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Net Metering

Net metering, like rooftop solar, is a way for homeowners, farmers & ranchers, schools, and businesses to take control of their energy costs by producing their own, clean energy.

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, but once per year the ‘bank’ balance resets to zero 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.
MREA net metering explanation
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Net metering policies vary depending on your energy provider and you should ask them what those are. Some good questions to ask are:

  • What is the system size cap (in kW) for a net metered system?
  • How long can I rollover (e.g. store) my net metering credits? Is there a "true-up" date?
  • If there is a true-up date, do I get to choose when it is? And at that time, are my credits forfeited to the utility?
  • 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?

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.

MREA works with decision makers to advocate for modernizing Montana’s net metering policies, which have not been updated in more than 20 years. We want to increase the arbitrary 50-kilowatt size limit on installations to allow schools and businesses to put in the larger systems necessary to meet their energy needs. We want to unlock aggregate net-metering so that farmers and ranchers with multiple electric meters on their property can save more on their energy bills. And we want to give Montanans the option to invest in community solar so they can access the benefits of rooftop solar no matter what their situation. Removing these barriers 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. We need policies that reflect that desire for energy independence.

If you would like to learn more about our work defending and modernizing net metering policies, read the latest from our Policy & Advocacy Blog.