Ever wonder how excess solar energy is compensated by utilities for customers (also known as prosumers) who don't consume all of the energy they produced from their solar installations?
This is where compensation mechanisms come to the picture in specifying how an electric utility pays for the energy produced by a customer that is self-consumed and/or exported to the utility grid. The three main types of solar compensation mechanism, differentiated by metering and billing arrangements, are summarized below:
Attribute | Net Energy Metering | Net Billing | Buy All, Sell All |
Allows self-consumption |
✓ |
✓ |
X |
Energy netting frequency |
Within Billing Period |
Instantaneous |
- |
Quantities Measured & Billed |
i) Net consumption ii) Net excess kWh credits to be compensated or banked |
i) Instantaneous net consumption ii) Instantaneous net exports |
i) Gross consumption over the billing cycle ii) Gross solar production over the billing cycle |
Solar value |
i) Retail Rate - for self-consumption & exported generation ii) Sell Rate - for expired net excess generation credits |
i) Retail Rate - for instantaneous self-consumption ii) Sell Rate - for instantaneous net excess solar exports |
i) Sell Rate - for gross solar production |
Feed-in-Tariff (FiT) Applicability |
X |
✓ |
✓ |
Intra-Billing Cycle kWh Banking |
✓ |
X |
X |
Credit Carry-over |
Excess kWh-credits or $-credits are commonly allowed to be carried over to future billing cycles & may or may not expire |
Credits are not guaranteed but are likely to be carried-over if ever granted, depending on specific crediting terms. For net billing that allows excess solar credits earned can be carried over to offset future bills, we call them "Net Billing with Credit Carryover". |
Credits are not guaranteed and follows specific crediting terms, if carry-over is applicable. |
Additional types of solar compensation mechanisms are handled in OpenSolar to model schemes specific to certain regions:
Type | Description |
Netherlands Net Metering Phase Out in 2031 (Netherlands ONLY) |
|
HECO Customer Grid Supply (Hawaii ONLY) |
|
Another factor that determines customer solar savings are various charges being applied by utilities:
Charge | Description |
PV Charge |
Can be a fixed monthly charge per specified time period (i.e. day, month, quarter, year) and can also be dependent on the installed kW solar capacity |
Net Surplus Compensation |
Credit provided to any net exported energy during True Up Date (i.e. expiration date for excess solar production under Net Energy Metering). OpenSolar uses a default $0.04/kWh for unspecified net surplus compensation. |
Export Credits or Feed-In Tariffs |
Predetermined sell rate applied to excess generation usually associated for Buy All-Sell All and Net Billing schemes. |
Non-bypassable Charges |
Portion of the usage charges that can't be offset by solar credits. This type of charge is usually seen on utilities operating in California. |
For further details on how to model these solar compensation-related charges as part of your custom tariff, refer to How to Create Custom Tariffs.
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