Net Metering Programs: Topical Issues Brief

There has been a recent surge of interest from the renewable energy industry and environmental groups in net metering. The reason for this interest is that net metering is a simple, low-cost, and easily administered method to encourage direct customer investment in renewable energy technologies. The renewable energy industry supports net metering because it removes an economic disincentive forpotential customers by increasing the value of the electricity generated by renewable energy technologies. Environmental groups support net metering because it promotes clean energy production. The concept of net metering programs is to allow the electric meters of customers with generating facilities to turn backwards when their generators are producing more energy than the customers' demand.Net metering allows customers to use their generation to offset their consumption over the entire billing period, not just instantaneously. This offset would enable customers with generating facilities to receive retail prices for more of the electricity they generate. Without a net metering program, utilities usually install a second meter to measure any electricity that flows back to theutility grid and purchase it at a rate that is much lower than retail prices. There are various net metering programs in the country. Most are available to customer-owned small generating facilities only, some further restrict the eligibility to renewable energy technologies. This Topical Issues Brief discusses how these net metering programs have been implemented by different utilities andstates, what the rationales are behind many net metering programs, and what the potential impact of net metering may be on the deployment of renewable energy technologies.