Wisconsin net metering: selling electricity back to the grid

Wisconsin residents who want to add a solar installation to their home need to know about net metering, which is the utility billing practice of offering credit for energy your solar energy system sends to the grid.

When the sun is high in the sky, solar panels often make more power than your home needs, and the excess is sent to the grid. At night, you draw energy from the grid. Your utility company will install a special two-way meter that records the energy you send and receive as a certain number of kilowatt-hours (kWh).

At the end of each month, your utility “nets” the kWh they sent to you and the kWh you sent to them. If you received more than you sent, you get a bill for the difference. If your system made more than you purchased, you are a net producer of energy, and a credit will show on your electric bill.

The most important thing to know is: net metering is the number one way solar panels save you money. Read on to find out more about your specific utility’s rules and the future of net metering in Wisconsin. Spoiler alert: going solar soon is a good idea, as the rules may change this year!

How Wisconsin net metering works

Wisconsin is one of the pioneers of good solar policymaking, with the state’s Public Service Commission (PSC) first requiring electric utilities to implement net metering way back in 1982. This policy actually covers all forms of “distributed generation,” which includes solar, wind, and combined heat and power (CHP) systems. But this is a home solar website, so we’re going to focus on the rules that apply to homeowners for systems smaller than 20 kilowatts (kW).

When you sign up to get solar panels, your installer will design a system to fit your needs and help you file the application form and interconnection agreement with your utility. These will get you on your way to using and selling renewable energy in the Badger State! Once the system is installed, the utility will activate your new meter and you’ll officially be the owner of one of the state’s solar generation facilities.

Net metering for specific utilities

By state law, every investor-owned and public utility in Wisconsin is required to offer some form of net metering “tariff” (rate plan) to its customers, but energy co-operatives are not. But, not all Wisconsin utilities are created equal.

The Public Service Commission only requires utilities to offer retail rate credits up to a solar customer’s monthly usage. After that, the utility can decide whether to offer energy credits that roll over to the next month or purchase the excess kWh for overproduction (aka “monthly true-up”).

Here’s a rundown of the specific rules used by the state’s five large investor-owned utility companies:

Alliant Energy

Alliant Energy will purchase all excess solar generation at the retail rate, up to the customer’s usage for the month. If solar production exceeds usage in any month, the company will provide a monetary credit equal to the avoided cost times the number of kWh above the customer’s usage. The avoided cost is around $0.03 per kWh.

For example, let’s say your solar panels sent 500 kWh to the grid during the month, and you used 450 kWh from the grid when the sun wasn’t shining. Your bill will show a credit for 50 kWh times $0.03, or $1.50. More information is available from Alliant.

Bottom line: if you want to avoid getting paid 3 cents per kWh for a bunch of excess electricity, ask your solar installer to size your system large enough to just meet your needs during the sunniest month of the year.

Madison Gas and Electric

Customers of Madison Gas & Electric (MG&E) take service under the company’s Parallel Generation PG-2 tariff. The company offers kWh credits for any monthly net excess generation, which carry over to the next month. At the end of 12 months, the company determines if a solar customer has been a net purchaser or net seller of electricity.

If your system has sent less electricity to the grid than you used over the previous 12 months, you can keep getting the kWh credits that carry over to the next month. On the other hand, if you’ve sent more than you’ve used, you’re designated as a net seller, and any kWh over your monthly usage will be paid at the buyback rate listed on sheet E-2.2 in MG&E’s rate sheets. As of this writing, that rate was about $0.038 per kWh for standard home customers.

In plain language, that means you can get a solar system sized to produce 100% of your annual usage, and not worry too much about going over by a couple of kWh in a year.

WE Energies

WE Energies offers net metering under a simplified rate structure for systems with under 300 kW of generating capacity. Every month, the company measures how many kWh a solar customer sent to the grid and how many they used.

If a WE Energies customer uses more electricity from the grid than their solar system exports during the month, they get a bill for the difference. If the customer’s system exports more solar energy than their grid usage, WE Energies multiplies the net excess by the Buy-Back Rate listed in its Customer Generation Rates and applies the total as a bill credit. That rate is currently $0.042/kWh for standard residential customers, and there are separate Buy-Back Rates for customers on a Time of Use billing plan.

As with Alliant customers, people who want to avoid getting WE Energies’ Buy-Back Rate should size their systems to meet their usage during the sunniest month of the year, or increase their electricity usage by switching appliances from gas to electric.

Wisconsin Public Service (WPS)

WPS offers net metering under its PG4 tariff to systems up to 20 kW in size. Like all other utilities in this list so far, WPS offers full retail-rate credit for solar energy sent to the grid up to the total of energy the customer used when the sun wasn’t shining. If a customer’s generation in a month exceeds the energy they used, WPS provides a credit on the customer’s bill using a formula for the value of the energy.

The formula used is 45% of the on-peak rate ($0.04644) plus 55% of the off-peak rate ($0.03242) under rate schedule PG-2A, plus a $0.00831/kWh transmission credit. All that math adds up to about $0.047/kWh.

As with other Wisconsin utilities that reconcile net kWh monthly, it may be wise to reduce your solar system size to avoid producing more excess electricity than your nighttime usage in a given month.

Xcel

Customers of Xcel Energy in western Wisconsin are some of the lucky few who get kWh credits for monthly net excess generation that carry over during a calendar year. At the end of the year, Xcel totals up any remaining credits and multiplies them by the customer’s retail rate. If the end-of-year credit exceeds $2, Xcel issues a check for the value of the credits. A credit of under $2 is applied to the customer’s account.

This practice is the gold standard, also known as “true 1-to-1 net metering.” It’s not required by Wisconsin state law, so we certainly appreciate Xcel for doing it. But, they might not keep doing it if Wisconsin changes its net metering rules, as is now a possibility.

Determining how many solar panels you need in Wisconsin

The average home in Wisconsin uses around 9,000 kWh of electricity per year, and one kW of solar panels can make about 1,215 kWh per year. Divide 9,000 by 1,215 and you get about 7.4 kW of solar needed to produce the full usage of the average Wisconsin home. That’s about 20 solar panels.

Here’s a screenshot from our solar panel calculator that shows the yearly output of a 7.4 kW solar installation compared to the typical usage of the average Wisconsin home:

The chart shows how the solar panels make much more electricity than the home needs in spring and summer, and much less than the home needs in fall and winter. This means the solar panels can output nearly the full amount of electricity over the course of the year, but it might not be a good idea to go with this size, depending on your utility.

As we covered above, some utilities pay less money for monthly excess electricity, oftentimes a rate of just 3 or 4 cents per kWh, versus the average retail cost of about 14.5 cents per kWh. If you’re a customer of Alliant, WE Energies, or WPS, you won’t want to generate too much extra solar energy every month.

For example, between April and September in the graph above, solar production exceeds energy consumption by an average of about 20%. Reducing the system size by 20% down to 5.9 kW would eliminate most of the overage. You could also consider adding an electric car or converting gas appliances to electric ones so you’ll be able to use more of those solar kWhs.

Finally, the numbers above are just averages, and your specific home and needs will likely be different. You can use our solar panel calculator to get more accurate estimates of the size and cost of the solar system you need.

Latest news on Net Metering in Wisconsin

Net metering in Wisconsin as it exists today may not be around for much longer. The Wisconsin Public Service Commission (PSC) is in the middle of working on a docket to consider whether net metering should continue as it is or be modified.

The PSC has asked stakeholders and the public to weigh in on whether the state’s current version of net metering appropriately balances “the ratemaking principles of efficient price signaling, maintaining customer understanding and acceptance, equitable cost allocation, and recovery of revenue requirements.” They are also considering whether current rules “align with Commission and state energy policy goals.”

On that last point, it could be argued that the state’s goal is to encourage as much solar generation as possible. The state is under a 2019 executive order from Governor Tony Evers to achieve a goal of 100% carbon-free electricity by 2050. A study conducted for the PSC in 2021 indicated that rooftop solar could account for nearly 70% of in-state electricity generation by 2034 and that a statewide net metering program would be the single best way to encourage that to happen.

As in other states, utility industry representatives are pushing back, alleging that net metering represents a “cost shift” from solar to non-solar customers. Essentially the utilities argue that when net metering customers reduce or eliminate their electric bills, they don’t pay a fair share of the costs to maintain the grid and that those costs then fall on people without solar panels. This argument is simplistic and doesn’t recognize the many societal, environmental, and economic benefits of distributed solar.

RENEW Wisconsin is leading advocacy efforts in the state by organizing clean energy advocates to respond to the PSC’s docket and continuing to push for smart policy to encourage renewable energy in the state.

We’ll keep watching the PSC to see what it does with the net metering docket, and we’ll update this article as changes occur.

Bottom line: does solar make sense in Wisconsin?

Let’s boil it down: if you’re a homeowner with a good south-facing roof or patch of land that doesn’t get much shade, going solar in Wisconsin is a great idea. You can use solar power to run your home’s appliances and devices while sending extra energy to the grid and getting credit for it. Just make sure you know your utility’s policy on excess solar energy.

In addition to net metering, Wisconsin offers a $500 solar rebate through the state-run Focus on Energy program, and the federal government offers a tax credit that can earn you 30% of the cost to install solar panels. Between these incentives, a solar installation in Wisconsin can pay back its cost in about 12 years and provide your home with clean energy for decades to come.