As part of our series on calculating the ROI of solar panels, today we answer a question from Jarrod in Baltimore, Md. about net metering — selling electricity from solar power back to the utility company.

Q: I understand my solar electric system may generate more power than I need to run my home. Can I sell this excess electricity back to the power company, and if so, how do I get started?

A: Maryland residents can absolutely sell their excess solar energy back to their power company. Maryland has committed to producing 20% of its energy from renewable sources (including 2% from solar) by 2020. The state is actively encouraging the practice of net metering – selling excess energy generated from privately owned systems back to the utilities – in order to meet this goal. To be eligible for net metering in the state of Maryland, your solar electric system must meet the following conditions:

  • It must produce no more than 2 megawatts of power. (Most residential solar electric systems fall in the 4-6 kilowatt range, well within the guidelines.)
  • It must be intended primarily to serve your own needs for power. Eligible systems may not generate more than 200% of your annual baseline energy usage.
  • It must be located on your property or on a property immediately contiguous to yours. However, you do not need to own the system. Leased systems or solar systems owned by third parties are eligible for net metering in Maryland.

Get Started: Sell Electricity from Solar with Net Metering

To get started with net metering, you must first send in an application to your utility company. Your qualified solar installer should handle this process for you as part of the installation package, as well as ensuring that your system meets all utility company requirements.

Depending on your location and equipment, you may run into a few minor expenses in setting up net metering. Your utility provider may charge a small fee for the application. Also, net metering requires an electric meter that can measure the flow of electricity in both directions – from your system to the grid as well as from the utility line to your home. If the equipment needed to monitor your system is more expensive than what is typically provided in your area, the utility company may charge you the difference in cost.

Once your system is installed, the fun begins. When the sun is shining brightly and your system produces more power than you are using, your meter will run backwards – meaning that you’re actually selling your home-generated power to the utility. Of course, at times when you’re consuming more power than you generate, you will be charged as usual.

In the end you will only be charged for the net amount of power you use: your total usage minus the amount you produce. If you generate more net energy than you use, the utility company will end up paying you! Don’t be alarmed, though, if you don’t see your net metering reflected on your monthly power bill right away. Most utilities, including Baltimore Gas and Electric, calculate net metered energy on an annual basis. Each April you”ll receive a check for any excess power produced over the course of the year (from April 1st of the previous year through March 31st of the current year). PEPCO, on the other hand, does calculate net usage on a monthly basis – but they may not be able to tell you exactly how much total power you’ve used (a situation they’re working to correct.)

(Editor’s Note: Learn more about understanding your PEPCO, BGE or Delmarva electric bill.)

Net metering in Maryland is a fantastic opportunity to get the most out of your solar electric system. But it may not be available forever. The program is first-come, first-serve, only until the state’s net metered power generating capacity reaches 1,500 megawatts. There’s still plenty of room for newcomers. However, if you’re considering investing in solar you might want to do so sooner rather than later, given that Maryland’s installed solar capacity grew 865% between 2011 and 2012.