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Virtual Net Metering Explained

Last Updated February 18, 2024

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Michael Jones

By Michael Jones

Michael literally wrote the book on solar (it’s called The Homeowners’ Guide to Going Solar) and has been a solar consultant for over four years.

Virtual net metering is the unsung hero of community solar

I’m on record as saying that Net Metering is the unsung hero of rooftop solar in Massachusetts. If that’s the case, then its cousin, virtual net metering, plays a similar role for Massachusetts community solar. 

Simply put, without virtual net metering, there would be no incentive for people to choose community solar and millions of people who can’t benefit from installing rooftop solar would also be denied the benefits of community solar. 

In this article I’ll explain the role that virtual nel metering plays in the burgeoning community solar landscape, walk you through the billing process for community solar and help you understand how you can benefit from what some experts call the democratized alternative to rooftop solar.

What is Virtual Net Metering?

Virtual Net Metering (VNM) is a billing mechanism that allows individuals to benefit from solar energy even if they’re unable to install solar panels directly on their property. Through virtual net metering, electricity consumers can subscribe to a solar farm situated at a different location from where they live. 

And just as homeowners with rooftop solar can receive net metering credits for electricity their solar panels send back to the grid, solar farm subscribers can receive virtual net metering crediting for the energy their solar farm sends back to the grid.

The credits show up in the form of a discount on their electricity bill. This discount acts as the incentive people need to encourage them to adopt solar even when they are not able to install panels on their roof.

How Billing Works for Community Solar

The whole point of community solar is that customers will ultimately pay less for the electricity they use. However, due to the complexities of how customers are billed for community solar, we typically get those lower electricity rates in, let’s just say, a roundabout way.

When you subscribe to a community solar project, you essentially get to purchase your energy at a lower rate than Eversource normally charges. In Massachusetts, that typically means you’ll receive two bills – one from Eversource and a second one from your community solar provider (or whichever third-party organization the provider has partnered with).

The bill that comes from the community solar provider tells you how much solar energy your subscription generated that month and, therefore how many virtual net metering credits you earned. You pay for those credits at whatever rate you agreed to when you signed up – usually at a discount of anywhere from 5 to 20 percent below the prevailing Eversource rate. 

Then, when you receive your Eversource bill, you’ll see that same number of credits reflected as a discount. Since the discount reflected on your Eversource bill is greater than the bill you paid to the community solar provider, you end up saving money overall.

A Virtual Net Metering Example

Let’s say you subscribed to a community solar project and the first bill you get from their third party billing company shows that your portion of the solar farm generated 300kWh of electricity that month. Let’s also assume that the rate you agreed to pay for that power was 30 cents per kWh, which is about 15% less than the prevailing rate that Eversource charges.

You would pay that community solar bill of $89.25 cents just like any other bill.

A few days or a couple of weeks later, you would receive your normal Eversource bill and let’s say that you consumed 400 kWh of electricity that month. Typically, you would expect to be charged for that electricity at at rate of 35 cents per kWh for a supply charge of $140. 

But you already purchased 300 kWh from the solar farm so you receive a 300 kWh virtual net metering credit on your Eversource bill and, therefore, only have to pay $35 for the outstanding 100 kWh. 

So instead of paying $140 to Eversource, you pay just $35 to Eversource and $89.25 to the community solar provider., which equals $124.25 for a savings of $15.75.

Consolidated Billing

Of course, all of this would be a little easier to keep track of if it was all expressed on a single consolidated bill. Some states have moved toward this, most notably, New York, Virginia and Illinois. Unfortunately, Massachusetts isn’t quite there yet.

We expect consolidated billing to come to the Bay State soon, but currently have no word on exactly when.

How to Sign Up for Community Solar

As of this moment, six community solar initiatives in Massachusetts are featured on the Energy Sage Community Solar Marketplace. It’s important to remember that inclusion in this list comes with a fee, suggesting there might be additional projects that are not displayed if they decided against paying for placement.

In another development, Cape Cod Solar Guys have entered into collaboration with Think Energy concerning community solar ventures in Massachusetts and several other states. They’re eager to share more about their program and assist you with enrollment. While it’s true we earn a commission for each signup via our link, that’s not why we recommend them.

Our recommendation stems from an appreciation that they do community solar the right way.

Final Thoughts on Virtual Net Metering

Virtual net metering might not be the most exciting part of the global energy transition, and you’re probably not going to impress your friends too much by showing off your deep understanding of it. But it’s a crucial piece of the solar puzzle.

Without virtual net metering, there could be no community solar. And without community solar, millions of people who either don’t own their own homes or are otherwise not good candidates for rooftop panels would be denied access to the most important source of electricity the world has ever had.

We’re all going to go solar sooner or later and virtual net metering is the mechanism by which millions of us get compensated for doing so.

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