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What is Net Metering?

Updated: Jul 21, 2023

A brief overview of solar energy net metering in Arkansas

Solar net metering Arkansas

If you have looked into solar energy as an alternative for your home, you likely have come across some unfamiliar terms, depending on your prior knowledge of solar. Terms such as “photovoltaic array,” “charge controller,” and “inverter” are all key terms and components of solar that you’ll want to become familiar with, at least on a basic level, if you are considering solar for your site. New Farm Solar technicians are happy to help explain these components because choosing the right system can be complicated. One essential term to understand concerning solar energy is called net metering. Net metering is a money-saving option with solar systems that are “grid-tied,” meaning your solar energy is blending with the power utility’s energy. The customer stays connected to the grid while primarily utilizing their solar array for their energy needs.

So how does it work?

During solar production, electricity generated from the panels flows to power the home. During sunny, peak-production periods, there may be excess energy created. This surplus energy needs a place to go. This is where the advantage of net metering comes into play. Any extra energy produced goes back through the special meter provided by your utility company. This meter runs both forward and backward. The excess solar energy that is fed back to the utility’s power grid is counted as reverse flow measured in kWh (kilowatt-hour) credits. These accumulated reverse flow credits are applied to the customer’s account at the end of each billing cycle. They are applied at a one-to-one kWh ratio, not based on the cost per kWh. These credits accrue during months that the solar energy exceeds the customer’s energy consumption, and they are then applied to the customer’s bill during months of high usage (rolling over month-to-month). At night, when there isn't solar energy generated, surplus credits accumulated will be utilized as the grid runs the home. The whole idea of net metering is that solar energy production offsets the cost of the customer’s kWh usage on the electric bill, keeping money in the customer’s pocket.

Net metering customer in Arkansas with solar array by New Farm Solar

Will my utility bill be zero?

One cost net metering will not offset is the grid connection fee that is automatically charged to the customer by the utility for having electric service in place at their home. Every single utility customer will see this line item on their bill. These connection fees will vary with different utility companies, but it is usually a small monthly fee, anywhere from $15 to $25. Aside from this fee, a properly sized solar array will generally offset your usage.

How long can credits be rolled over?

In Arkansas, after two years, the customer has the option to sell their excess kWh to the utility at avoided cost (roughly 2 cents per kWh), or the customer can continue to hold on to the credits. Each state has different policies, and each utility company may have differing rules. Arkansas has a great net metering program.

Meter Aggregation

Another fantastic option available with net metering and grid-tied solar systems is meter aggregation. This means that a home, business, or farm may have multiple electric meters or building locations for which they pay for electricity under one bill and account name. One of the customer’s buildings may be very well-suited to a photovoltaic system, with plenty of sunlight exposure, while another building isn’t ideal. It could be that the building is shaded with mature trees that the owner doesn’t want to remove. By placing a solar system on one building and meter (or mounted on the ground in an area that isn’t being utilized), the energy generated in surplus at that site could be credited to another site (even miles away) and offset kWh usage at a different location. Only one meter can be used as the primary generation meter in an aggregation system. All meters must be under one utility account name.

Meter aggregation can be extremely beneficial for many scenarios. One New Farm Solar customer has nightly cabin rentals in wooded areas, but they have an array mounted in a sunny location that generates a lot of energy. Thanks to meter aggregation, this customer can use those kWh credits from one meter and cover energy consumption needs at multiple cabins.

Net metering solar array on cabin in Arkansas woods installed by New Farm Solar

New Farm Solar prioritizes designing to the unique circumstances of your site. Ensuring your solar array is properly sized will maximize your site potential and save you the most money. We size our systems to offset 100% of a customer's previous 12 months' usage. Give us a call at 1-833-639-3276 to see if net metering or meter aggregation could work for you.

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