Monica Niehaus joined Melink in 2020 and serves as Business Development Manager. Monica is responsible for developing partnerships with accounts to grow solar energy solutions in the commercial building sector.
On Friday, April 16, 2021, a webinar hosted by Frost Brown Todd was presented as an opportunity for Ohio’s Public Utilities and Municipalities to learn more about clean energy and the benefits of transitioning to behind-the-meter solar. Continue reading “Solar 101 Webinar: A Beginner’s Guide”
Range Anxiety. It’s no surprise that this is a common concern of those who are hesitant in making the switch to electric vehicles (EVs). How can owners of electric cars confidently take a long drive without a plethora of charging stations along the highway? Gas stations are everywhere. Why should EV charging stations be any different? Continue reading “Electrifying Our Future”
As businesses attempt to set themselves apart in a world of emerging technologies, those invested in renewable energy continue to outshine competition. Solar power in particular has not only proven to be a profitable investment — it can also serve as a marketing tool to entice customers and employees. Consider a solar canopy covering your business’ parking lot. Continue reading “The Added Appeal of Solar Canopies”
If you are considering solar for your commercial building, an important concept to understand is net metering, whether it applies in your state, and how it works with your utility company.
What is Net Metering?
Net metering is a billing incentive that offers credits to the owner when a solar PV system produces more electricity than consumed. Any excess power generated through solar feeds back into the utility grid, thus qualifying the owner for a “credit” on his or her electric bill. Think of “debits” as energy used from the grid, or any electricity that solar power cannot cover during a given period.
How Does Net Metering Work?
Credits = Power produced by solar
Debits = Electricity consumed from the grid
The net of these two is how net metering functions, factoring in whether the owner is charged for grid usage, or owed credits for solar production.
Think of the daily variations of energy usage in the typical home. Assume that residents typically consume most of their electricity in the mornings and evenings, before and after work. If there is little or no solar production during the time when electricity is needed, energy will come from the grid. Hence, debits — or the costs one would otherwise see on the utility bill.
Solar energy systems usually hit peak production in the afternoon when sun exposure is maximized. So, what happens to all the solar generation during the day if the power is not used or needed? The excess solar power spins the meter backwards and sends energy to the grid. Hence, these credits serve to help offset your electricity bill.
Why is Net Metering Important?
Net metering ensures the owner is credited for those natural swings in daily production. Depending on your building’s energy usage and time of peak demand, net metering can help maximize the owner’s savings from solar power. Understanding net metering laws can help determine the ideal size of the PV system, after factoring in daily, weekly, monthly, or annual estimated energy usage.
If you are considering switching to solar, these net metering regulations should guide the solar company to design your system in the most cost-effective way. After evaluating your electricity usage, the solar provider should factor in net metering compensation to get the best return on your investment, depending on how much PV generation you prefer.
How Does Net Metering Compensation Work?
Forms of compensation will vary by state and utility company. Generally, the owner should be charged only for the net electricity used by the end of the month. In some instances, if more power is generated by solar than consumed over a month or year, the utility will roll over those credits to the next period. In other scenarios, the consumer will be compensated at the retail or wholesale rate at the end of a given cycle.
Consumers must elect to receive credits in a contract with their utility provider. Tariff sheets, or compensation rates, are provided by the utility and explain whether solar overproduction results in the following:
Monetary bill credits
kWh credits to offset future consumption from the grid
It is important to fully understand your state’s policies regarding net metering compensation. EnergySage explains how net metering rules can vary: “If you do generate more electricity than you use in a year, utilities in some states will let you carry credits over into future years, while others will reduce your credits.”
Do not let credits confuse you for cash payments, unless you live in a state that allows for that type of compensation. While you can stock up on credits to cover power you may need from the grid throughout the month or year, do not assume the utility companies will be sending a check covering the full retail rate.
Does Every State Have Net Metering?
While net metering is authorized in most states, there are different approaches to how they distribute credits, assign eligible technology, and handle capacity limits. The National Conference of State Legislatures expands on state-specific laws and advises one cannot make assumptions about compensation without digging into state rules. For example, “California credits excess generation to a customer’s next bill at retail rate. After a 12-month period, customers can choose whether to roll credits over indefinitely or receive a payment for credits at the wholesale rate. If no option is selected, credits are granted to the utility with no customer compensation.” In this case, the owner can opt in for credits at the end of the year, but it will be at the wholesale rate. Month to month, however, they receive credits at the retail rate.
Net metering policies were originally intended for areas with lower solar adoption. As more and more states become reliant on clean energy, we can expect some changes to occur. Regardless of your state or utility’s current policy, it’s important to understand how different factors can affect your long-term savings when installing solar panel systems.
Does Net Metering Eliminate Utility Bills?
A common misconception is that if you can attain Net Zero Energy for your building, you will not receive a utility bill. This is false, as the owner is still tied to the utility company in some capacity. If you are producing a lot of solar power, the building consumes the amount of electricity needed, and the remaining power shoots back onto the grid. Credits are accumulated through net metering and impact whether your utility bill is $0, or a lesser amount than in the past.
Sure, you may owe less to the utility, and the bill may look different depending on how much energy solar can offset. However, in most cases, solar will supply as much electricity as possible, and the remaining power is met by the grid.
How Does Net Demand Work?
The following chart shows a live example of how net metering works when savings occur with solar PV generation. These daily variations in current demand (debits), layered against solar PV power (credits), result in the building’s net demand.
The solar energy system at this site overproduces during the first two days since there is ample sunlight and little demand. The utility is crediting the owner’s account for that overproduction, which is then used to offset the bill when the system is under-producing.
Net metering occurs in the areas that display overproduction from solar. Excess electricity causes the meter to spin backwards. In these cases, solar generates more power than the actual usage. That excess power is sent back to the grid, while “credits” accumulate on the account.
Savings occur in every green area where solar produces power. For example, although the system is not overproducing during the last day, solar is still helping to offset part of the demand costs, or “debits.”
WEEKEND: On Saturday and Sunday, the building load is very low. Solar power is generated throughout the day with plenty of sun, which causes a lot of energy to be exported to the grid (accumulating credits). Credits are being used up at night while there is still some electricity load. MONDAY: The building energy load spikes, causing debits on the account. Solar generation doesn’t show a consistent curve since it’s cloudy outside. For the most part, the building is pulling power from the grid (at a reduced rate), and energy is exported for a small amount of time in the middle of the day. TUESDAY: A nice, sunny day. In the morning, the building starts pulling power from the grid as the energy load shoots up when workers arrive. Then, the load from the grid starts to slowly reduce as some of the electricity is produced by the solar array. Then, eventually, the building exports power back to the grid (accumulating credits), before the cycle reverses again. WEDNESDAY: No net-metering occurs because of the lack of sun. However, the load from the grid is reduced and savings still occur. The net of the debits and credits appears in the middle.
As devastating as COVID-19 has been, there’s a different lens from which we can view its effect on the world. How can businesses become more resilient? While it’s hard not to focus on just the next few months, it’s important to think about the kind of world we want to live in after this crisis ends.
One immutable constant is great leaders always want to prosper. Despite whatever challenges, they will continue to seek opportunities to grow their top and bottom lines. They will continue to build their brands and organizations for long term success.
Given you may be one of these leaders, there’s a growing secret across the U.S. and around the world. Solar power is slowly but surely becoming the way of the future – and businesses are primed to reap the benefits. If you sense shifting to clean energy is an intimidating undertaking, the following points should empower you more than anything.
Reasons to Consider Clean Energy
#1 Reduce Electricity Costs and Invest in Long-Term Savings
Using solar will lower the costs on your electric bill. Sure, the initial cost to install solar may be your biggest barrier. However, if you account for your average monthly electric bill cost, and budget for that expense on an annualized basis – after five, 10, 15, 20 years, the amount paid to the utility is a daunting reality that can be mitigated. Not to mention we should also factor in future rate increases over a 30-year period. The return on investment and savings over the lifespan of a solar panel system, depending on your energy consumption and the estimated production of the system, is a factor worth considering.
#2 Hedge Against Volatile Energy Costs
Purchasing solar can be much like investing in insurance. People pay for insurance because of the uncertainties of accident, injury, or death. Similarly, there are unknowns about the price of electricity through your utility and what it will cost down the road. According to the U.S. Energy Information Administration, over the last decade, the average price of electricity has increased about 4.6%. However, over those ten years, the standard deviation of commercial electricity prices was 0.24%. This signifies the great variability of energy costs over the last decade. Instead of relying on the ever-changing lows and highs of electric power prices, you can create a more predictable budget by locking into your rate for solar. Investing in solar can help companies avoid rising energy costs, and the uncertainty that comes with depending on power from the grid.
#3 Boost Public Relations and Attract Talent
As more and more companies switch to clean energy solutions, they further enhance their brands. In an article by the U.S. Chamber of Commerce Foundation, they indicate how practicing Corporate Social Responsibility (CSR) reaps multiple benefits, such as engaged employees, loyal customers, and positive public attention. In fact, it’s a purchase driver for many. “In a Nielson survey, 66% of participants said they pay more for products and services from socially responsible companies.” People are simply targeting more businesses that strive for better Environmental Social and Governance (ESG) practices. It captures the interest of younger generations, brings talent, and drives morale within the workforce. Internally and externally, people are motivated by businesses that look out for the greater good.
#4 Improve Your Property Value
Think about buying and owning a house. There are various ways in which one can invest in its worth and longevity. Perhaps it’s an addition that makes the house more attractive. These investments should increase the value of your home or building when you go to sell it. People decide to stop renting because, well…it’s money down the drain. Like buying a house, when you purchase solar, you become an owner of your electric bills. Just like renovations maximize a home’s value, installing solar and producing your own energy appeals to buyers, employees, and consumers alike. An article from Money.com references a study provided by Zillow: “On average, solar panels raise a home’s value by 4.1% across the U.S. — that’s a boost of $9,274 on a $226,300 home.” Even more so with larger buildings, there’s always going to be operation costs that go into running a facility. Just like the importance of fixing leaks or fine-tuning plumbing, investing in solar relieves long-term expenses of running a commercial building. Thus, making solar pannels more valuable.
#5 Commit to Sustainability
There’s no way to avoid it. Helping the environment and leaving the Earth in better condition for future generations is a driving force for companies to consider clean energy. Businesses now have a duty to pay attention to CSR. In an article published by RE100, numerous companies are taking action — and explain why: • IKEA committed to “generate as much renewable energy as the total energy it consumes in its operations by 2020. And to consume 100% renewable electricity by 2025.” Why is that their goal? “(Our) investments into wind and solar energy generation contribute to the shift for low carbon economies. From a business perspective, this helps secure our future as we become energy independent,” says Steve Howard, Chief Sustainability Officer. • AB InBev recognizes the “shift to renewables has potential to drive remarkable transformations in infrastructure, not only in the U.S. and Europe but also across emerging nations around the world. They “pledged to secure 100% of purchased electricity from renewable sources by 2025,” says Brian Perkins, Global VP Budweiser. • Microsoft’s Chief Environmental Strategist, Rob Bernard, made a strong statement when asked why the company wanted to be 100% powered by renewables (achieved in 2014). He said, “We believe there is a clear and urgent need for society to address climate change, and we recognize that our responsibility begins with our own actions. We are working to consistently reduce our carbon footprint. We are committed to taking significant action to shape our energy future by developing clean, low-cost sources.”
Investing in solar is a commitment to cleaner air and a brighter future. It’s a commitment to not only maintain the health of our planet but to sustain the economy.
Is Clean Energy Worth the Investment?
Convinced yet? If not, compare solar power to other investments that may be in your portfolio.
The estimated Internal Rate of Return (IRR) – a metric to quantify the profitability of long-term capital projects – can be greater for solar systems than traditional equity investments in the stock market. Taking into consideration initial installation costs, scale of the project, and future electrical price estimates, IRR calculation over a 30-year period range between 10-13% for solar. This is in contrast to 7.4% for the S&P 500.
Of course, it’s important to assess the value of installation, or Levelized Cost of Energy (LCOE), which quantifies the cost of the electricity produced over a solar system’s lifespan – usually up to 30 years. This metric helps directly compare what you would otherwise be paying for utility charges. Again, this is where locking in a predictable rate can be crucial. One can expect to significantly gain from an investment like solar because it provides a solution to fighting rising electrical prices. There’s no longer a need to depend on the utility’s energy costs.
If you’re a business owner or key decision maker in your company, these should be highly compelling reasons to consider clean energy for your facility footprint.
In uncertain times, it’s our responsibility to fool-proof our infrastructure and buildings. They need to withstand the social and economic costs of pandemics, global warming, and other unpredictable occurrences. Furthermore, there’s a need to think about the greater good of our decisions, their impacts, and what our world can become beyond the pandemic.
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