Net metering

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When you install solar panels, the amount of solar electricity you export will need to be measured so you can get paid for it. You’ll either get a new meter or get your existing electricity meter reconfigured. The new meter is called a ‘net meter’ (note: this is different from a smart meter). It has two counters:

Counter 1: Imports. This shows how much energy you import from the grid. You import from the grid when your home is using more than you generate with your panels at any moment in time. You pay the retail electricity rate for every kWh of electricity you import. This price can vary from 22c to 55c per kWh depending on your tariff.

Counter 2: Exports. This shows how much solar energy you export to the grid. You export when your panels are generating more solar than your home can use at any moment in time. You get paid a feed-in tariff for every kWh of electricity you export. As mentioned, this is generally from 6c to 16c per kWh depending on the retailer.

Net metering and zero-dollar bills

I’ve already covered how, if your electricity meter ran backwards whenever your system exported energy, then it would be really easy to get a zero-dollar bill with solar.

Here’s all you’d have to do. Before going solar, you’d take your most recent bills and look how many kWhs you’d taken from the grid in the last 12 months. Then you’d buy a solar power system that would generate that many kWhs in 12 months.

Predicted solar electricity generation in Australia is easy to calculate. As a rule of thumb, you generate about 4 kWh per day for every kW installed on the roof. The magic multiplier is 4.

Let’s say your home used an average of 20 kWh per day. You could buy a 5 kW system to generate the same amount:

5 kW x 4 = 20 kWh per day

Voila! Your net electricity consumption from the grid would be zero.

You’d still have a service charge of about a dollar a day, but you could simply add another kW to the system size to offset that by generating another 4 kWh per day, which, at 25c per kWh, would reduce it to nothing.

Bingo – a zero bill.

Unfortunately, we can’t do this (though some shonky solar companies are still calculating payback this way).

We can’t do this because, in almost every home, a proportion of your solar energy will always be exported. And that exported energy is worth less than the price you pay for imports.

This means your solar power system is at its most valuable when you are consuming your solar energy yourself. When the solar electricity you are generating is being used up in your home, you are avoiding buying energy from the grid, saving around 30c per kWh. Compare this to exporting at 6c to 16c per kWh.

This is why it’s important to measure not only how much electricity you use but also when you use it. Ideally you want to know how much energy you consume in at least 30-minute intervals. I call this your ‘energy profile’.

Unfortunately, many solar installers do not measure this.

Now you understand how important your energy-use profile is to system payback, you won’t be tempted to buy a system without first measuring your profile. You are on the first step to being an informed solar buyer with a realistic expectation of how much solar power can help you. I’ll show you how to measure your energy profile in Step 2.

First I need to expose how the electricity retailers hide the true value of solar energy when they send you your bills.

Your post-solar bills will hide most of your solar savings

When you get your first post-solar electricity bill, the amount you have to pay will be the difference between the cost of your solar imports and your earnings for solar exports, plus your daily service charge.

The daily service charge is also known as a ‘supply charge’. It’s the amount you are billed, each day, for simply being connected to the grid. Typically, it’s about a dollar a day.

So you pay:

Usage – Exports + Daily Service Charge = Your Bill

Do you remember how I explained that your electricity retailer doesn’t know what goes on ‘behind the meter’? None of the solar that has been self-consumed, saving 25c to 50c per kWh, is shown on your bill. For most solar power system owners, that’s the bulk of their savings!

This leads to many solar owners thinking that the only financial benefits from their systems are the electricity exports on their bills. Typically that’s $150 per quarter, or only $600 per year.

If the electricity retailers cared about their customers knowing what’s really going on, they could plug a $20 device called a ‘current transformer’ into your meter to measure your solar output. Then they could present a bill that showed all your savings.

Let me use one of my bills as an example to show you what a difference that would make.

What my bill told me my savings were in a quarter:

Solar exports: 2,457 kWh x $0.08 = $196

What my true savings were:

Solar exports: 2,457 kWh x $0.08c = $196

Solar self-consumption: 960 kWh x $0.31= $297

Total solar savings = $493 for the quarter

As you can see, accounting for self-consumption is important to see the true savings of solar power.

In Step 4: Show Me The Money! I’ll show you exactly how I accounted for the self-consumption.

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