As community solar gains more attention in the U.S., more and more homeowners are hearing about a solar incentive referred to as “virtual net metering.” Thus, the question everyone is asking is fairly obvious: what exactly is virtual net metering, and how does it work? We’ve got the explanation.
What is virtual net metering?
Virtual net metering (VNM) is a bill crediting system for community solar. It refers to when solar is not used on-site but is instead externally installed and shared among subscribers. In this case, you receive credits on your electric bill for excess energy produced by your share of a solar garden.
Virtual net metering vs. regular net metering: what’s the difference?
In order to dive further into this new and highly appealing solar incentive, we should define two relevant concepts that are mentioned above: everyday net metering and community shared solar.
The term community solar refers to an alternative to rooftop solar for homeowners that either don’t qualify to have solar installed on their roof or would prefer not to have their own personal solar panels. Community solar is also sometimes referred to as “shared solar,” wherein homeowners collectively pay for a solar system that provides power to multiple households.
You can think of community solar as something that homeowners “subscribe” to. A large scale, off-site solar panel installation will typically offer available energy to hundreds of homeowners. In many cases, a community solar array can be built to power an entire neighborhood or town. A resident can either own a few of the community array’s solar panels or rent them in order to get discounted energy rates without having to make any up front purchase. Issues like maintenance, warranties and equipment are not a factor with community solar, because all of those elements are handled by the owner.
Net metering is a solar incentive where homeowners receive credits for the excess power that their solar panels produce. Because the excess power is delivered to the grid, net metering can be thought of as a solar storage solution that allows you to push and pull energy to and from the grid without having to pay extra for a home battery to provide backup.
How bill credits work with virtual net metering
Virtual net metering offers weighted credits determined by your portion of the solar array, which helps you account for the kWh of energy that your solar panels are generating. VNM is also referred to as aggregated or community net metering – it is an incentive that is shared among multiple people who own a share of a community solar array.
The amount of virtual net metering credits you receive depends on the size of your share in the community solar system. For example, if you own 25 percent of a community solar array, you’ll be credited for 25 percent of the production of that system. The credits will appear on your electric bill, offering you a significant cost reduction on your energy spending without the hassle of having panels installed and maintained on your own roof. In a sense, the massive solar array in which you hold stock will provide virtual energy to your home, and VNM credits are how you account for that energy.
What states offer virtual net metering?
Before anybody can construct a community solar array in your state, your government needs to approve legislation to enable virtual net metering. Not every state has VNM, but a growing number are developing virtual net metering rules to make way for community solar options. These are some of the states that offer virtual net metering in some form:
- Colorado (solar only)
- Delaware (solar only)
- Minnesota (Xcel Energy only, solar only)
- New Hampshire
- New York (solar only)
- Rhode Island
- Washington D.C.
- Wisconsin (solar only)
The top performers for community solar are where the majority of activity in this solar industry segment are occurring. However, there are other emerging markets – SEIA cites community solar programs active in 25 states as well as the nation’s capital. In general, community solar and virtual net metering are resoundingly popular in the Northeast. It’s forecasted that community solar programs will be established across the nation as awareness grows. As the “sharing economy” expands in the U.S. (Airbnb, Uber, TaskRabbit), more homeowners are exploring opportunities within their communities that help them make the most of their resources.
Why virtual net metering is taking off in the U.S.
Community solar and VNM combine to make a smart investment that guarantees reduced utility bills and carbon emissions. Because the incentive is “virtual,” you don’t have to deal with solar panels on your rooftop but instead simply receive credits that make energy use more affordable. For this reason alone, virtual net metering has become a popular option in the U.S. for homeowners who want to pursue green living but can’t install solar on their roofs. Whether you live in a multi-unit building or have a roof that can’t host solar panels, virtual net metering is a great way to take advantage of solar.
Furthermore, VNM allows for economies of scale. A massive utility-scale project can serve as a community solar garden and provide energy benefits for thousands of people. This type of sizing allows for lower per-unit prices, leading to massive projects that allow homeowners to go solar in a matter of minutes. The next step in solar’s rapid expansion is certainly this type of low-risk, high-reward opportunity to go solar without the barriers of installation. To get a feel for what solar would cost you, try our free Solar Calculator or register your home on the EnergySage Solar Marketplace to start receiving quotes from qualified, pre-vetted installers in your area.