Can I Make Money Selling Electricity to My Power Company?

Installing a renewable energy system could not only provide all of your power needs, but also make you thousands of dollars per year when you sell electricity back to your power company. Most homes already have the necessary equipment to sell electricity back to a power company and even if they don't, the homeowner does not have pay for new equipment.

As of 2011, 42 states allow consumers to sell excess energy back to their power company—called net metering, according to the U.S. Department of Energy. These 42 states do not force power companies to buy all excess energy. Only twenty-nine states, for instance, require net metering for wind energy systems.

Some states do not allow consumers to make money through net metering. Instead, individual producers can add their surplus energy into the power grid and use it later when they cannot produce enough energy for their homes. Also, most profits are earned from renewable energy credits. Many utility companies are required by law to produce some amount of renewable energy. Because individuals can receive these credits by installing a clean energy system in their home, renewable energy credits can be sold to the power company instead of the power company producing clean energy on their own.

Most states that allow customers to receive money for excess energy put a cap on how much they can earn by limiting the output of systems that qualify for net metering. In California, for instance, individuals cannot have an energy system that produces more than one megawatt at its peak usage. Also, tax credits—dollar-for-dollar tax reduction that can be returned to the consumer—are critical to making net metering a wise investment. The federal renewable energy tax credit alone covers 30 percent of the cost of new renewable energy system.

The return on investment for renewable energy usually is $200 to $300, according to Jeffrey Gangemi of Businessweek. The amount of companies purchasing excess energy and renewable energy credits should grow significantly during the early part of the 21st century. By 2020, all utility companies in the U.S. will be required to produce some electricity from renewable fuels. Contact your state's energy commission and power company about net metering policy. If you do not have the proper equipment to send energy back to the power company, the power company must pay for the installation of new equipment.