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Selling Solar Electricity Back To The Grid: What You Need To Know

Apr 8, 2022

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Grid independence, or being completely off the grid, may be feasible if you live in a remote area, but for many residential homeowners with solar energy systems, it still may make sense to remain connected to the existing utility grid. Remaining connected to the utility grid allows you to generate your own energy while selling your extra solar electricity back to your local utility company.

What Is Grid-Connected Energy?

The electrical grid is simply the system that connects energy users to the electric generation and distribution system. Solar, hydroelectric, nuclear, wind turbines and other forms of power generation are connected to homes and businesses across the nation through a series of power poles, transformers and substations. This interconnected apparatus is collectively known as "the grid."

Grid-connected energy refers to having your own solar energy system at your home while still being connected to the main power grid. This can allow you to buy power from the grid if you use more power than you generate. Advancements to energy distribution systems mean that you can also sell any excess power that you generate back to the utility grid.

Energy Independence Vs. Off-Grid Vs. Grid Independence

These three terms all relate to generating your own power, but they have slightly different meanings. Being energy independent just means that you generate enough power for your own needs. Grid independence means that you no longer rely on utility companies to supply your power.

In the case of energy and grid independence, you could still choose to remain connected to the utility grid, either as a backup or to sell excess power. When you have a stand-alone or off-grid system, that means that you are self-sufficient and have no connection to any electric grid. Off-grid systems are responsible for all of your energy usage with no backup, and no way to sell solar power back to the grid.

Selling Back Solar Power To The Grid: The Options

If you want to sell solar power back to the grid, you have a couple of different options. Which option works best for you will depend on your particular solar setup as well as the utility company in your area.

Net Metering

Many utilities offer a way to sell solar power back to the grid called net metering. If you have solar panels generating electricity at your home, you may generate extra electricity during peak daylight hours. With net metering, any excess power that you generate is sold back to the utility grid. You are only charged for the difference between power you use from the grid and the power you sell to the grid. This can make solar power a cost-effective way to reduce your monthly utility bills.

Net Purchase And Sale

Net purchase and sale, sometimes called net billing, is similar to net metering in that you might both sell and purchase power from the grid. Where net billing is different is that the rates for selling and buying power may be different. Check with your local utility company to see what types of programs they offer in your area.

Solar Renewable Energy Certificates (SRECs)

Many states and other jurisdictions have passed legislation requiring utility providers to source a specific percentage of their power from renewable energy sources like solar energy to reduce fossil fuel emissions. To prove that they are meeting the requirement, utility companies can use their own renewable power plants or purchase renewable energy credits.

If you live in an eligible area, you may get one Solar Renewable Energy Certificate (SREC) for each 1,000 kWh (or 1 megawatt hour) of energy production by a solar energy system. SRECs are performance-based solar incentives that “count” toward a state’s percentage of renewable energy; in other words, homeowners can get credit for contributing renewable energy back to their state’s grid and helping their state rely less on nonrenewable sources. These SRECs are separate from the actual electricity that is provided from your solar system. They can either be sold directly to the utility company or to specific SREC brokers.

Do I Need Additional Equipment To Add Power Back To The Grid?

Besides your solar panels and battery backup power, you are likely to need additional equipment to send power back to the grid. Homeowners should review their utility company’s interconnection standards to determine what permits, insurance and limits there might be on the power you can sell back.

Before you can sell back solar power to the grid, you will need to apply for what is called interconnection with your local utility company. When applying for interconnection, you will need to make sure that your solar power system meets safety and regulatory standards. Your solar installer should be able to guide you through the interconnection process as part of their installation service. They will advise you on the best equipment for your location and home.

Power Conditioning Equipment

A solar power conditioning system is used to convert solar photovoltaic power into a form that is suitable for storage or later use. Typically a power conditioning system consists of a solar charge controller, a battery inverter and a grid charger. This converts the direct current (DC) from your array of photovoltaic solar panels into alternating current (AC) that can be used by the power grid or your electrical outlets.

Safety Equipment

Your local utility may mandate certain types of safety equipment when connecting your solar energy to the local electric grid. One example of this is that in many locations, solar systems must have a shut-off when the rest of the grid fails. This can protect those who are working to fix grid issues during blackouts or other power outages.

Instrumentation And Metering

Besides the standard electric meter that connects the power lines to your home or business, your utility may require you to install additional metering equipment. This instrumentation equipment can help determine your energy consumption and rates for net metering or net billing.

Solar Battery Storage And Grid Interconnection

By definition, a PV system that produces solar energy only generates power during the day. Depending on how much sunlight your location receives, you may generate more solar energy than you can consume during peak daytime hours. To capture that excess power, many homeowners with a solar power system have an energy storage system that charges large batteries during daylight hours. These batteries can help to provide power during the nighttime when your solar energy system is not generating power.

Getting Started Selling Electricity Back To The Grid

If you already have or are considering installing a solar photovoltaic array system at your home, you'll want to understand how and why you might want to remain connected to the existing power grid. As you design your solar energy system, check with your local electric utility. They likely already have a program in place to help homeowners generate and sell back renewable power.

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