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SESK: Stuff Everyone Should Know · sesk.info/solar-avoided-cost

Under a "net purchase and sale" setup, what does the utility usually pay for the solar power you export?

Its avoided cost, which is the wholesale rate.

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  1. The full retail rate
  2. Double the retail rate
  3. Its avoided cost (wholesale rate) ✔

Why: Two one-way meters are used. You pay retail for power you buy, but the utility buys your exports at its lower avoided cost. Net metering instead effectively pays retail for exports.

Huh, didn't know that: DOE warns there may be a significant difference between the retail rate and the avoided cost.

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Why did the sun go to the bank? To open a light savings account!
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References

Answer: Its avoided cost (wholesale rate). Two one-way meters are used. You pay retail for power you buy, but the utility buys your exports at its lower avoided cost. Net metering instead effectively pays retail for exports.

  1. DOE Energy Saver: Grid-Connected Renewable Energy Systems www.energy.gov/energysaver/grid-connected-renewable-energy-systems
    Under this arrangement, two uni-directional meters are installed
    Checked 2026-10-10.
  2. DOE Energy Saver: Grid-Connected Renewable Energy Systems www.energy.gov/energysaver/grid-connected-renewable-energy-systems
    the power provider purchases your excess generation at its avoided cost (wholesale rate)
    Checked 2026-10-10.
  3. DOE Energy Saver: Grid-Connected Renewable Energy Systems www.energy.gov/energysaver/grid-connected-renewable-energy-systems
    There may be a significant difference between the retail rate you pay and the power provider's avoided cost.
    Checked 2026-10-10.

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