How to Sell Power Back to the Grid

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The Federal Energy Commission passed new rules in the fall of 2013 that makes it easier for homeowners and small businesses to connect to the grid -- and sell power back to it. These new standards apply to small businesses and homeowners with 20 megawatt systems and smaller. When installing an alternative energy system, you must adhere to state or local building codes and installation requirements before you apply to the utility company to sell power back to the grid.

Alternative Energy System

Check your state and local government codes before installing an alternative energy system for your home or business, as government inspectors must inspect the system during construction and approve it when complete. These systems include small wind and solar systems, micro hydropower systems and hybrid wind and solar electrical systems, some of which may not be approved in your area. A professional contractor can do an energy analysis of your home or business to determine the type and size of the system you need, as systems are custom-designed based on electrical needs, location and local laws.

Net Metering

Net metering allows utility companies to give credits back to alternative energy system owners when they generate more electricity than they need. To sell power back to the grid, the system owner must have a bi-directional meter installed by the utility company after the owner's application has been approved. This meter measures the flow of energy to or from the grid. Alternative energy system owners are only billed for the net energy they use. According to the Solar Energy Institute Association, this usually represents 20 percent to 40 percent of an average solar system's output.

Public Utility Commissions

State public utility commissions or service agencies determine the process that utility companies must use for customers who want to sell power to the grid. The process usually involves filling out the utility company's application form and interconnection contract. Requirements differ based on the utility company, the region or area of the country, and the amount of excess energy generated by the home or business system. Larger systems may require additional information and documentation.

Connection Procedures

After getting the needed local government approvals for your alternative energy system, check with your utility company to get the application and interconnection contract. Some companies may require you to pay a small application fee, install a disconnect switch and obtain general liability insurance, but this usually only applies to customers with large systems. For example, Duke Energy customers in Florida that generate less than 10 kilowatts do not have to pay an application fee, do not need a disconnect switch or additional insurance coverage.

Federal Energy Tax Credit

Homes that heat more than half their water with a solar system certified by a state-approved entity can receive up to a 30 percent tax credit on their system when installed by December 31, 2016. This applies to systems placed in service after 2008. To receive the residential energy credit from the government, homeowners must fill out and submit the IRS Form 5695 with their taxes during the tax season. Eligible systems include photovoltaics, wind, fuel cells, geothermal heat pumps, solar water heat and other solar electric technologies.