What Is Net Metering & How Does It Impact Floridians?
News / What Is Net Metering & How Does It Impact Floridians?
Florida is known as the Sunshine State for its abundance of sunny weather, making it one of the top places to go solar. Furthermore, Florida offers multiple benefits to offset the cost of shifting to renewable energy. And one of those benefits is net metering.
If you plan to install solar panels, you might wonder what a solar net metering system is and how it impacts your electricity bill in Florida. Here’s what you should know.
What Is Net Metering?
Net metering is one of the top reasons for adopting solar energy. It’s a billing mechanism crediting utility customers who generate electricity and add surplus or unused power to the grid for distribution. When your solar panels produce more electricity than you consume, you can let it go unused, store it in solar batteries, or send it back to the grid.
How Does Solar Net Metering Work?
Consumer-generators earn credits under the net metering system at the rate determined by their utility providers or state regulatory laws. In Florida, utility companies compensate solar homeowners at a full retail price each month, with any surplus credits reconciled at the avoided cost rate at the end of the year.
You may apply the credits from surplus energy sales to reduce your monthly consumption. However, keep in mind that even if you go solar, you won’t be able to go fully off the grid, particularly if you want to use net metering.
Yes, especially when your solar panels generate more energy than you use during the day. Sending electricity to the grid causes your electric meter to run in reverse, but the meter moves forward during cloudy or rainy days.
The utility provider reflects your consumption against your accumulated credits over time. After calculating any deposits, they will only charge your “net” energy usage—the remainder of what you’ve taken from the grid.
For example, let’s say you produced $10 of excess electricity during the day, which you sent back to the grid. Then you run the central air full blast all night to combat that Florida heat, using $15 of electricity from the grid. In total, you’d pay $5 for electricity for those 24 hours.
The Impact of Net Metering on Florida Residents
If you plan to harness the sun’s energy for power, you should know what net metering is and understand how it will impact your household or business. Here are its pros and cons.
- Lower Utility Bills: Using earned credits to offset energy use reduces monthly bills, leading to cost savings.
- Shortened Payback Period: Because of the cost savings potential of net metering, consumer-generators accelerate their return on investment for the solar power system.
- No Actual Cash Payout: You won’t earn cash for generating power under a net metering arrangement; you only get credits from your utility provider.
- Requires Connection to the Grid: You only get net metering benefits if you remain connected to the public grid. It doesn’t give you freedom from the grid; it only reduces dependence.
Understanding Net Metering Laws in Florida
Florida has become one of the leading solar states in the United States due to its ample sunlight and substantial investments in solar energy. Altogether, the state has built 9,791 MW of solar energy capacity, enough to supply power to over a million households, placing it third in the nation in solar energy output.
While local legislation can benefit the flourishing of renewable energy, unfavorable laws can hinder its progress too. This hindrance is a fact to which Floridians can attest when reviewing the attempts to modify their net metering policies. How does solar net metering work in Florida, and how did it change over the years?
In 2008, Florida enacted its net metering program under HB 7135. The state’s Public Service Commission (PSC) adopted rules and regulations for consumers producing power from sun, wind, water, and other renewable sources through owned systems.
The law aims to increase solar adoption in the Sunshine State as a cleaner energy source than fossil fuels. Other benefits of the net metering policy include a fairer power generation industry and a more resilient grid system due to reduced load.
However, it’s worth noting that the future of Florida’s net metering program was threatened by HB 741 and its companion legislation, SB 1024, in 2021. The bill would have taken effect in July 2022, resulting in the following:
- Reduced or eliminated credits for surplus energy supplied to the grid for renewable power-producing customers.
- The ability of utility companies to recover lost revenues from additional solar power systems installed by residential customers.
Florida Solar Net Metering: What Does This Mean for Floridians Today?
We understand what net metering is, but how do the current stipulations regarding it affect Floridians? To fully grasp why HB 741 would have been unfavorable for solar energy users in Florida, you must understand the state’s current net metering regulations and how valuable they are for solar energy users.
Florida homeowners with solar systems seldom consume the total energy their solar panels produce. Their surplus energy gets exported to the grid, allowing the local utility company to resell it to other customers. With a favorable net metering policy, Florida homeowners can enjoy full credit for the surplus energy they produce.
The Florida Administrative Code Rule 25-6.065 sets net metering rules in Florida, which apply to all electric utilities in the state, including rural, municipal, and investor-owned utilities. Here’s a quick summary of its stipulations:
|Solar System Capacity Limit||
Monthly Credit Rollover Policy
Annual Credit Rollover Policy
|State-wide Net Metering Cap||
The state’s 2 MW (2,000 kW) system capacity limit is higher than the average size of most residential solar systems, enabling all Florida homeowners to reap the benefits of net metering.
Under the current administrative rule, the surplus energy credit of Florida solar energy users gets rolled over to the next month at a full retail rate. The full retail value means you earn the same energy credit as what it would cost to purchase electricity from the utility company. Unused credits at the end of the year are credited at a lower rate based on wholesale energy costs, referred to as the “avoided cost” rate.
If HB 741 had passed, this bill would have significantly reduced the energy credits earned by Florida solar system owners, negatively impacting their potential savings. Under the new bill, utility companies would have been able to apply the lower avoided cost rate (currently only applicable to the annual surplus energy accumulated) to all power generated from solar panels. Electric companies would also have been allowed to set fixed charges for their net metering service.
Fortunately, Governor Ron DeSantis vetoed this bill, and solar users still enjoy the benefits of net metering. The state continues to offer favorable conditions for homeowners who want to invest in this renewable energy source.
Make Your Future Bright
Knowing what a solar net metering system is and understanding its benefits will help you live a greener, more sustainable lifestyle. Learn more about installing solar in Florida with Current Home today.
If you’re interested in exploring what net metering is further and how it can benefit you, we’ve compiled a list of helpful resources to help you get started.
- Solar Power Bill & Net Metering Explained: This helpful guide from Current Home walks you through the basics of net metering and answers your most frequently asked questions about it.
- What Are the Solar Tax Credits & Incentives in Florida?: Net metering and government-provided tax credits and incentives help Florida homeowners gain the return on investment for their solar systems faster.
- 2023 Guide to Net Metering in Florida: This blog post from Solar Reviews highlights everything you need to know about Florida’s current net metering policies.
- How Much Do Solar Panels Save the Average Homeowner?: In this post, Forbes highlights how net metering and other factors influence how much you can save from solar panels.