Selling Back Excess Electricity: A Renewable Homeowner’s Guide

As the world pivots towards renewable energy sources, many homeowners are interested in how they can make the most out of their solar panels and wind turbines. One common question is whether unused electricity can be sold back to the power company. This article will explore the possibility of selling back excess electricity and provide guidance for homeowners.

Understanding Electricity as a Real-time Commodity

One key concept to grasp is that unlike other commodities such as coal, which can be stored and resold at a later time, electricity is a real-time commodity. This means that if electricity is not used at the exact moment it is generated, it is essentially lost. However, if there is no demand for the electricity, it may not be produced in the first place, and the fuel used to generate it can be saved for later.

Grid-Connected Solar Panels for Excess Power

Homeowners with utility company-approved grid-connected solar panels can sell excess power back to the power company. In many cases, power cooperatives or utility companies pay homeowners the wholesale rate for any excess power generated and charge retail rates for electricity purchased from them. In other words, the electricity produced directly from rooftop solar panels is the most valuable, as homeowners are avoiding the higher retail price for power.

California, a Leading Example

California stands out as a leader in this area. Over one million homes with rooftop solar panels sell back some power each day. This practice not only reduces reliance on non-renewable energy sources but also helps balance the grid and reduce the need for new power plants.

Requirements to Sell Electricity to the Grid

To sell electricity to the grid, you do need to have an electricity generator license and qualified power-generating assets. This includes residential and commercial solar installations, wind turbines, and other renewable energy sources.

Rules and Credit Systems Vary by Location

The rules for selling back excess electricity can vary significantly depending on your location. Some electric companies offer a credit system, which may expire, while others will pay at the wholesale rate at some point. In some cases, you may receive nothing for excess power. Additionally, if your electric utility charges you at the retail rate but pays you at the wholesale rate, it may be best to produce only what you need. For example, in my situation, a credit of 19 cents per kWh for overproduction versus a charge of 23 cents for usage balances out over the year, so I never pay anything.

Considerations for Renewable Energy Incentives

When considering selling back excess electricity, it's important to evaluate the incentives and rules specific to your location. Here are a few factors to consider:

Wholesale vs. Retail Rates: Some utilities pay at the wholesale rate for excess power sold, while others will charge more for usage. Energy Storage Solutions: Utilizing batteries with your solar panels can be economically beneficial, especially if the utility company pays at a wholesale rate. Surplus Credits: Understand whether credits for overproduction will expire, and if so, how best to manage them.

In conclusion, while the ability to sell back excess electricity is not universal, it is an increasingly viable option for renewable energy homeowners. By understanding the local rules and taking advantage of incentives, homeowners can maximize the value of their solar and renewable energy installations.