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Net Metering

Distributed Generation (“DG” or “DGen”) is the term used to describe electrical generation systems that are located at or near where the electrical energy is intended to be used. The most common example in Montana is rooftop solar photovoltaic (solar “PV”), but this also includes small wind, ground mounted solar PV, solar thermal, micro-hydro, and other technologies.

Net Energy Metering (“NEM”, or “net metering”) is a billing mechanism that allows a home, business, school, or library with a distributed generation system to accrue on-bill credits for excess energy that their system exports to the grid. Credits can be ‘banked’ for future bills. In most cases, the ‘bank’ balance resets to zero once per year and any leftover credits are forfeited to the utility.

How it works

  1. After you install a renewable energy system on your property, it will begin producing energy.
  2. The inverter that is installed with your system converts the direct current (DC) electricity from the system into alternating current (AC) electricity. AC electricity is what is used in homes, businesses, and schools for things like lights and appliances.
  3. Whenever your system is producing more energy than is needed on-site at your home, school, or business that energy can flow back onto the grid for other customers to use. A bi-directional meter attached to your home, school, or business will measure the energy going from the grid to the home (the "usual" direction) as well as any of that excess energy going back out onto the grid.
  4. Customers earn an on-bill credit for the excess energy they export to the grid. At the end of each month, the customer is billed for the net difference between the energy they purchased from the grid and the energy credits they earned. Depending on your energy provider's net metering policies, you can store those credits for use on future bills.

Good Questions to Ask Your Energy Provider

Net metering policies vary depending on your energy provider and you should be sure to ask them what their policies are. Some good questions to ask:

  • What is the system size cap (in kW) for a net metered system? Knowing your energy provider's size limit for net metered systems helps you assess whether the system size required to meet your energy needs qualifies for net metering. Participating in net metering is the primary way most customers pay off their renewable energy investment.
  • How long can I rollover (e.g. store) my net metering credits? Is there a "true-up" date? A "true-up" date is the time at which your excess or "banked" credits from sharing energy to the grid are forfeited to your energy provider, or paid out to you at the dollar value. At this time, you begin accruing credits again from zero.
  • If there is a true-up date, do I get to choose when it is? When the "true-up" date occurs is a critical part of getting the most out of your energy generation because peak energy production from renewable sources like solar and wind are seasonal. When possible, we recommend choosing a "true-up" date of late winter/spring for solar systems so you can get the most out of the energy credits you banked in spring, summer, and fall.
  • Am I allowed to do "aggregate net metering", allowing credits from a single solar array to offset multiple meters on my property, ranch, or school? At this time, Montana's net metering legislation does not enable aggregate net metering for our investor owned utilities (NorthWestern Energy and Montana-Dakota Utilities). If your energy provider is a rural electric cooperative, they set their own policies and you should reach out to them directly to ask what those policies are.

Status of Net Metering in Montana

MREA works with decision makers to advocate for modernizing Montana’s net metering policies. While net metering is one of our most successful renewable energy incentives in the state, there are also several limitations to our current policies that restrict small-scale renewable energy development. One key limitation is that for all NorthWestern Energy (NWE) customers, there is an arbitrary 50-kilowatt size limit for net metered installations. This size restriction means that to participate in net metering, schools and businesses may have to install systems smaller than what would be required to meet their total energy needs. Our current net metering legislation also does not enable NWE customers to participate in aggregate net-metering. This program would allow customers like farmers and ranchers, with multiple electric meters on their property, to apply their credits toward their total energy usage across all of their meters. Virtual net metering is similarly not enabled, but if it was it would allow NWE customers to participate in community solar projects where households could purchase or lease a portion of an array sited in their community and could receive credits for its energy generation. This is especially helpful for ensuring renters, or homeowners with roofs that cannot support solar, can benefit from the cost savings, independence, and resiliency that renewable energy offers. While changing these policies for NWE customers requires new legislation, rural electric cooperatives have the freedom to set their own policies, and their customers have a say in how each cooperative is run by voting for their board members. Enabling these policies through legislation, or through local decision-making in rural electric cooperatives, will mean more clean energy on the grid and more well-paying, local careers across Montana. A win-win! Montanans have the right to use the sun to power their homes, businesses, and schools and we need policies that enable energy independence.

For investor owned utilities, net metering can be affected through lawmaking at the Montana Legislature as well as through regulation at the Montana Public Service Commission. In Montana, the rural electric cooperatives are not regulated by the Public Service Commission, so they set their own policies. If you would like to learn more about our work defending and modernizing net metering policies, read the latest from our Policy & Advocacy Blog.