Solar and Your Utility

Solar and Your Utility

You may think solar and your utility company are positioned as adversaries, but it is almost never that simple.

Most solar installations are on homes or properties that are connected to the electrical grid and served by a utility company. These companies have a wide range of friendliness towards solar installation projects, depending on where you live. However, almost all utility companies in the US have some sort of arrangement to allow customers to install a solar system and connect to their electrical grid.

You must get approval from your utility company to activate your solar system.

This application process varies widely—some utilities require their approval to start the installation process, others only to activate the system once it has passed inspection by your local authority. This isn’t because the utility is looking to deny solar applications. Overall, utility companies approve most of the applications that are submitted. Those that are denied usually are larger systems that will put too much power into the grid in an area where the utility company’s equipment is unable to accept it without an upgrade. This is much more common in areas of the country where the grid is older (like the Northeast) or frequently battered by storms (like the Gulf Coast region).

A common misconception is that you can go solar and sell electricity from your solar to your utility company and make a profit.

Except in very few locations in the U.S., your utility company will not pay you for additional electric production that you do not use. Net metering allows solar customers to use their grid connection like a bank account to “store” energy credits for later use. However, it is very rare for utilities to pay for excess solar production from residential systems. It is usually a condition of connecting to the grid that the utility will not reimburse their clients for excess production (usually annually). Many even have limits on the maximum size system that can be installed based on your historical usage for this reason. It is important to understand your utility’s agreement when going solar, so you understand exactly how your credit system works and any unique features or guidelines that require consideration.

Differences in your local utility regulations can require changes to the design of your solar system, depending on your goals.

Certain billing structures (like Time of Use or Demand Charges) can mean that it is better financially to maximize production at a certain time of day versus installing a larger system. If you have a state with strong net metering protections or somewhere with production-based incentives, you would likely be better served generating as much of your own electricity need as possible.

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