Before we explore the two other types of solar systems, let’s take a moment to see how a grid-connected system works. Let’s also see how utilities keep track of electrical production and consumption.
Unlike stand-alone systems, grid-connected PV systems have no physical on-site electrical storage capacity. That is, they have no means of storing electricity for later use, for example, at night when the PV modules are inactive. Solar homeowners, however, use the electrical grid as their “storage battery.” That is to say, the electrical grid accepts excess electricity when a solar electric system is producing more electricity than a home is using. Excess electricity that’s transferred onto the grid is used by one’s neighbors. At night, when a system is no longer producing electricity—or during the day when a home requires more electricity than the PV system is producing—electricity is drawn from the grid.
To keep track of this, many utilities simplify matters by installing one electrical meter. It contains a flat disk that runs forward when electricity is being drawn from the grid. Each rotation of the disk represents a certain amount of electricity consumed by a household.
Rotations of the disk are converted to kilowatt hours by the meter.
When electricity is flowing on to the grid, the meter runs backwards subtracting from the amount of electricity your home has consumed previously. The kilowatt-hour reading on the meter decreases.
This simple arrangement is called net metering. What it means to you, the producer and consumer of utility power, is that you are charged for net electrical usage (production of electricity – consumption = net use).
If, at the end of the month, your system has delivered 400 kilowatt hours of electricity to the grid and your household consumed 400 kilowatt hours at night, your cost will be zero — although the utility will very likely charge you a fee (around $10– $20 per month) to read the meter. If your system delivers 800 kilowatt hours of electricity during a month, but only draws 600 kilowatt hours of electrical power from the grid, you won’t be charged for any electricity. But don’t expect a check for the excess you sold to the utility. From the research I’ve done, utilities generally don’t reimburse customers for surpluses. They may credit it to offset future bills when customers consume more electricity than they produce.
As of December 2004, 23 states had net metering laws in place requiring utilities to credit customers for the electricity they deliver to the utilities at the same rate they charge for the electricity they deliver to a home. See the sidebar for a website that will help you determine if the state you live in requires utilities to use net metering.
In states where net metering is not required by law, utilities can make the lives of those with grid-connected PV systems rather difficult. They typically require the installation of two electric meters on houses, one to measure how much electricity is delivered to the grid, and another to determine how much the customer buys from them. This allows the utility to monitor the electricity they sell to the homeowner, for which they charge the full retail price, usually around eight to ten cents per kilowatt hour. The second meter in the system allows the utility to monitor the electricity customers “sell” to them. By law, however, the utility is only required to pay what it costs them to generate electricity, usually only two to three cents per kilowatt hour. In addition, solar home owners will very likely also have to pay for the second meter, and the utility may charge more to read two meters.
To understand how this works, let’s suppose that you consume 400 kilowatt hours of electricity from the grid one month but generate twice as much, 800 kilowatt hours of surplus electricity, that you deliver to the grid.
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