Net Metering Systems (NMS), also known as Net Energy Metering System, is the concept created by law (in the USA it refers to the DOE and local state governments laws and regulations) which allows any person or corporation to be able to be credited with electrical energy produced within the consumer’s property by means of any eligible Renewable Energy Generator(REG) and fed to the UtilityGrid (i.e., Grid)
This basically refers to the surplus energy produced by the consumer’s REG which not only covers the electrical energy needs of the consumer but is also capable of producing extra surplus energy that can be fed back to the Grid.
This means that if the consumer installs an approved REG within his facilities (usually a Photovoltaic Energy Generating System or a Wind Energy Generating System or a combination of both) and if the system is capable of producing excess energy above and beyond what the consumer is utilizing, then the Electrical Utility company is obligated to buy such energy and compensate the consumer for the same.
There are some other installations that are created for the exclusive purpose of generating electrical energy by means of REG to be fed to the Grid. Examples of these are Wind Farms or LargePhotovoltaic Arrays. These installations are not covered by the dispositions of the NMS regulations but still the Utility is obligated to buy the electrical energy supplied by them. However, the compensation to be paid for such installations is negotiated directly with the Utility on a case by case basis by means of a Power Purchase Agreement (PPA).
Several Utility Companies presently interpret this law enacted by the Department of Energy (DOE) in different ways, but the concept remains the same.
The term Net Metering Systems may be a misnomer, but the intent is not. There have been considerable advances in the electrical meters used by the Utility Companies. There are new meters which incorporate (among many others) special metering features such as Dual Metering (DM). In the case of DM the energy that flows inward into the consumer’s facilities (i.e., consumed energy) is measured separate from the supplied energy (which flows in a contrary direction) that the consumer may provide to the Utility Company, also known as the Grid.
By measuring these two blocks of energy as separate entities, the Utility Company can apply different tariffs (unfair but true) to energy supplied to the consumer vs. the energy it received from the consumer in to the Grid.
In order to be included in this arrangement the consumer and the electrical Utility needs to execute a contract in which the parameters for connecting the consumer’s REG and the method of reimbursement including the time period for such contract are established. These are usually for up to 20 to 25 years.
Also incorporated into these new electrical meters (among many other features) is the Time of Day (TOD) recording capacity (not in use in Puerto Rico). This is used by utilities which choose to structure their billing taking into consideration at what time of day were each predefined block of energy consumed. Thus energy consumed (and reasonably as well, energy contributed to the grid) during peak hours (e.g. during normal work hours) would be billed at a premium (i.e. at a higher) cost than a similar block of energy consumed during non- peak hours (i.e. during non work hours).
The Net Metering Laws provide any User with the capability to produce and offset the high energy costs with any of the approved renewable energy sources. This can result in substantial savings to the User. Also there are other means to offset the initial costs of these systems (see the Tax Incentives section)