While renewable energy systems are capable of powering houses and small businesses without any connection to the electricity grid, many people prefer the advantages that grid-connection offers.
A grid-connected system allows you to power your home or small business with renewable energy during those periods (daily as well as seasonally) when the sun is shining, the water is running, or the wind is blowing. Any excess electricity you produce is fed back into the grid. When renewable resources are unavailable, electricity from the grid supplies your needs, eliminating the expense of electricity storage devices like batteries.
In addition, power providers (i.e., electric utilities) in most states allow net metering, an arrangement where the excess electricity generated by grid-connected renewable energy systems “turns back” your electricity meter as it is fed back into the grid. If you use more electricity than your system feeds into the grid during a given month, you pay your power provider only for the difference between what you used and what you produced.
Some of the things you need to know when thinking about connecting your home energy system to the electric grid include:
- Equipment required to connect your system to the grid
- Grid-connection requirements from your power provider
- State and community codes and requirements
Equipment Required for Grid-Connected Systems
Aside from the major small renewable energy system components, you will need to purchase some additional equipment (called “balance-of-system”) in order to safely transmit electricity to your loads and comply with your power provider’s grid-connection requirements. You may need the following items:
- Power conditioning equipment
- Safety equipment
- Meters and instrumentation.
Because grid-connection requirements vary, you or your system supplier/installer should contact your power provider to learn about its specific grid-connection requirements before purchasing any part of your renewable energy system. See our page on balance-of-system equipment requirements for small renewable energy systems.
Grid-Connection Requirements from Your Power Provider
Currently, requirements for connecting distributed generation systems—like home renewable energy or wind systems—to the electricity grid vary widely. But all power providers face a common set of issues in connecting small renewable energy systems to the grid, so regulations usually have to do with safety and power quality, contracts (which may require liability insurance), and metering and rates.
You will need to contact your power provider directly to learn about its specific requirements. If your power provider does not have an individual assigned to deal with grid-connection requests, try contacting your state utilities commission, state utility consumer advocate group (represents the interests of consumers before state and federal regulators and in the courts), state consumer representation office, or state energy office.
Addressing Safety and Power Quality for Grid Connection
Power providers want to be sure that your system includes safety and power quality components. These components include switches to disconnect your system from the grid in the event of a power surge or power failure (so repairmen are not electrocuted) and power conditioning equipment to ensure that your power exactly matches the voltage and frequency of the electricity flowing through the grid.
In an attempt to address safety and power quality issues, several organizations are developing national guidelines for equipment manufacture, operation, and installation (your supplier/installer, a local renewable energy organization, or your power provider will know which of the standards apply to your situation, and how to implement them):
- The Institute of Electrical and Electronics Engineers (IEEE) has written a standard that addresses all grid-connected distributed generation including renewable energy systems. IEEE 1547-2003 provides technical requirements and tests for grid-connected operation. See the IEEE Standards Coordinating Committee on Fuel Cells, Photovoltaics, Dispersed Generation, and Energy Storage for more information.
- Underwriters Laboratories (UL) has developed UL 1741 to certify inverters, converters, charge controllers, and output controllers for power-producing stand-alone and grid-connected renewable energy systems. UL 1741 verifies that inverters comply with IEEE 1547 for grid-connected applications.
- The National Electrical Code (NEC), a product of the National Fire Protection Association, deals with electrical equipment and wiring safety.
Although states and power providers are not federally mandated to adopt these codes and standards, a number of utility commissions and legislatures now require regulations for distributed generation systems to be based on the IEEE, UL, and NEC standards.
In addition, some states are now “pre-certifying” specific models of equipment as safe to connect to the state electricity grid.
Contractual Issues for Grid-Connected Systems
When connecting your small renewable energy system to the grid, you will probably need to sign an interconnection agreement with your power provider. In your agreement, power providers may require you to do the following:
- Carry liability insurance — Liability insurance protects the power provider in the event of accidents resulting from the operation of your system. Most homeowners carry at least $100,000 of liability through their homeowner insurance policies (although you should verify that your policy will cover your system), which is often sufficient. Be aware, however, that your power provider may require that you carry more. Some power providers may also require you to indemnify them for any potential damage, loss, or injury caused by your system, which can sometimes be prohibitively expensive.
- Pay fees and other charges — You may be asked to pay permitting fees, engineering/inspection fees, metering charges (if a second meter is installed), and stand-by charges (to defray the power provider’s cost of maintaining your system as a backup power supply). Identify these costs early so you can factor them into the cost of your system, and don’t be afraid to question any that seem inappropriate.
In addition to insurance and fees, you may find that your power provider requires a great deal of paperwork before you can move ahead with your system. However, power providers in several states are now moving to streamline the contracting process by simplifying agreements, establishing time limits for processing paper work, and appointing representatives to handle grid-connection inquiries.
Metering and Rate Arrangements for Grid-Connected Systems
With a grid-connected system, when your renewable energy system generates more electricity than you can use at that moment, the electricity goes onto the electric grid for your utility to use elsewhere. The Public Utility Regulatory Policy Act of 1978 (PURPA) requires power providers to purchase excess power from grid-connected small renewable energy systems at a rate equal to what it costs the power provider to produce the power itself. Power providers generally implement this requirement through various metering arrangements. Here are the metering arrangements you are likely to encounter:
- Net purchase and sale — Under this arrangement, two uni-directional meters are installed: one records electricity drawn from the grid, and the other records excess electricity generated and fed back into the grid. You pay retail rate for the electricity you use, and the power provider purchases your excess generation at its avoided cost (wholesale rate). There may be a significant difference between the retail rate you pay and the power provider’s avoided cost.
- Net metering — Net metering provides the greatest benefit to you as a consumer. Under this arrangement, a single, bi-directional meter is used to record both electricity you draw from the grid and the excess electricity your system feeds back into the grid. The meter spins forward as you draw electricity, and it spins backward as the excess is fed into the grid. If, at the end of the month, you’ve used more electricity than your system has produced, you pay retail price for that extra electricity. If you’ve produced more than you’ve used, the power provider generally pays you for the extra electricity at its avoided cost. The real benefit of net metering is that the power provider essentially pays you retail price for the electricity you feed back into the grid.
Some power providers will now let you carry over the balance of any net extra electricity your system generates from month to month, which can be an advantage if the resource you are using to generate your electricity is seasonal. If, at the end of the year, you have produced more than you’ve used, you forfeit the excess generation to the power provider.