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Subject What are the benefits and costs of net metering?
Author Sascha Deri
What are the benefits and costs of net metering?

Net metering provides a variety of benefits for both utilities and consumers. Utilities benefit by avoiding the administrative and accounting costs of metering and purchasing the small amounts of excess electricity produced by these small-scale renewable generating facilities. Consumers benefit by getting greater value for some of the electricity they generate, by being able to interconnect with the utility using their existing utility meter, and by being able to interconnect using widely-accepted technical standards.

The only cost associated with net metering is indirect: the customer is buying less electricity from the utility, which means the utility is collecting less revenue from the customer. That’s because any excess electricity that would have been sold to the utility at the wholesale or ‘avoided cost’ price is instead being used to offset electricity the customer would have purchased at the retail price. In most cases, the revenue loss is comparable to having the customer reducing electricity use by investing in energy efficiency measures, such as compact fluorescent lights and efficient appliances.

The bill savings for the customer (and corresponding revenue loss to the utility) will depend on a variety of factors, particularly the difference between the ‘avoided cost’ and retail prices. In general, however, the difference will be between $5 - $10 a month for a residential-scale PV system (2 kW), and between $25 - $50 a month for a farm-scale wind turbine (10 kW).

Moreover, any revenue losses associated with net metering are at least partially offset by the administrative and accounting savings, which are not included in the above figures.
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