Net Metering Policies in the 10 Most Popular States for Solar
States with generous net metering policies tend to do better in the solar market. Having a good metering agreement makes the ROI of solar higher for homeowners and businesses.
Until home batteries become cheaper, solar will stay grid-tied. Consequently, most solar customers stay connected to the grid. The 10 most popular states for solar prove the impact net metering policies have on solar development.
This list comes from SEIA’s 2020 top solar states. These rankings come from each state’s number of solar installations in the second quarter of 2020.
10. New York
While the net metering policy in New York requires utilities to pay the retail rate for excess solar generation, it will change soon. After January 2021, New York will transition from net metering to a Value of Distributed Energy Resource (VDER) tariff. All customers who install solar before 2021 will have the grandfathered rate for the next 20 years.
While Georgia does have net metering in place, it doesn’t have protections for customers, which means utilities may not be as easy to work with as they are in other states. Currently, solar customers get their net excess generation (NEG) credited to their next bill at the avoided cost rate for solar.
Massachusetts customers who installed their system after September 2016 get market net metering credits for their NEG. These credits equal 60 percent of the retail rate for most solar customers. However, these credits can carry from month to month indefinitely.
7. New Jersey
New Jersey net metering credits the full retail rate for NEG. If the customer still has NEG by the end of the year, the utility writes a check at the avoided cost rate to the customer. All investor-owned utilities have net metering requirements, as well as some municipal and cooperative utilities.
Nevada net-metered customers enter into one of four different tiers of net metering depending on when they add their solar arrays to their homes. These customers receive a guaranteed rate between 95 and 75 percent of the retail rate for 20 years from the installation. As of July 2020, the net metering rate entered the 75 percent tier.
Arizona has three utilities that control most of the electricity in the state. Each offers time-of-use rates instead of net metering.
APS has four time-of-use schedules that solar customers can choose. These rates lock-in for the next 10 years. The most current rate lock equals $0.1045/kWh, only three cents less than the retail rate.
SRP uses time-of-use rates and implements higher monthly flat fees and demand charges, but counters it with low retail rates for customers and energy storage incentives. TEP also offers a 10-year lock-in rate for their time-of-use schedules. The 2019 rate lock equaled $0.964/kWh.
The majority of Texas has a deregulated electricity market. While this allows for competition within the state, it also makes it hard to enforce net metering, which relies on utilities to offer fair compensation for NEG. Some cities, such as San Antonio, still have utilities that control most of the market and they typically have decent net metering programs.
If a Florida resident has an investor-owned utility, they have net metering requirements. These utilities offer the full retail rate credit for all NEG, which gets carried over from month to month. At the end of 12 months, the utility pays the customer the avoided-cost rate for the remaining NEG.
2. North Carolina
North Carolina requires its three largest utilities to offer retail-rate net metering. Customers get the retail rate credited to their bill each month for their NEG. At the beginning of summer, any NEG cancels out without compensation, and the customer starts over.
California has also switched to a time-of-use metering system. However, the way it’s managed is a bit different.
Each month customers pay the netted fee for the electricity they pulled off the grid, a monthly connection fee, and a non-bypassable charge of two cents per kWh of solar power sent to the grid that month. Then at the end of the year, the customer receives a true-up bill, which determines whether they produced more, less, or just enough solar power. If the system generated more then used that year, the customer receives three to four cents per kWh of NEG.