Posted by Caryn Colgan | Sep 24, 2009

Guide to Selling Power Back to the Grid

Here's the basics of selling your renewable power back to the grid.

Owning an energy-efficient solar, geothermal, and/or wind powered home has many advantages. Besides producing free, sustainable, and non-polluting energy, alternative energy sources can create more energy than is needed to operate the home. When this happens, the utility meter reverses direction and runs backward saving you hundreds, and even thousands, of dollars in utility costs.

According to an article by Renewable Power Options entitled, Selling Power Back to the Utilities, November 2008 over 40 states have laws in affect stating utility companies must allow some kind of interconnection agreement with its users.

Most standard utility meters can measure the flow of energy in either direction. The meter spins forward when electricity is flowing from the utility to the customer and spins backward when power is flowing from the customer to the utility. Check with your power company to be sure you have the correct inverter to safely operate your alternative energy system.

Don't expect to receive a check in the mail. Few, if any, utility companies remit payment if you produce more energy than you use. Rather, a common practice is to roll over the dollar amount you saved to the next month or some future time when you use their power.

Since solar power is most productive during sunny days, extended periods of cloudy skies or rainy days will draw on any accumulated credits you have with the utility. The same unpredictable energy production patterns affect wind turbines. As long as the wind blows the turbines turn and produce energy. Geothermal is not dependent on weather patterns but is not available in all geographical locations.

With net metering, customers are billed for their net power usage. If the customers use energy that would have cost $200 to run their home but their solar panels, geothermal system or wind turbines offset $140 of that energy consumption, the utility would bill the customers for $60 ($200 less $140).

If the customers produce more power than they use in a month, the utility maintains a credit to be used to offset future net usage. For example, assume that in June, Dave and Sally produced $100 worth of solar power in excess of their monthly usage. July was a rainy month so they used $120 more power than their solar panels produced. Their utility company offsets their credit balance of $100 and sent Dave and Sally a bill for $20.

Additionally, the federal government offers tax incentives in the form of tax credits. Homeowners can file Form 5695 for tax credits up to $2000 for qualified solar electric property costs, up to $2,000 for qualified solar water heating property costs, up to $4,000 for qualified small wind energy property costs and up to $2,000 for qualified geothermal heat pump property costs. Selling that power to your local utility company can be easy and help you pay for your energy system. Contact your local utility company and file an interconnection agreement with them. Be sure to research your rights and the applicable regulations in order to earn money from your solar, geothermal, or wind powered source for energy.

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