Feed-in tariff schemes (FITs) and net metering both present ways for owners of solar panels (or wind turbines) to put excess electricity generated back onto the utility grid. The motivation for these programs is to promote renewable energy by making an investment more affordable for consumers.
There is a certain confusion of the different terms involved in these programs. The goal of this article is to give you a clear picture over what’s going on and how you can use these programs to benefit in your home. We will be covering the following subjects:
- Net Metering
- Feed-In Tariff
- Net and Gross Metering in Australia
- Virtual Net Metering
- No Programs in Place
Net metering is the simplest form and only requires one power meter installed (the device that measures how much electricity you are consuming). A net meter spins backwards once electricity from the solar panels surpasses the consumption of the household, or in other words, you are generating more electricity than you are consuming. This means that you are “selling” electricity back on the grid in terms of lower electricity costs. You are technically not being paid for what you are generating, but rather offsetting other electricity use.
In some cases there are fees and taxes that cannot be offset. There can be certain limitations or caps with net metering. The rules vary from country and state.
In some places net metering are calculated every month, meaning that it is not possible to carry over surplus from one month to another. This is done annually in most places to ensure that people are afraid to generate a surplus in the summer months and size their system accordingly – an absolute necessity for net metering program to work well.
Feed-in tariffs have two separate power meters, the one of which you are already familiar with before you invested in solar, and an extra power meter that is capable of measuring outflow of electricity from your home independently from consuming.
You are not directly using the electricity your solar panels are generating and the system usually feeds directly into the utility grid. Feed-in tariffs enable pricing for electricity consumption and generation to be different.
For every kWh you generate you get paid! FIT-schemes are usually based on a 20-year contract where prices are pre-defined. FIT-schemes are more financially feasible and can even be profitable.
Unlike net metering, FIT-schemes require prior arrangement or notification.
Feed-in tariffs often come with “tariff degreession”, which effectively reduces the earnings per kWh of electricity that is sold to the grid over time. This is an effort to track and encourage technological cost reductions.
The feed-in tariff scheme in Australia is divided into net and gross. Net being similar to what you would call net metering in the other parts of the world and gross being a “true” FIT-scheme where all the electricity that is generated is measured, exported to the grid and paid for.
Like with net metering, an Australian net FIT would only offset the consumer’s energy usage.
Virtual net metering is the same as net metering except that meter is shared between a group of people. This way, for example people that otherwise wouldn’t be able to put solar panels on their roof because their live in an apartment building can now purchase or lease a part of a community owned solar system or a “solar garden”. There are about one dozen virtual net metering systems operating in the U.S. at the time of writing.
This would mean that sending electricity from your solar panels to the grid would be the same as giving it away for free. Energy storage is possible, but this would mean significant additions to the overall system costs.