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What`s the Difference Between Net Metering and Feed-In Tariffs?

Feed-in tariffs (FITs) and net metering, also known as net energy metering (NEM), are both methods designed to accelerate investments in renewable energy technologies (e.g. solar panels and wind turbines) by allowing energy producers (e.g. homeowners) to be compensated for the energy they feed back into the grid.

Net Metering

Most electricity meters are bi-directional and can measure current flowing in two directions. This allows you to easily bank excess electricity from your solar panels for future credit. Net metering can be implemented easily without special equipment or any prior notification.

Net metering only requires one power meter, while feed-in tariffs require two.

Unlike feed-in tariffs and power purchase agreements, the credits you accumulate through net metering are always at full retail value.

Net metering was first adopted by utilities in Idaho in 1980. Since the Energy Policy Act of 2005, every public electric utility is required to offer net metering to their customers. Some provinces in Canada have implemented net metering.

Feed-In Tariff

Feed-in tariffs require one extra power meter in order to measure outflow of electricity from your home independently. This enables electricity consumption and electricity generation to be priced separately.

Feed-in tariff schemes are typically based on a 15-20 yearlong contract where prices are pre-defined above retail with a tariff degression, which effectively reduces your earnings over time. For every kWh you generate you get paid.

Unlike net metering, feed-in tariffs do require prior arrangement and notification.

Only six states across the U.S. currently have some form of feed-in tariff scheme as of today: California, Florida, Vermont, Oregon, Maine and Hawaii.<sup[1]

Virtual Net Metering

Virtual net metering is basically net metering (with one electric meter) shared between several people. This enables homeowners that are unsuited for solar for one reason or the other, to participate in community-owned solar farms (also known as solar gardens).

There are about one dozen virtual net metering systems operating in the U.S. at the time of writing.

Rules can vary significantly by country and state/province:

  • Is net metering or feed-in tariff available?

  • How much are the credits worth (retail/wholesale)?

  • How long can I actually keep my banked credits?

  • Is there a monthly connection fee? References: [1] U.S. Energy Information Administration.

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