How to Make Money on Your Solar Investment

We all know that one of the main benefits of “going solar” is that it gives home and business owners more independence from their utility company by enabling them to tap into free, green energy from the sun – in this way, solar panels can significantly lower monthly energy bills saving hundreds of dollars each year. But not everyone is aware that solar photovoltaic (PV) systems can actually generate income.

The concept is called “net metering.” Net metering essentially allows you to sell the excess electricity generated by your solar PV system back to the grid. In essence, solar PV owners become mini-energy companies who actually earn money for every kilowatt hour of electricity that is created by their solar PV array and put back onto the electrical power system. Utilities simply monitor the amount of electricity sold back to the grid and credit you on your utility bill at an agreed upon rate per unit of energy.

How do you know if this option is available to you? Currently, forty-three states have established net metering policies. Figure 1 shows which states have net metering policies and ranks each state for how generous its policies are to home and business owners. States with an “A” grade have some of the most generous net metering policies, whereas states with an “F” still have some work to do. So, if you’re living in a state with a passing grade, this means solar may be more lucrative of an investment than you realized.

Currently, there are hundreds of thousands solar PV system owners in the U.S. who are reaping the rewards of net metering.ⁱ And this number is rising quickly, which is in large part due to a push for net metering policies that encourage solar investments.

Net metering rates vary widely by state, but they typically are set equal to the retail rate of electricity; this means PV owners can sell electricity at the same rate as utilities themselves.

On average, you can expect to sell about 20-40% of the electricity produced by your solar array back to the grid.ⁱⁱ There are ways to increase this figure, too. Since solar PV systems generate the most electricity during the middle of the day, (typically noon to four o’clock in the afternoon), when the radiant sunlight is shining at its strongest, you can make the most of net metering by lowering your usage during these times. In this way, you’re selling the greatest amounts of electricity back to the grid. Another option is to invest in an array that is a bit bigger than your needs to ensure you’re able to sell as much excess electricity as possible.

With net metering policies in place, going solar is a no-brainer these days. Not only can you expect a huge reduction in your energy bill from simply having a solar PV system on your roof, but net metering now makes solar a potentially profitable endeavor for you – well worth the investment.

i^ http://www.seia.org/research-resources/net-metering-state

ii^ http://www.seia.org/policy/distributed-solar/net-metering