How Net Metering Works


Which States Allow Net Metering?

Under a federal law called the Public Utility Regulatory Policies Act (PURPA), utilities must allow homes that produce their own energy to connect to the energy grid; the companies must buy any excess power homes or businesses produce.

Forty-two states and the District of Columbia have gone beyond that to allow net metering. In 2007, the number of people in net metering programs increased by 45 percent, to 48,820. California has the largest number of net metering customers, with 72 percent of the national total [source: Energy Information Administration].

Although most states allow net metering, policies and requirements vary from state to state. An organization called Network for New Energy Choices has graded states on their net metering policies. They awarded top grades to states that provide incentives to homes and businesses that install renewable energy systems, provide credit for sending excess energy into the grid, and reduce bureaucracy (red tape and fees).

In their 2007 report, "Freeing the Grid," the organization gave top marks to states like Arizona, Illinois, Florida, Massachusetts, Oregon, Utah and Vermont. Massachusetts has one of the most progressive policies in the country, thanks to its 2008 Green Communities Act, which gives consumers incentives for installing solar and other renewable energy systems. However, 28 states earned Ds or Fs because their rules were so restrictive that they make it almost impossible for the average homeowner to participate.

Often legislation gets stalled because of resistance from the utility companies. In June 2007, Texas signed a bill into law that called for net metering to go into effect "as rapidly as possible" [source: Fast Company]. But when the utilities protested, legislators gave in and the law was compromised.

Do you know if your state allows net metering? Check out this map of net metering programs by state, or go to the next page and learn more.

Related HowStuffWorks Articles

More Great Links

Sources

  • American Wind Energy Association. "What are 'Net Billing' & 'Net Metering?'" http://www.awea.org/faq/netbdef.html
  • Energy Information Administration. "Green Pricing and Net Metering Programs." April 2009. http://www.eia.doe.gov/cneaf/solar.renewables/page/greenprice/green_pricing.html
  • Kamenetz, Anya. "Why the Microgrid Could be the Answer to Our Energy Crisis." Fast Company.com. July 1, 2009. http://www.fastcompany.com/magazine/137/beyond-the-grid.html
  • Livingston, Doug and Scott Hollis. "Simpler Solar Power." Mother Earth News, June/July 2005. Issue 210, pgs. 41-45.
  • Network for New Energy Choices. "What is Net Metering?" http://www.newenergychoices.org/index.php?page=nm07_NM&sd=nm
  • SERC Online. "Net Metering." http:/www.serconline.org/netmetering/index.html
  • U.S. Department of Energy. "Net Metering Policies." http://apps3.eere.energy.gov/greenpower/markets/netmetering.shtml
  • U.S. Department of Energy - Energy Efficiency and Renewable Energy. "PV Systems and Net Metering." http://www1.eere.energy.gov/solar/printable_versions/net_metering.html

More to Explore