HOW CAN I BENEFIT FROM A NET METERING SYSTEM?
ELIMINATE HYDRO BILLS WITH NET METERING

The Ontario Net-Metering program is another great way of using a renewable “green” energy technology to generate your own electricity and reduce your monthly costs. If you’re not interested in a MicroFIT solar system, or want nothing to do with the OPA/IESO, then Net-Metering might be the ideal solution for you. Unlike MicroFIT and FIT, there is no contract. There are far fewer rules too!

The Ontario government has mandated that the electrical providers in the province (the official name for an electrical provider is “LDC” for Local Distribution Company) allow for their customers to offset their own electricity use by generating renewable energy, and this is called Net-Metering.The details differ a little from provider to provider, though by-and-large it works the same way.

Net-Metering systems can be up to 500 kW in size, though for most residential customers a typical system size would be 10 kW or less. The trick with Net-Metering is to size the system in such a way that annual energy production is equal or less to your energy use: You can zero out your electrical bill by producing your own electricity, but you do not get a penny for any additional energy production beyond your own use.

To make life a little easier you can ‘store’ any excess energy in the electrical grid, for later use for up to 12 months. The way it works is that excess energy can be carried forward against future use for up to 1 year. For solar PV this is great! Any excess production in summer can be used up in winter, when there is little sun. As long as you use up all your excess energy credits within a year life is good!

With rising electricity costs, Net Metering is becoming more and more of an attractive option! The more the price of power increases, the more you benefit from having a Net Metering system. Assuming the average standard rate for electricity is currently 12 cents/kWh, you will be earning credits equivalent to 12 cents for every kilowatt hour of electricity sent to the grid. But as the price of power increases, the payback will only get better and better. With a system lasting 35+ years, this may be one of the best investments you ever made! An example below is based on a Solar System installed over 30 years ago.

 

Array Size(kW)	Annual Energy(kWh)	Total Price(CAD)	kWh Cost(cent/kWh)
8 kW	9,400	$26,700+HST	14.0
9 kW	10,575	$29,770+HST	13.9
10 kW	11,750	$31,995+HST	13.5 100% Solar finance available

Note: The cost-per-kWh number assumes 25-year life of the system, and adds 1.2 ct/kWh for maintenance (such as replacing the inverter once during this time). The PV array is south facing at a 35 – 45 degree pitch.

With Net-Metering, each kWh your solar array produces offsets a kWh you would otherwise have to buy from your electrical company. So it offsets the cost of that kWh. For most people that cost is around 18.5 ct/kWh at the time this was written (just take your last electrical bill, and divide the total cost including tax etc. by the total kWh’s that were sold to you to find your cost per kWh). Since solar PV is very predictable in what it produces over a long time period, it is easy to calculate how long it would take to generate enough electricity to offset the cost of the system. That is the (simple) payback time.

Payback Time for Net-Metering
The Ontario law that governs Net-Metering also describes how the utilities have to calculate billing, and unfortunately it is about as clear as a sooth-sayer reading the coffee grinds. The long-and-short is that any fixed monthly fees the utility charges will still be there, they cannot be offset through Net-Metering. At the time this was written fixed costs are around $18 for those in “high density” areas, while people in the boonies pay around $34 per month. Using those monthly fees the table to the right shows how long it takes at today’s 18.5 ct/kWh effective rate to earn back the investment in a Net-Metering system.

While those payback times do not look too impressive there is more to the story: Ontario electricity rates are set to increase drastically over the coming years! The 2013 Ontario Energy Plan calls for a 42% jump in 5 years. The expectation at this time is for at least 30% over the next 3 years, and that would put the rate that Net-Metering offsets your bill at 24 ct/kWh by the end of 2017. Using that number the payback time gets much more interesting, as shown in the table to the right!

That is only the tip of the iceberg though: Electricity prices will continue to rise as time goes by, and that will make your Net-Metering system look better and better. Because of that actual payback time will almost certainly be shorter than the numbers listed here. It is hard to give accurate numbers beyond those in the table because so many variables are either unknown at this time, or they differ from case to case.

Array Size(kW)	Payback @ 18.5 ct/kWh	Payback @ 24 ct/kWh
8 kW	19 years	14 years
9 kW	19 years	14 years
10 kW	18 years	13 years

Note: Simple payback time in years for a Net­Metering system with $18/month in fixed fees.

 

It is reasonable to assume that your system will still be working after 40-50 years and anything beyond a conservative 13yr payback period will provide free Hydro for your home or business.

Benefits of Net Metering (Spinning the meter backwards)

Net metering is a program, offered by some electrical utility companies, that allows you, the solar power system owner, to connect your system to the utility company’s system and feed any excess solar energy into the utility distribution system.

1. Financial Credit for Extra Solar Power Produced

You will receive a credit for your excess solar power at the utility’s going rate for electricity. When there is not enough electricity from the sun, the utility company will supply your electrical needs. You will pay only for the difference between the power supplied by the utility and the power produced by the solar panels. Typically, extra solar power that you produce can be banked for up to a year at which point the utility company has some arrangement for handling any excess. For net metering, a bilateral meter is installed that records the solar power you have produced and fed back to the grid as well as the power you have used from the utility. When you produce more than you use, you are effectively “spinning the meter backwards”.

2. No Battery Storage System Needed

With net metering the utility company essentially “stores” your extra solar power for times when you don’t have enough. This means that you don’t really need an expensive battery bank, unless you want a small battery backup system for power outages. When you have a grid-tied system like this your power will go down when the utility power goes down. This is for safety reasons, to protect the repair crew who are not expecting any power generated in the lines when they go out to repair the problem.

3. No Backup Generator for when Solar Power is Not Available

Another expensive part of early solar power systems that you won’t need is the backup generator. Generators are expensive, noisy and need fuel (gasoline, diesel, natural gas or propane). The electrical utility is there as your backup when solar power is not available.

4. Seasonal Storage – Solar Power Produced in Summer Saves on Winter Costs

One of the frustrations of off-grid systems which are not connected to the utility is that the extra power in the summer months can’t be stored for the winter. Battery banks typically store power for only 3-5 days. When the batteries are full there is no way to store the extra energy. But, with net metering, you are feeding back your power over the summer and you get credited for it in the winter – now you have seasonal storage.

5. No Maintenance – Solar Power Without Hassles

With net metering, we have now eliminated the batteries and the backup generator – the two components of a solar power system that require maintenance and have the shortest lifetimes. The only components you need for a grid-tied net metering system is the solar panels, which produce the power, and an inverter that converts the DC power from the solar panels to the standard AC power produced by the utility. Neither of these components requires maintenance. The solar panels, which have a 25 year warranty, are made from a semiconductor material and usually protected by a tempered glass front. The inverters, some of which also have 25 year warranties, are solid state and also maintenance free.

A grid-tied net metering system gives you the advantages of producing your own clean renewable energy without maintenance hassles and with very durable components.

Net Metering Cost

The average Family Home in Ontario will be completely powered by a 10kw system. Most clients take advantage of 100% finance under the program, thereby negating any need to take money from their own pocket. The government Program is sufficient to pay for the system and provide a reasonable income over and above paying for the system. After the system is paid for using income from the program to pay the finance, there is the ability to ‘Opt Out’ of the program and use the solar system to power your home thereby negating all future hydro bills. Savings of over $200,000 can be achieved over 40 Years to the home owner, and significant Carbon Emission benefits to the environment through the generation of clean energy.