How Can Net-Metering Reduce Your Municipal Electricity Bill

Posted: April 18, 2018
Tagged As: Electricity, Energy, Energy Bills, Net-Metering

Many municipalities are turning to renewable sources of energy as a means of lowering their energy bills.  If your municipality has a microFIT installation or some other source of renewable energy (e.g. water, wind, solar, bioenergy) that generates electricity, then you may want to consider net-metering.

What is Net Metering?

Net Metering is a billing arrangement with your local utility that allows you to offset the electricity you purchase from your LDC with electricity generated by your own renewable energy system. Net-metered customers receive credits on their electricity bill for the electricity they generate. Energy credits can be carried over for up to 12 months for application on future energy bills. Primarily, the electricity that is generated is consumed on-site and the remainder is sent to the grid, reducing your total energy cost. A net-metered customer is still able to draw power from the local distribution grid when needed.
Image of Basic Net-Metering System
Figure 1: A diagrammatic representation of a basic net metering system.

To become a net-metered customer, you must apply to your LDC to connect your renewable energy system to the grid. It is advisable to contact your LDC before buying or installing a renewable energy system. In some parts of the province, you may not be able to connect a renewable energy system due to capacity constraints on the grid.

To be eligible for net metering a customer must meet the following criteria:
  • Generate electricity from renewable source (e.g. water, wind, solar or bioenergy)
  • Generate for own use
  • Meet LDC technical, safety and inspection requirements
  • Obtain required environmental approval and municipal building permits.

Legislative Framework:

The net metering regulation (Ontario Regulation 541/05) has been in existence since 2005. This Ontario regulation mandates LDCs to offer net metering to their clients. The 2013 Long-Term Energy Plan (LTEP) identified net metering as an opportunity to transition customers from FIT/microFIT to net metering. The Ministry of Energy began consultations in 2016 to update the net metering regulation. Amongst some of the major changes were the removal of the 500kW size restriction and the eligibility of energy storage.

Below is a typical example of a customer’s energy consumption profile through net metering:
Typical Residential Net-Metering Consumption Profile
Figure 2: A residential net-metering system with a 4kW rooftop unit.

The 2017 LTEP intends to improve Ontario’s net-metering framework to give customers new opportunities to participate in renewable electricity generation. In accordance with this commitment, the Ontario government intends to expand net metering eligibility to include new ownership methods and to ensure appropriate consumer protection provisions and siting restrictions. Legislative and regulatory measures for these improvements are supposed to be made in 2018. The Ontario government will also work with the Independent Electricity System Operator (IESO) to develop a program to support a select number of innovative renewable and virtual-net metering demonstration projects.

Potential for Future

The Ontario Fair Hydro Plan has stabilized energy cost for the next 4 years. However, as the cost of energy begins to rise, net metering will be a reasonable economic alternative for municipalities to consider.

Already some municipalities have began experimenting with net metering with some of their buildings. It will be worth studying these municipalities to gather data on how their energy cost has been positively impacted by net metering. Other municipalities can take a cue form these pioneering municipalities.

How Net Metering Works

If you are considering a renewable energy project but are unsure how to proceed, the Renewable Energy Facilitation Office (REFO) would be a good starting point. Contact REFO by e-mail at or by phone at 1-877-440-7336.

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