Have you ever wondered how utility companies track how much solar energy is going back to the grid? Well the answer lies in a handy device known as a net meter. The net meter tracks your unused kWh by measuring the excess energy being sent back to the grid.
When your solar panels are producing energy, and you happen to be on your computer, the energy flows straight from your roof to your processor. But when your panels are producing more electricity than your building needs to run, the excess is sent back to the grid & your net meter spins backwards.
For every kWh sent back to the grid, the utility company gives you a one-to-one credit. This makes calculating the payback of your system easier and maximizes your savings. Not to mention, you won’t have to time your energy consumption to coincide with your solar system’s production.
However, Louisiana utility companies have a net metering cap. Why?
The Louisiana Public Service Commission arbitrarily set a cap on retail-rate net metering for Louisiana utility companies at 0.5% of their customer base.
This cap greatly limits the number of Louisianans that can receive net meters for their solar systems. According to the Louisiana Solar Industry Association, Louisiana’s threshold is one of the lowest in the country; 89% of states have a cap larger than our own.
What happens when the utilities reach the cap?
Once a utility has reached the 0.5% cap, they are no longer required to accept any more net metering applications. Additionally, with no way to monitor the excess energy flowing back onto the grid, they are not required to issue the one-to-one payback to grid-tied solar customers.
As we mentioned above, only what gets sent back to the grid is captured by the net meter for the one-to-one credit. To put some numbers behind the concept, 1 kWh usually costs about $0.10 for small Louisiana businesses, meaning that for every 1 kWh that your system produces and you use, you save $0.10.
In this case, for every 1 kWh that your system sends back to the grid, you earn a $0.10 credit, but only if you have a net meter. Without the net meter, it becomes difficult to value your system's benefit.
The timing of your electricity use, the direction your solar panels face, the size of your facility, and annual weather variations all are factors that make it tough to anticipate the savings of a solar system without a net meter.
Can I still benefit from solar if my utility has reached the cap?
Absolutely! Just because we can’t tell you exactly how much you will save, doesn’t mean the benefits of solar are completely lost. When solar panels produce energy, that energy first and foremost goes into your building to power your lights, air conditioning, and computers.
If your utility company has reached their cap, sometimes it is better to go with a smaller solar system to offset your direct usage. This can help to limit the amount of solar energy that you send back to the grid while maximizing the production of your panels for your daily consumption.
In the future, you can always add more panels to your system or invest in a battery backup system to capture more of that clean energy.
Where have we reached the cap and where are we close to it?
The Washington-St. Tammany Electric Coop, based out of Franklinton and Abita Springs, reached the 0.5% cap in February 2014. This past July, DEMCO, of Baton Rouge, also stopped accepting net metering applications. In Slidell, CLECO recently exceeded 75% of the 0.5% cap, but is still installing net meters for the time being. Entergy Louisiana has also recently reported that they will soon stop approving new net meter applications.
Entergy New Orleans is regulated by the New Orleans City Council and is currently not restricted by a net metering cap. Fortunately, we do not expect to see a cap instated by this governing body.
What can I do to help get rid of the net metering cap?
The Louisiana net metering cap is one of the most restrictive in the country. The Louisiana Public Service Commission is a publicly elected board that has the power to change the utility-driven net metering cap. By reaching out to your Commissioner you can make your voice heard.
You can also follow Louisiana Solar Works, a non-profit advocacy group that supports energy choice for Louisianans. This group provides tools that make it easy to find relevant solar legislation or reach out to your representatives about solar-related issues. To learn more, sign up for alerts, or email your elected officials, visit their website here.
Tell Utilities Solar won’t be Killed, or TUSK, also hosts annual Energy Security Summits and other events to support energy choice. To learn more about the organization, you can visit their website here.
As always, if you would like to learn more about how solar could help you save, give us a call at 504-586-0625 or reach out to us via our Contact Us page.