A rooftop solar array could save you tens of thousands of dollars in electricity costs over the panels’ lifetime. You’re unlikely, however, to make money with solar. Most utility companies still charge a basic fee for service even if you put more energy into the grid than you take out. Read on to learn more.
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Ah, the 5 cents per kWh question. Can you actually make money by installing solar panels? Specifically, can you make money from a residential rooftop solar array?
The short answer is maybe, but it’s becoming more unlikely.
A lot of this depends on if net metering is available where you live, and how the net metering or net billing program works.
When net metering works too well
Here’s an example, based on my own experience, of where early adopters of solar took advantage of net metering and sort of ruined it for the rest of us.
My electricity provider (BC Hydro, a monopoly) used to pay customers nearly 10 cents per excess kWh generated by renewables such as solar and wind. Unfortunately, the company stopped this a few years ago as a handful of people were making tens of thousands of dollars with outsize arrays far beyond their personal use needs. Now, anyone who applies to the net metering program must include their household energy consumption.
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Why? Because the utility company has switched to tracking a home or business’s net energy and using any excess power generated to offset the cost of your bill. There are no payments, even if you make more power in a year than you use. Instead, your best-case scenario is that you break even (excepting the application fee for net metering and any unavoidable service charges).
So, to answer the question of whether you can make money with solar, it depends. Basically, even though a small solar array on my roof would create energy the utility company could sell to other customers, I wouldn’t see a profit from it.
The upside, though, is that I might not have to pay for electricity for the next 20 or 30 years. And, for you, there may be a greater pay-off, depending on your utility provider and household energy use.
A rooftop solar array could save you tens of thousands of dollars in electricity costs over the panels’ lifetime. You’re unlikely, however, to make money with solar. Most utility companies still charge a basic fee for service even if you put more energy into the grid than you take out.
Should you apply for net metering?
In general, if your utility provider offers net metering (also known as net energy metering or NEM in some places), you’ll want to apply. You’ll get the most out of net metering if:
- You have a south-facing roof in good shape with a few years of life left (at least)
- Your roof is big enough for a standard/common solar installation (about 240 square feet)
- Your roof is free from shade for most of the day
- You have another location on your property where solar panels can go
- You can install PV panels on an adjacent property connected to the same service (only some utility companies offer this option).
Before installing anything though, check with your utility provider, and see if any of your neighbors have installed rooftop solar arrays recently. I say recently for a reason: Beware exemptions and special clauses that support net metering payments only to those who applied prior to a certain date.
You can also talk to local solar installers as they should be up to date with net metering policies. These companies obviously have a vested interest in convincing you to install solar, but they’re still a great resource for information on how net metering actually works where you live.
Where I live, anyone who began net metering prior to 2019 will still receive 9.99 cents (CAD) for every excess kWh generated up until 2024. Anyone applying after that date gets nothing. Instead, excess energy flowing into the grid is only used to offset bills.
Is there a third way? Absolutely.
Net metering and battery storage
If you live in an area where net metering works instantaneously, every 15 minutes, or on a similarly short timeline, I highly recommend installing a battery alongside your solar panels. Why? Because the price of electricity you buy from the grid will always be higher than the credits you receive for electricity you put into the grid. This is why utility companies are so set on amending regulations to allow for instantaneous net metering instead of, say, monthly leveling of energy flowing in and out of a home with solar.
Confused? Think of it this way, under normal net metering with monthly ‘netting’ it doesn’t really matter to the utility company if you or your neighbor uses the energy produced by your rooftop array. Every month, your utility company just tallies your consumption and production to find the net or difference, then charges or credits your account accordingly. This means you can generate a ton of energy during sunny days, send any excess into the grid, then draw off the grid at night and on cloudy days without worrying (too much) about the cost of buying or selling electricity.
Utility companies don’t like this netting method, though, because they lose the opportunity to buy energy cheap and sell it back for more. To increase their profits, utilities are turning to instantaneous or 15-minute measurements instead, carefully clocking any energy going in or out. This prevents homeowners from producing an excess during the day and using up that credit at night.
How batteries help
Here’s the workaround: install battery storage. That way, you can consume energy as it’s produced during the day, save any excess for use at night (up to the size of your battery), and then switch back to drawing energy from the grid if/when the battery runs low. Your battery helps minimize your draw on the grid and means you ‘sell’ less energy to the utility without fair compensation.
Some legislators, such as in California, have proposed scrapping net metering altogether or modifying policies to allow for instantaneous netting. The argument here is that more solar customers will then add storage, reducing overall draws on the grid, especially at peak times.
One other way to make a rigged system work to your advantage is to check your credits close to the end of your billing period. If your utility doesn’t roll credits over indefinitely, consider charging any and all batteries you have now, so you use up ‘excess’ power you’ve generated throughout the year. This will then save you drawing from the grid in the early part of your next billing cycle.