One of the advantages of going solar for residential and commercial customers is the opportunity to get paid for the excess energy they generate. Those customers push the electricity they aren’t using back onto the grid and receive a credit from their utility. Those customers are only billed for the “net” energy used each month, hence the reason why it’s called net metering.
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 metering policies have on solar development. This list comes from SEIA’s 2021 top solar states. These rankings come from each state’s number of solar installations in the second quarter of 2021:
- California (32,209 megawatts)
- Texas (12,309 megawatts)
- Florida (7,764 megawatts)
- North Carolina (7,460 megawatts)
- Arizona (5,549 megawatts)
- Nevada (4,245 megawatts)
- New Jersey (3,287 megawatts)
- Massachusetts (3,486 megawatts)
- Virginia (3,444 megawatts)
- Georgia (3,260 megawatts)
A large majority of states and territories have passed net metering laws. There are a handful of states that have some form of compensation for a distributed generation but it is not explicitly labeled as net metering. Three states (Alabama, South Dakota, Tennessee) offer no form of net metering or compensation.
Net metering policies have facilitated the expansion of renewable energy through on-site, also known as distributed, generation. Common distributed generation sources—which are often located at a house, school, or business rather than utility-owned property—include:
- Solar panels
- Natural gas micro-turbines
- Methane digesters
- Small wind power generators
Net metering policies allow distributed generation customers to sell excess electricity to a utility at a retail rate and receive credit on their utility bill. This credit offsets the customer’s electricity consumption during other times of the day or year, which reduces the amount of electricity the customer purchases from a utility.
Increasing numbers of utility customers are using net metering to generate electricity on their property. In 2020, states outside of California made up their largest share of the market in the last decade, led by rapid growth in Florida and Texas. By March 2021, U.S. net metering capacity reached 26,619 MW. This represents an 18.3% increase in capacity compared to March 2020. Residential, commercial, and industrial customers accounted for 58.8%, 33.5%, and 7.7% of net metering capacity, respectively.
State Net Metering Policies
Net metering policies can assist states in meeting their renewable portfolio standards (RPS) or targets since a number of states have specific requirements for distributed generation. While a majority of states and territories have authorized net metering, they have taken differing approaches to policies with variations in capacity limits, eligible technology, net metering credit retention, and renewable energy credit (REC) ownership.
Below you’ll find a list of all Thirty-nine states:
|Connecticut||Nevada||U.S. Virgin Islands|
|Iowa||North Carolina||Washington, D.C.|
|Kansas||North Dakota||West Virginia|
Thirty-nine states, Washington, D.C., and four territories offer net metering, and utilities in two additional states—Idaho and Texas—have voluntarily adopted net metering programs. Seven states—Arizona, Georgia, Hawaii, Indiana, Nevada, Maine, and Mississippi—have statewide distributed generation compensation rules other than net metering. These states’ distributed generation compensation rules do not qualify as net metering because they do not offer full retail rate compensation or because their policies use an alternative compensation structure, such as a “buy-all, sell-all” approach. Additionally, although Minnesota offers conventional net metering, the state has also created a value of solar rate, or tariff, as an alternative to net metering.