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Can You Sell Surplus Industrial Power to the Electric Company?

Each month, your organization receives a utility bill from the electric company. Wouldn’t it be nice to receive a check instead? Hypothetically, that’s what can happen when you generate surplus electricity, and form a contract with the electric company to buy the power.

The federal government requires utilities in 42 states and the District of Columbia to purchase surplus electricity from utility customers, including those who have industrial power systems. Below, we look at three factors that significantly impact product and sale of surplus electricity.

States With Different Rates

Before planning to invest your earnings from selling electricity, it’s important to know what your state pays to purchase electricity from customers. States pay various rates for surplus electricity, but you won’t receive nearly as much as the electricity company charges customers for electricity. And about that hypothetical monthly check mentioned earlier, you’re more likely receive payment at the end of the year instead of monthly.

As the website Residential Solar Panels explains, “If you generate more power than you use from the electric company in a given month, you will see a credit applied to your bill. At the end of a year, if you have a surplus of energy, you may be paid in cash, at a wholesale rate, per kilowatt hour. What this means is that the utility will pay you what it costs to generate the power, and not the end-user markup.”

For example, if a kilowatt hour sells for $.09 / hr. And has a production cost of $.02 / hr., you’ll be paid the latter rate.

Different Sources of Electricity

The most common way to produce surplus electricity is outfitting real estate with solar panels. However, it takes more than a few panels to produce enough extra electricity to profit handsomely from liquidating it to the utility provider.

This is why some electricity producers resort to other methods of electricity generation that can pack more punch, such as installing a large, conventional power generator and building makeshift generators that produce electricity by combusting materials ranging from waste cooking oil to dead foliage.

The power source you choose depends on three things: how much you can invest upfront, how much time you have for equipment maintenance, and the level of profit you wish to earn. For many industrial power users, powering a facility via onsite electricity generation is a great financial reward in itself.

Connecting to the Electricity Grid

If you go the traditional route and use solar panels to generate electricity, you’ll need a grid tie inverter that inverts direct current (DC) electricity that solar panels produce to the electricity current your utility provider uses: alternating current (AC). However, it’s important to remember states and municipalities have different requirements for connecting hardware to the grid.

At Exeltech, we provide stock and custom grid tie inverters. If you’re an industrial power user that needs a grid tie inverter, call us today at 800-886-4683, or send us an email through our contact form. We’ll help choose the right inverter for your needs!