The Maryland Public Service Commission recently announced an amendment to Maryland’s net metering program that greatly benefits solar customers; solar homeowners can now elect to have their excess credits accrue indefinitely. To understand why that’s such a big deal, read below!
What is Net Metering?
Net metering is a billing arrangement used by utility companies that allows solar energy system owners to receive credit for the electricity they create but do not use, which is fed back into the grid. When a solar energy system produces more electricity than is needed, the excess electricity flows back into the grid, and the owner’s utility meter spins backwards, offsetting the electricity consumed from the grid when solar production is insufficient, such as at night or during periods of high demand.
When going solar, it is extremely important to consider your state’s policy on net metering. Luckily in Maryland, net metering is allowed by law, allowing solar customers to reap the full benefits of their system!
Example:
A customer has a solar system where they produce 12,000 kWh of electricity a year. Most of that electricity is generated in the summer months, when days are longer and the sun is stronger. Additionally, usage is lower in summer months, due to less electrical usage.
Consider June, where production is at an all time high at 1,350 kWh produced by the system that month (green) and consumption (home usage) sitting at 500 kWh used.
All that excess production of 850 kWh (1,350 kWh minus 500 kWh) carries over and builds until usage is higher than production. In the example below, that occurs in October. Those credits are then applied to the difference between production and usage then and the customer still has no bill in October!
New Updates
Before 2024, there was a “true-up” period, where the utility would pay out all the excess credits in April. The payout rate would be a weighted average of the Energy Charge (cost to create energy) over the past 12 months, multiplied by the excess credits.
Let’s say the average energy charge is $0.085/kWh. If a customer has 1,500 kWh in excess credits, they would get paid 1,500 kWh * $0.085/kWh for $127.50. This amount would then sit in their utility billing account, being applied to any flat fees (such as a monthly connection fee of $10).
The disadvantage of this structure is that the payout is too low- it ignores any other delivery, tax, or transmission charges, opting only to payout the Energy Charge. The new structure, with no payout period, allows excess credits to be stacked indefinitely. When they are eventually used (during lower producing months), they will be credited to the full cost of a used kWh.
Using the example above, when those 1,500 kWh excess credits are used, they will be applied to 1,500 kWh of consumption credits. In SMECO, we pay around $0.165 for every kWh used, so it will now save us $247.50 that we would have had to pay otherwise!
Other Implications
This new structure shows added support to Maryland’s green initiative. There are a number of incentives to go solar in Maryland, and enhancing this existing one shows Maryland’s continued commitment to supporting solar energy in the State!
Reach out today to stop overpaying for your electricity and save with solar!