What is Net Metering?
The diagram illustrates a typical installation. Net metering is the middle ground between generating all your own power similar to an off-grid home, and a microFIT installation where you sell all the power you generate at a subsidized rate to the IESO (formerly the Ontario Power Authority).
This is an arrangement between you and your local hydro company to swap power with the grid. When you have an excess of power beyond your own requirements, the excess is exported onto the grid. At night and when you use more power than you generate, you receive some or all of your power from the grid. Your solar system uses the grid as a virtual battery to store surplus power until it is needed. This is available in most provinces, but this requires your hydro company to offer net metering. Hydro One supports net metering.
The existing house meter is replaced by a bi-directional meter. The DC power flows from the solar panels into an inverter which outputs 240VAC synchronized to the hydro grid. It supplies power to your building, and any excess is exported to the grid. At night and when you consume more than you generate, the shortage in power in imported from the grid, and supplements any power generated by the PV panels. Usually there is no battery in this system.
You buy the power at the standard, non-time of use price, and when you export your excess power it is credited to your account at exactly the same rate that you purchase. Over the period of a year, you pay only for the power that you consume. If you generate more than you consume, you do not pay for the power, but you are NOT paid anything for the excess power. There is an an Ontario Ministry of Energy brochure that explains the financial model of net metering in more detail. If Hydro One is your local utility, they use a sliding 11 month window to reconcile your credits.
The bill of materials is almost exactly the same as a microFIT installation of the same size. The difference is one set of wires that connects to a dual breaker on the house side of the main meter, and no need for a dual meter base. Therefore the component cost is similar for either microFIT or Net metering. It is lower by the omission of a dual meter base. The labour is lower for net metering, as there is no need to have the local Hydro company shut off the power while the meter base is changed. Both require a 60A 240VAC disconnect switch mounted outside near the meter base.
Your existing house meter is changed to a bi-directional meter, instead of the normal unidirectional smart meter.
Many people expect to be paid for the excess power that they generate, but they are not. It is banked as a credit and reconciled on a one year window.
When you export to the grid in Ontario, you are credited a delivery charge at the same rate per kWh that you pay when you are using power from the grid. Therefore if you used no power over a year, or you generated more than you consumed, you pay no per kWh delivery charges. You do pay the same fixed monthly delivery charge. If you generated a little less than you consumed, you pay the per kWh on the net amount that you used from the grid, both for the kWh and for the delivery charge for the net amount.
There is no taxpayer subsidized rate paid to the producer, and power is bought and sold at the current market price.
Your savings are all in after tax dollars! (This is due to you avoiding spending money, rather than earing income as in the microFIT program.)
Why Net Metering?
You wish to have solar power but don't want to have a subsidized price, you would prefer to have market pricing instead. And you still wish for your solar installation to make economic sense and pay for itself in the long run. I just takes a little longer to pay for itself than microFIT.
You may be concerned about the rising cost of electricity, a net-metering installation can protect against rising prices. The protection can be almost 100%, if you generate more than you consume. The only price that can rise is the fixed portion of the delivery charge. Your cost of electricity goes down, with an up front investment in solar power.
In a Globe and Mail article, the provincial Energy Minister announced "The province’s long-term energy plan, released Monday, projects a 42-per-cent jump in home power bills by 2018, climbing to 68 per cent by 2032. The cost for industrial enterprises will also rise, by 33 per cent in the next five years and 55 per cent in the next 20." This amounts to a 3% increase per year, until 2032.
Net metering is a safe investment with a reliable return. It can drive your hydro bill down to a small amount of fixed charges for having an electrical service. If you don't pay for any amount of power consumed, the energy savings will over time offset the cost of the installation, and from then on, you have almost free electricity. This is with the reliability and convenience of a grid power connection. If you have high hydro bills, this can provide a good return on investment, with no impact on your lifestyle as might happen with off-grid solar.
Net metering can have a better payback than solar hot water heating, and there are a lot less moving parts - none. There is a lot less to go wrong. In an electrically heated house there are far more potential savings available if the electrical bill goes to zero, than if the hot water heating costs drop towards zero.
The more electricity your house uses, the greater the savings than are possible with net metering.
You may not qualify for a microFIT installation due to the IESO's microFIT quota exceed for the year. However you would still like to have a solar power installation.
Do you wish to be power self sufficient, without the cost and maintenance of a large battery bank. The grid acts as your battery bank and does not need replacing every 10 years. Meanwhile you save money and help green the planet at no cost in the long term.
If you would be interested in discussing a net metering solar energy system please contact Ottawa Valley Photovoltaic to get started. Usually the first steps are a site survey and a review of your hydro bills to determine annual consumption.
What is the process for a net metering system installation?
We have a guide that outlines buying a complete net metering solar installation.
What extra electrical equipment does net metering need?
- You require the installation of an isolation switch (visible, accessible and lockable) located
between the meter and the customer's equipment, at a location beside the meter.
- You connect the output of your inverter to a double breaker in your existing electrical panel
- The local hydro changes the meter to a bi-directional unit.
What services do we offer?
- We offer site surveys to determine the suitability for solar power, the impact of shading and provide an estimated costed bill of materials for the recommended installation.
- We can provide a kit delivered to your site of all of the solar components that are needed for a project.
- We can assist a DIY owner to install a net-metering system.
- Occasionally when we are not busy, we will do a complete installation for you.
- We have a tool to calculate the savings that are possible, and predict the break even point. Click for an example PDF showing its results.
Can I participate?
You do need an approval from you local hydro company, and that approval is subject the a transmission capacity limit. In Ontario the same size limit as applied to microFIT. In the rest of Canada, you need to contact your local hydro to find out their limits.
What if my local hydro company does not support net metering, or they do but there is not sufficient capacity?
Then you can achieve the similar benefits of an almost zero hydro bill by installing an off-grid style solar system, and attach the grid connection in the place of a backup generator. You only accept power from the grid, and do not generate surplus power onto the grid, thus you do not need any hydro's permission to operate. Please contact us to discuss this further. There are some subtle choices to be made. Unlike typical net metering, since you have a battery you do not loose power if the grid goes down in a storm.
What are all the differences to microFIT?
- This is available most places in Canada
- You don't need IESO approval
- There are no Ontario content rules unlike microFIT 2.0. MicroFIT 3.0 has lowered the requirement.
- You can have more than 10kW of generation capacity in Ontario. (Up to 500 kW, but under 10k is simpler)
- You can install a ground mounted system in urban areas
- The output from the PV generation meter connects to the house side of the original meter
- There are no domestic content rules, unlike microFIT 2.0
- A person can own as many installations as they like, instead of one microFIT
- You can expand your system to add more panels any time you wish, as long as it is ESA inspected and you don't exceed 10 kW.
- Power is bought and sold at the current retail price
- Savings are in after tax dollars
- As hydro rates increase, your $ of savings increase due to the more costly power.
- You are removed from the time of use billing and pay the same price all day long.
- We do not recommend a dual axis tracker, as there is no motivation for their use since there is not a fixed limit to system size. It is less expensive to just buy more panels. Panel prices have dropped sufficiently to favour a fixed installation. If you have electric heat, you may need more power than a 10kW fixed system can deliver, then this might be practical.
- You save the cost of a double meter base and the labour to install it
- You can have batteries as part of your system. (If so, it is designed similar to off-grid.)
If you look up your annual yearly electricity use for the last 3 years, (You can get this from hydro) then the optimum size is about 125% of that capacity per year. We need to know some details about your site, and its shading to be able to de-rate the panels to calculate their production at your site. We also allow that the panels will drop in productivity to 80% of the original output after 25 years, so this would remain capable of a zero kWh bill for 25 years. It also would be wise to plan how extra panels could be added to the system in an efficient manner in case your electrical needs grow with a family or changes in life style.
If you have an Canada wide average consumption of 19 kWh per day.(Based on 720 households) You would need a system that is smaller in capacity than a 10kW microFIT system, and therefore the cost would be less. A typical 10kW system would supply 2 times the power used by the average home with 19Wh per day.
Using our recommended mounting orientation, shading at your site, and the productivity rating of 1 kW of panels in your location, determine the kW rating of the panels to generate the required amount in one year. If there is any shading, you will need the results of our shading analysis tool to do this calculation. If there is no shade, then this can be done with the use of the PVwatts tool available online.
if your calculated installation is 10kW or less, you have a simplified application to your utility, exactly the same as if you were applying for microFIT. If however you wish to have over 10 kW, you have to fill in a FIT application and go through the more extensive FIT application process. This has vastly more paperwork, and requires connection impact study, etc. Most home owners do not wish to take this route.
Sample break even analysis
We created a tool to predict the break even point, and the savings for the next 30 years. The example output from this tool can be viewed in a PDF file. The assumptions in this particular run are:
- 10 kW net metering system
- Location Ottawa
- Panels face due south, and are at a 45 degree tilt, and there is no shading
- The current hydro price per delivered kWh is $0.15.
- The prices for hydro will grow by 3% each year, as predicted by the Ontario Ministry of Energy
- The cost of the system included installation, but is approximate.
Can I have microFIT and net-metering?
Yes if both total less than 10 kW, otherwise no. For most people the answer is no. There is a solution only if you have more than 10kW of net metering generation, and you apply for a FIT sized net-metering installation. The latter requires a lot of paperwork, time, and there would be some costs. Environmental approvals would be required if it was ground mounted. The heart of this is the rule by the IESO that a microFIT contract can only have 10kW of generation capacity per property. If the net metering causes the combined capacity to exceed 10kW, then this is no longer qualifies as a microFIT installation. However you can have a FIT and a microFIT on the same property. This is the rational for stating you can do it only if the net metering itself is greater then 10K.
If you want the economic benefits of net metering, you can achieve this by an off-grid type of installation for your own power, and only use the grid instead of a backup generator. You do not export any power, so you don't need your hydro's permission, and you don't trigger any IESO rules concerning your microFIT system.
Will the lights still be on if the grid goes down?
A common misconception or expectation is that you will still have power if the grid goes down. If you have a no battery version of net-metering, you will loose power if the grid goes down. This is the most common form of net-metering. For safety reasons the inverters shut down when the grid goes down, so you don't electrocute the hydro staff repairing the problem.
At night, the panels do not generate any power, so this can't keep your lights on. The power has to come from another source, which could be a battery or a standby generator.
If always keeping the lights on is one of your major objectives, there are two solutions.
- You need a battery, therefore net-metering is implemented as an off-grid system with the grid providing the backup instead of a generator. You need an off-grid inverter which has grid tie capabilities. You have all of the off grid components except for the automatic standby generator. This is the more expensive installation.
- The less expensive way to provide lights when the grid is down is to use a normal grid-tie inverters, with no batteries and have a standby generator and a transfer switch.