Bi-directional metering means that the utility will pay avoided cost (sometimes called wholesale rate or buyback rate) for any overproduction from distributed generation, such as solar and wind energy.
What this means for you is that you will not receive the full retail rate for any power that is sent back to the utility. Instead, you will receive a lower rate (avoided cost). Typically this rate is typically 2-4 cents per kWh.
To help understand how this works, let's compare how Alliant Energy's net metering policies vary from the bi-directional metering policies described above.
Net Metering Policies*:
- Power that is overproduced is not bought back.
- Instead, a credit is issued for the full retail rate. (This is ideal for solar energy because the customer gets the full value of the power)
- When solar isn’t producing (such as at night) the customer can utilize the credit from the excess power they produced previously.
Instead of receiving a credit for the power and being able to use that credit later, bi-directional metering pays a lower than retail rate, called avoided cost, for any power that is sent back to the utility.
Electric cooperative and municipal utilities will typically establish policies like this in order to prevent solar/wind from being a cross subsidy. In other words - customer's of the utility without the ability to produce their own power will be forced to pay a higher rate for power.
*Net Metering policies vary based on your utility.