Many families and businesses choose to take advantage of solar panels because they can save money on their electric bill. This is especially true in sunny states like Texas, California, and Arizona. But can you actually turn a profit with a solar power installation?
Selling solar power back to the grid is not only a very real possibility but a practice employed throughout the country. Both homeowners and businesses can take advantage of this concept.
Renewable Energy Credits
A solar panel system can range in size from a small domestic rooftop installation to systems that cover thousands of square feet. Homeowners looking to take advantage of federal tax credits and local rebates can do so with a smaller system and net a positive ROI (return on investment).
This is due in part to the renewable energy credit, which represents 1 megawatt of solar power. In most states, selling solar power to your utility company is allowed under the Renewable Portfolio Standard mandate. These credits have been implemented as an incentive for solar energy investments.
Thanks to the Public Utility Regulatory Policy Act, or PURPA, utility companies are under a mandate to purchase any excess electricity that a renewable energy system generates. This act, along with other government incentives, provides a compelling financial reason to install a solar power system.
The Net Metering Agreement
A net metering agreement is an agreement that you enter into with your local utility company when you connect a photovoltaic system to the grid. This agreement stipulates that you will be charged for your net power usage. Net metering uses a bi-directional meter that spins forward when energy is taken from the grid. When excess energy is produced, the meter spins backward. If your business or home generates extra electricity you will be credited. This credit means that your energy costs are offset or your utility company will send you a check.
Some utility companies offer wholesale agreements. Energy production is measured by two unidirectional meters. One meter keeps track of the amount of electricity taken from the grid. The other meter is used to track the amount of energy being funneled back to the grid.
Selling Solar Power Increases Savings
The amount of money made from selling solar power back to the grid varies based on the local market value for electricity. However, there have been reports of home producers making around $3,000 per year from a combination of government incentives and renewable energy credit sales. You probably won’t become a millionaire, but selling solar power can increase your energy savings.
If you’d like to find out more about the process of selling energy to the grid, contact your power company.