Electric bill credits from rooftop solar
Rooftop solar benefits everyone. Solar owners benefit directly by generating electricity to use directly at your home and business. But your neighbors also enjoy the benefits of clean, local solar energy when you produce more than you use. The credit your utility adds to your electric bill for that electricity you share with your neighbors is called Excess Distributed Generation (or EDG).
Note: If you installed solar before July 1, 2022 or have net metering, you can find out more here.
EDG can be confusing. Here are some common questions from solar owners and answers that can help you understand what you receive for the electricity you generate, but don’t use yourself. This page will also help you understand how to maximize your solar investment with EDG.
- What happens to the electricity my panels make?
- What happens to the electricity I don’t use?
- What is the credit I receive for the electricity I don’t use?
- How are my EDG credits counted?
- What will I see on my bill each month?
- How can I make the most of my solar system with “instantaneous netting”?
- What’s next in advocating for fair solar policies in Indiana?
How is the electricity generated by my panels used?
Your solar panels may be set up a little bit differently than the image in this section, but all solar energy systems function similarly. Block #1 shows the panels, or solar array, on the roof. The panels collect sunlight and turn it into Direct Current, or DC, electricity. That electricity goes to #2, the solar inverter. The inverter converts that electricity into Alternating Current, or AC, electricity. Your home and appliances most likely use AC electricity. That AC electricity then goes to #3, your home’s electrical panel. This is where it’s sent to power your lights, computers, refrigerator, and anything else in your home that uses electricity. Any electricity you don’t use is sent to #4, the utility meter on the outside of your house. After flowing through your electric meter, it is then sent to be used by your neighbors.
Before your solar array was turned on, your utility switched out your old utility meter for a new, bi-directional meter. This meter measures how much electricity you take in each month from the utility and how much electricity you send back.
What happens to the electricity I don’t use?
Sometimes your solar panels generate more electricity than you can use at that particular moment. Think about the middle of the day, when your panels are pumping out electricity, but you’re at work, or you’re running errands. You may not be using all that electricity at that moment. Where does the electricity you’re not using go? If you’re hooked up to your local utility and you don’t have batteries to store it, that electricity goes out through your electric meter and onto the grid. Since electricity uses the path of least resistance, the people closest to you will use it instead.
This electricity you send out benefits everyone. In addition to providing environmental, health, and economic benefits that come from clean electricity, rooftop solar also helps by:
- providing clean power where it’s needed locally, where it can be used most efficiently,
- reducing wear and tear on the electrical grid, and
- limiting the need for the utility to add expensive infrastructure, like additional power plants or other system upgrades.
For every kilowatt-hour of electricity you send out to the grid, you get credit on your bill that helps lower your monthly payment.
What is the credit I receive for the electricity I don’t use?
The credit you receive will depend on the utility that supplies your electricity.
If you’re a customer of a municipal electric utility or a rural electric member cooperative (REMC), the amount of credit for the electricity you send back – and how it’s measured – will vary. You will need to check by going to the utility’s website or calling them to see what their rate of credit is for the electricity you send out.
If you’re a customer of one of the five large investor-owned utilities or IOUs (NIPSCO, CenterPoint, Duke, AES, or I&M/AEP), then you will receive an Excess Distributed Generation credit, or EDG credit. That EDG credit is equal to the average wholesale price of electricity for the prior year plus 25%. The wholesale price is what the utilities pay for the electricity that they send on to you.
Wholesale prices go up and down. The EDG rate will be updated annually for each of the five large IOUs. These updates will reflect what the average wholesale price was in the previous year multiplied by 1.25.
EDG replaces a previous and fairer system of credit called net metering. The IOUs lobbied the state legislature to do away with net metering in 2017. The Indiana General Assembly acted by replacing it with EDG in 2022. Solar United Neighbors has worked with many individuals and state organizational partners to preserve and bring back net metering. We’ll continue that work.
2024 EDG credit rates by utility
| NIPSCO | $0.036675/kWh |
| AES Indiana (IPL) | $0.039350/kWh |
| I&M | $0.036100/kWh |
| Duke Energy Indiana | $0.041542/kWh |
| Centerpoint (Vectren) | $0.038330/kWh |
How are my EDG credits counted?
With EDG, all the electricity generated by your solar panels that you don’t use is credited at the lower EDG rate. That means every kilowatt-hour you share with your neighbors on the grid is worth much less to you as the solar owner than electricity you use on site. The utilities call this form of measuring solar credits “instantaneous netting.”
We’ll talk more shortly about how you can maximize your solar savings with EDG. But first, it’s worth spending more time on why SUN and our allies argue that EDG is unfair and what we can do about it together.
Before the Indiana General Assembly ended net metering, solar customers received a one-to-one, even swap for the electricity that they sent to the grid over the course of a monthly billing cycle. By reducing the credit value to the lower EDG rate and changing how credits are counted, Indiana’s policy makers significantly reduced the value of going solar in our state. This decision was largely thanks to lobbying from large investor-owned monopoly electric utilities with primarily out-of-state ownership.
Changing solar compensation from net metering to EDG puts rooftop solar out of reach for too many Hoosier families that want to go solar.
Along with several partners and allies, SUN challenged the switch to “instantaneous netting,” taking our case all the way to the Indiana Supreme Court. Unfortunately, in early 2023, the Court overturned a previous victory for solar advocates in a lower court, ruling in favor of CenterPoint Energy and upholding EDG with no monthly netting.
Despite this setback, SUN remains committed to fighting to ensure all solar owners receive fair credit.
You can stay committed to the fight too. We encourage all solar supporters to join together to fight for their energy rights. Stay committed by joining our Solar Action Team! Advocates from around the state have joined the Solar Action Team to fight for fair solar policies! If you’d like to join our efforts, please contact us at: INTeam@solarunitedneighbors.org.
What will I see on my bill each month?
Your bill will reflect the difference between these two amounts:
- the cost of the electricity you use from the utility, and
- the amount of credit off your bill for the electricity you send out.
What the bill won’t show is the amount of electricity generated by your array that you used directly at your home. It will only reflect the amount of electricity you don’t use at your home and that you then send out.
You can check the data available from your solar inverter or solar meter to see how much electricity your panels generated.
How can I make the most of my solar system with “instantaneous netting”?
If reducing your electric bill is an important reason you want to go solar, it’s important to remember that electricity you use from your solar panels will be more valuable than the electricity you generate and send to the grid.
Therefore, the key task with “instantaneous netting” is to minimize the amount of electricity you send out. To maximize your investment in solar, use as much of your solar-generated electricity at your home or business as you can. Here are some tips to consider to help you accomplish that goal.
First, make sure that your solar system is sized correctly for your energy needs. Assuming no other changes to your electricity consumption, you’ll want a system that, on average, only provides a portion of the electricity that you use. That often is around up to 50% of your monthly electricity usage. The actual number will depend on specific features of your personal energy consumption, like if you use more electricity during the day, and how your solar installation is designed.
While there will still be moments that you send electricity out, and thus receive the lower EDG credit for it, those moments will be few, assuming your system is properly designed to maximize self consumption. Properly sizing your system is the cheapest way to maximize your solar investment.
Second, you can explore a wide range of supplementary options to use more electricity from your solar panels on your side of the utility meter. This could include shifting when you use electricity to better align with when your panels are producing electricity. For example, if you have an electric vehicle, you can program it to charge during the daytime instead of overnight. Or, you can install a package of equipment and software that helps you manage certain energy intensive appliances, like an electric water heater, so that the appliance runs more often while your panels are producing.
You can also ask your solar company about adding battery storage to your solar project, though the additional costs of adding batteries may be significant.
Finally, another important thing to do is to upgrade the energy efficiency of your home. You will get the biggest return on the investment you make in your home if you combine a properly-sized solar array with energy efficiency upgrades.
The good news is that the federal government has created a whole host of new tax credits, rebates, and other incentives that could help to cover the costs of these additional investments in efficiency, battery storage, and electrification upgrades. If you want to see more information about what kind of incentives might be available to you, check out this Savings Calculator from our partners at Rewiring America.
What’s next in advocating for fair solar policies in Indiana?
States all over the country recognize the value and benefits that customer-owned rooftop solar brings to all electricity users. They do so by using net metering to calculate credit for solar-generated electricity. Unfortunately, in 2017, the Indiana General Assembly went along with the wishes of the large IOUs. It voted to end net metering by July 1, 2022 and replaced it with EDG. That decision was made worse with the adoption of “instantaneous netting” or “no netting” practice for counting solar credits approved by state regulators at the Indiana Utility Regulatory Commission.
Solar United Neighbors continues to work with our partners around the state and solar supporters like you to ensure that all solar owners receive fair credit for all the electricity they generate.
You can be a part of that effort by joining our Solar Action Team. The team is made up of folks just like you from around Indiana. We meet once each month online to receive an update on what’s happening with solar in the Hoosier state. We work together to find out how we can advocate for better solar policies with lawmakers and other policy makers. Join the Solar Action Team to help make a better utility system for all Hoosiers!
If you have other questions about your bill, the credit you receive for the electricity you send to the grid, or other solar issues, email us at inteam@solarunitedneighbors.org.