A Guide to Solar Billing Structures

How does going solar effect your energy bill? Here’s a breakdown of the most common utility billing structures for solar customers.

Utilities have several options for how to bill customers who install solar panels. Sometimes it can be hard to decipher what they mean and how they work. We’re here to help.

Net Metering

Among the most favorable billing structures for homeowners with solar panels is net metering.  Thirty-eight states, including California, have laws that mandate net metering for certain utilities. 

When a solar system is the most productive–usually the afternoon on a sunny day– also happens to be when a lot of people are not using much electricity because they are at work and school. Even when people are in their homes during the day – as has been the case for many this year – systems can still produce excess power. That excess energy is sent back to the grid and distributed to other homes. 

To compensate you for that energy, your utility gives you credits for the excess energy you produce. Those credits offset the energy that you use at night and during the fall and winter months when your solar panels aren’t as productive.

Net metering credits can be reset annually or monthly. With some utilities you completely lose any excess credits, while others allow you to carry over some of them perpetually. It all depends on the utility and the state law. Our expert energy consultants can help you understand your utility’s policy and design your system accordingly to ensure the most value. 

Net Billing

Net billing creates a market for excess energy by allowing customers to “sell” excess energy to the utility. 

Instead of essentially rolling the electric meter backward when you create excess energy, as in net metering, customers sell the excess energy at a predetermined rate. That rate is called the “avoided cost” and is usually slightly lower than the rate at which a customer purchases power from the utility.

Time of Use

Time of Use is a billing structure that charges customers more for energy at peak times and less at non-peak times. For example, a utility might charge peak pricing for energy consumed from 3-8 on weekdays and non-peak the rest of the week.

For customers, whether they have solar panels or not, that means that heavy use activities like charging electric vehicles or even doing laundry is cheaper at night. Solar installation gives homeowners an advantage when their system produces energy during utility peak demand hours. This advantage can be bolstered with the addition of a home battery, which can charge during peak production hours and be used during peak demand hours to limit the amount of power bought from the utility during the high-cost windows. 

Demand Charges

While not a standalone billing structure, demand charges are a fee some utilities add on to your bill to charge you for a high-peak load. It is usually used for industrial and commercial customers, but can be assessed to homeowners as well

For homeowners with a demand charge associated with their bill, the utility will typically measure the highest usage amount of a billing cycle over a given period and multiply it be a predetermined amount to assess a fee. For example, a utility may look for the highest 15-minute usage period in a month and apply a multiplier to arrive at a fee of $10, which is added to the bill. 

Regardless of the billing structures and policies in effect in your utility, our expert energy consultants can help you determine how to maximize the benefits of going solar. To schedule your consultation, click below:

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