is contracted by LIPA, which is a public entity and isn’t subject to the same regulations as Con Edison. They changed their net metering policy in 2018; now, PSEG LI continues crediting your energy bank for excess solar energy for a 20 year period, after which it’s returned to zero. They no longer write checks, unless your system was registered prior to the policy change.

There are benefits and some drawbacks to both policies, but as mentioned above, each utility uses a blanket net metering policy for all properties within a class (e.g. residential solar) so customers simply must accept the policy for their territory. On the one hand, it’s nice to receive a check at the end of the year; on the other hand, since solar panels can degrade in efficiency over time, it’s nice to have an ongoing energy bank for 20 years. Then again, some customers use up all their solar energy anyway, and simply enjoy their solar systems for the considerable energy savings over time.

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