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What is Net Metering and How Does It Work in North Carolina?

Updated: Mar 31



Utility Options in North Carolina

In North Carolina, you seemingly have a lot of options for home electricity sources, but there are really only three possibilities:

  1. Producing your own energy, but, in North Carolina, local zoning laws for non-agricultural property require connections, so that your home solar system must be connected to the electrical grid. We will install industry leading panels and microinverters, the top tier solar products available for efficient and cost-effective residential energy production. Connected to the grid, you will make use of the net metering program offered by your utility provider.

  2. Cooperatives (based on availability in your area): EnergyUnited, City of Concord, and Huntersville's ElectriCities are among 26 local non-profit cooperatives, part of North Carolina Electric Cooperatives, originating from farmers and rural community leaders in the 1940s who campaigned door-to-door to form a member-owned utility. Each offers a net metering program, which I will describe below.

  3. Duke Energy: the juggernaut, Duke Energy is the second largest utility company in the nation, currently valued at more than $80 billion. In October, North Carolina passed a state energy law that gives Duke Energy control over all power plants in the state going forward, as well as permission to request multi-year rate increases at each hearing with regulators, rather than submitting annually for review. Suffice to say, this publicly traded company monopolizes energy policy in North Carolina. Although the power wielded by Duke in North Carolina (pun not intended) can impact the flexibility of the cooperatives, the company offers the simplest net metering program.

Because any residential energy production you own must be connected to the grid, each of the cooperatives and Duke Energy offer interconnection services that allow you produce your own energy, use energy from the grid when you need it, and to "sell" your overproduction to the energy company, which is then sold to other homeowners and businesses. This process is called net metering.


Net Metering Overview

In the most basic sense, net metering is the "net" energy you use from your solar system and the grid, and the costs related. The extra energy your solar panels produce during the day goes through the grid to other homes and businesses, and is tracked both by your system and by the utility company as a credit on your account. When your usage is greater than your production (such as during the summer months, when usage typically goes up for every home), or at night (when your panels produce no energy), you use those account credits to "pay" for the energy you use from the grid. This means your meter is tracking your usage as both a positive (traditional: using energy from the grid) and a negative (sending energy from your solar panels to the grid for credit). The net result is the net metering program.




How Net Metering Works in North Carolina

Let's go back to your energy sources to see how it would work for your home:

  1. Solar: we typically design your solar system to match your annual usage from the previous year, an "offset" goal of 100% (offset=replacing your current power bill with solar production). If you look at your current power bill, you'll typically find a graph that shows your usage fluctuate throughout the year, based on how you use electricity. If you have gas appliances, for instance, your gas bill is high in the winter, but your power bill is low; and then vice versa in the summer. By matching your annual usage with solar, we will set up your home to over produce energy in the winter and underproduce in the summer by matching your annual usage. In the winter, your over-production will build credits with the utility company, which you will then spend in the summertime when the solar production cannot keep up with your increased usage, but the annual production average should equal your annual usage average. The app provided with your microinverters will track how much energy is going to the grid, so you know what credits you should see on your power bill. Your monthly power bill will now show your credits and a "connection fee" (see below for each utility).

  2. NC Cooperatives: state cooperatives such as EnergyUnited offer three options. Net metering is available with a structured connection fee and cap at 10kW systems (current rate schedule in this link). Newer homes benefit the most, given that energy efficient construction and historically low usage result in 100% offset below the 10kW mark. Credits roll over, so there is some value in an oversized system that produces more than 100% usage in order to build credits for future increased usage. The other two options are the "purchased power program" ("buy all, sell all") and "own use" options described in the link above, but these are not net metering programs.

  3. Duke Energy: Duke offers the simplest net metering program, but credits do not renew, and so must be accumulated again each year. This makes it counterproductive to "overproduce", as credits from extra production would be lost, a waste of your money. Duke charges all customers a connection fee, so you should be able to find it on your current power bill. Once you switch to solar, your monthly power bill will show your accumulated credits, that connection fee, and any energy you used from the grid that was not offset by credits.

Interconnection Agreement

In order for net metering to work, your solar system must be connected to the grid. Your system installed by our crew consists of top tier panels connected to the microinverter system, which converts the DC energy produced by the panels into AC energy for your home. Excess energy flows to the grid, tracked by your meter and an app.


The utility company will replace your meter to track the two-way flow of electricity, and will require your solar array installers to set up the system according to their safety regulations mandated by the Interconnection Agreement. The utility company will also require you, the homeowner, to provide specific personal liability coverage in your homeowners insurance policy, in case someone is harmed by an incorrectly installed system.


For this reason, a partnership should exist between your solar installation company and the utility company, to ensure the solar installation company takes on the liability of proper installation, and has been trained on the specific requirements of the connection by the utility company. The utility company will require the homeowner to sign the interconnection agreement, and will inspect the system before connecting it to the grid, but proper installation is key to proper safety and release of liability.


FAQ

  • Why only 100%? Under net metering credit exchange, if your system produces more than you use, you are building a "bank" of credits you can never use. Under cooperatives, this may be useful for future increases, but, under Duke Energy, unused credits are lost every year. Be sure to question your installation company if the design is more than 110% offset, as this may be a waste of your money.

  • What happens if the power goes out? Utility companies shut down the grid for areas in need of repair, so your solar system will also be shut down in order to prevent a back flow of energy into the grid, which would endanger utility workers. If the grid goes down, your solar system also goes down.

  • What about house batteries? Generally speaking, batteries are not necessary under a net metering system, because credits act as your battery. In other words, you do not need to store excess energy for later use, because the grid does it for you. Batteries can be useful as a backup when the power goes out, but batteries tend to offer either limited storage at a modest cost (meaning they would only operate for a few hours in an outage) or relevant storage for a high cost (meaning you would pay tens of thousands of dollars for something you may never need). There are a number of batteries on the market, and improvements and options are quickly becoming available, so the answer to this question changes constantly. Also, keep in mind my response is focused on the Charlotte metro area, where the grid system is reliable, and outages are not common.

  • What about a generator? As a back up for power outages, this is the most reliable and economically viable solution for most homeowners. Our solar arrays offer connection to the system, so a homeowner can hire an electrician to connect a generator to the system to offer power when the grid goes down, eliminating the necessity to plug appliances directly into the generator. Generators are more affordable than batteries, and merely need to be serviced annually to ensure proper performance.

  • Will I pay a power bill after I purchase solar? Yes, but results vary. With 100% offset, your solar panel production will match your current annual usage in order to displace your current utility bill with solar. That being said, the system must be installed in the winter or spring in order to build enough credits to offset usage the following summer, or there will be some level of billing from the utility company to cover the difference. If your annual usage increases after the design has been completed, your design is based on old information, and you will receive a bill from the utility company for the additional usage. And finally, you will have a monthly connection fee from your utility company, a charge that everyone must pay for connecting to the grid. The rate of the connection fee is set by the utility company.

I hope this is helpful. If you have any questions about net metering or solar panels for your home, feel free to contact me, I'm here to help!


Jamie Duncan is a proud solar consultant operating in the Lake Norman/Charlotte area of North Carolina. Please see link for all contact information and Calendly connection to learn more or set up a virtual or in-person appointment to discuss solar for your home.





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