Virtual net metering, put simply, is net metering for electricity generated by a solar system that is located at a different place than where the energy is consumed. If you’re a community solar customer (or you’re thinking about becoming one), you’ll want to familiarize yourself with virtual net metering. Lucky for you, we’ve got you covered!
- Virtual net metering is a solar incentive system that allows community solar subscribers to benefit from net metering.
- Virtual net metering awards credits for energy produced by solar panels, and those credits translate to discounts on electricity costs.
- Currently, 41 states and D.C. offer net metering and community solar in some form.
- Ready to start saving with virtual net metering and community solar? Get started today on the EnergySage Community Solar Marketplace by comparing projects in your area.
What’s in this article?
- What is virtual net metering?
- How does virtual net metering work?
- How does billing work with virtual net metering?
- What states offer virtual net metering?
What is virtual net metering?
Virtual net metering (VNM) is a bill crediting system for community solar. It refers to the net metering of solar that is not used on-site where it is generated, but instead fed into the grid and the resulting net metering credits are shared among subscribers. The energy generated by your share is sold to you at a discount, reducing the cost of your electricity bill. In most cases, you’ll receive credits on your electric bill for excess energy produced by your share of a community solar project.
In order to dive further into this highly appealing solar incentive, we should define two relevant concepts: community solar and net metering.
Community solar is an alternative to rooftop solar for households and businesses that either don’t qualify to have solar installed on their roof or would prefer not to have their own solar panels. Community solar is also sometimes referred to as “shared solar,” wherein households collectively pay for a solar system that provides power to multiple homes.
You can think of community solar as something that households “subscribe” to. A large scale, off-site solar panel installation will typically offer available energy to hundreds of households. 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. Learn more about how much you could save with community solar in this article.
Net energy metering, usually referred to just as “net metering”, is a solar incentive where households 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. This type of net metering only applies to power that is produced and used in the same location. If you think net metering sounds like a pretty good setup, but you don’t think you can benefit from it because you’re unable to install solar, you’re in luck! Virtual net metering (VNM) is a way to offer the benefits of net metering for people who are subscribed to community solar.
How does virtual net metering work?
The “virtual” part of virtual net metering is what allows community solar customers to reap the benefits of net metering even though they do not have their own solar systems. 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.
How does billing work with virtual net metering?
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.
With community solar and virtual net metering, you’ll receive two bills: one from your community solar provider, charging you for the energy credits generated by your share of the community solar project and your regular electricity bill, which will reflect the discount you’ve received on your electricity costs based on your share of the community solar project. You can think of the solar credits generated by your share of the community solar project like a gift card for electricity that you are able to purchase for 90-95 cents on the dollar. To learn more about community solar billing, check out this article covering the key things to know or get a preview of what your electricity bill will look like with community solar.
Can you earn money with virtual net metering?
With net metering, you’ll receive utility bill credits for the electricity that your solar panels produce. However, in most cases, you won’t receive a cash payment from your utility for your excess solar electricity. If you do generate more electricity than you use in a year, utilities in some states will let you carry credits over into future years, while others will reduce your credits. With that in mind, it’s important to size your solar panel system to be large enough to offset as close to 100 percent of your electricity needs as possible, but not to produce significantly more than you use.
What states offer virtual net metering?
Before anybody can construct a community solar array in your state, your state’s government needs to approve legislation to enable and regulate virtual net metering. Not every state has VNM, but a growing number are developing VNM rules to make way for community solar options.
The top performing states for community solar are where the majority of activity in this solar industry segment are occurring. However, there are other emerging markets – according to SEIA there are active community solar programs in 41 states, as well as in 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. (which includes companies like Airbnb, Uber, and TaskRabbit), more households are exploring opportunities within their communities that help them make the most of their resources.
These are some of the top states that offer virtual net metering:
- California: CA passed their first shared renewables law back in 2013, and in September 2022 they passed a law expanding virtual net metering. The market is primed for a boom considering California’s ambitious goal of becoming 100 percent carbon-free by 2045, and with the newer law we can expect to see market growth and increased availability of community solar by 2024.
- Colorado: CO first adopted community solar in 2010 with the passing of the Community Solar Gardens Act. Ten years later, they remain a leader in community solar. Xcel Energy, the largest utility in the state, boasts of the nation’s largest community solar program: Solar* Rewards.
- Illinois: IL is one of the most recent states to adopt community solar, having done so with the passing of the Future Energy Jobs Act in late 2016. Since then, the market has grown substantially thanks to the Illinois Shines program, which provides financial incentives for community solar projects.
- Maine: ME initially passed community solar legislation back in 2009. However, due to net metering caps and other policy factors, the state has had a hard time growing its community solar market to its full potential. In 2019, legislators passed An Act to Promote Solar Energy Projects and Distributed Generation Resources in Maine, which eliminated some past barriers and promoted community solar development.
- Maryland: MD began offering community solar in 2017 with the introduction of its seven-year community solar pilot program. With the passing of the Clean Energy Jobs Act (CEJA) in 2019, the state set a goal to generate 50 percent of its electricity from renewables by 2030, which includes community solar.
- Massachusetts: MA was one of the first states in the country to offer community solar options. Much of this is due to the passage of the Green Communities Act in 2008, which established the state’s first solar carve-out. This piece of legislation also helped form MA’s virtual net metering policy that allows electricity customers to receive bill credits for energy generated at community solar farms. According to the Institute for Local Self-Reliance (ILSR), Massachusetts had roughly 208 community solar projects as of late 2020.
- Minnesota: MN has long been the national leader for community solar, having more projects and capacity than any other state in the country. The state’s largest utility company, Xcel Energy, is home to the nation’s largest community solar program (Solar* Rewards). MN first passed community solar legislation in 2013 and community solar development has grown rapidly since.
- New Jersey: NJ passed AB-3723 / SB-2314 in 2018, which established the state’s first community solar program. The state’s renewable portfolio standard (RPS) targets 100 percent clean energy by 2050, which will help to incentivize community solar growth.
- New York (solar only): the Empire State is home to one of the best community solar markets in the country. NY first launched community solar in 2015 as part of the Shared Renewables Program, an initiative to help make clean, affordable energy accessible for all types of New Yorkers. As of 2020, thanks in part to Governor Cuomo’s NY-Sun initiative and Reforming the Energy Vision (REV) plan, New York is one of the top five states with the most community solar installations in the country.
- Rhode Island: Rhode Island established a community virtual net metering policy in 2016, which allows electricity customers to receive bill credits for energy produced at large, off-site solar projects. The state’s first community solar farm, Broncos Highway Solar, went live in late 2019. Fortunately, there’s more to come: as of late 2020, there are 16 more community solar projects planned for the Ocean State.
- Washington, D.C.: the first community solar project was built in Washington, D.C. in 2017, and community solar has been expanding in the District since. Solar for All and the District Department of Energy and the Environment are helping residents go solar in the city’s effort to go 100 percent carbon-neutral by 2050.
Start taking advantage of virtual net metering today!
With community solar, you’ll be able to take advantage of virtual net metering and save money on electricity costs! EnergySage is the nation’s leading online solar marketplace: using our Community Solar Marketplace, you can compare local options, get a quick community solar savings estimate, and seamlessly subscribe to an open project in your area. Over 10 million people come to EnergySage each year to learn about, shop for and invest in solar. Compare your community solar options today to see how much you can save.