Solar Power and the Madison Electric Utility
Solar photovoltaic (PV) systems in Madison are connected to the Madison Electric Utility. This connection provides two benefits: First, there will be times when you’ll need power from the electric system, like on a cloudy day or when there’s snow covering your solar panels. Second, at times when your PV system is generating more power than you need, the excess power flows into the electric system grid and earns you “energy credits” that will reduce future bills. This works through a process called “net metering.”
Net Metering
A customer with a solar system is a buyer and a supplier of electricity. You're a buyer at night – or on days with reduced sunlight - when you need electricity from the grid to run the equipment in your house. You're a supplier when your PV system is generating more power than you need and the excess flows into the electric system. Measuring the flow of electricity in two directions requires a “net meter.” Your meter has two registers. One register is measuring the electricity you are consuming from the Madison Electric Utility grid, the other measuring the electricity you are providing to the grid. You’ll receive a Madison Electric Utility bill every month based on your “net consumption” of electricity, measured in kilowatt hours (kWh).
Net Consumption
The net consumption is the difference between the amount of electricity drawn from the grid when your PV System is not meeting your household needs and the amount you exported when the panels were producing in excess to your household needs. Keep in mind; you use your solar panels’ electricity first.
Get the Most Value from Your Credits
Residents can decide at any time whether to cash out their remaining solar energy credit or let the credit continue to accumulate and roll forward. The "cash out” will automatically occur when a credit reaches $750 and also when an account is closed. If you request a cash out, then the utility will use the actual cost the Borough paid for electricity to determine the value of the credits you have accumulated. This rate does not include system charges, capital and operating expenses. So, you will get the most value from energy credits if you use them during the year to reduce your bill.
Measuring Your Total Consumption and Solar Production
The Madison Electric Utility only records customer’s interaction with the Madison Electric grid. That is, the energy that your solar panels produce but is consumed for your own home needs is not recorded. Only your solar contractor or your system can provide solar production reports. The only way to know how much total electricity you have consumed in your house is to add up the solar production from the contractor with the electricity purchased from the Borough. An example is provided below.
A Sample Bill including Solar
This utility bill is for an actual residence (2200 sq.ft. 5 bedroom split-level). At the time of this bill, the residence has had a 7.9 kW solar PV rooftop system for 12 months. In that time the solar panels generated 9.6 MWh of electricity. (As stated above, this value is not on the bill and only available from the solar system or the contractor.) The bill is for July. (1) It shows that in that month 539 kWh was supplied by the grid to the home while the solar system supplied 494 kWh back to the grid.
Adding up 12 months in the column on the left part of the bill (2) indicates about 4.4 MWh was drawn from the grid over 12 months. Since there is a net credit of $293.31 (3) the solar system must have sent back to the grid energy equal to the 4.4 MWh plus energy equivalent to the credit, about 1.7 MWh. Therefore, over the 12 months the solar system sent about 6.1 MWh back to the grid and about 3.5 MWh (9.6 – 6.1) of solar power was used at the house itself.
In those 12 months, this residence consumed 7.9 MWh of electricity (the 4.4 and 3.5 from above). Thus the solar system has saved ~ $1370 in avoided electric bills, generated a current credit of $293.31 and earned $864 in Renewable Energy Credits from the state (approx. $90 per MWh). The net investment for the system (cost – Federal tax incentive) was about $20,700. Not counting the current credit, the return on that investment is about 11% ((1370+864)/20,700).
The 11% return calculated above is roughly equivalent to a 9-year payback. However, according to a survey by Zillow, a solar PV system raises the resale value of a home by ~ 4%. For a $500,000 home, this returns almost all the original investment when the house is sold. Thus a payback period is not necessarily the right analysis; your solar PV system adds value to your home at the same time as it generates savings for you.