Distributed Generation (Net Metering) Program

The distributed generation program enables Michigan's utility, cooperative and AES customers to develop on-site renewable energy electric generation projects to meet some or all of their electric energy needs and reduce their electric bills. Under the distributed generation program, customers may install an on-site renewable energy electric generation project, such as a wind turbine or solar photovoltaic panel. The project must be sized small enough so that it is no larger than what is needed to meet a customer's electric energy needs. The customer will be able to reduce their electricity purchases from the utility by using their generated electricity "behind the meter" and receive a credit for excess generation.  As of December, 2016, Michigan had over 2,500 customers participating in the program.

MPSC Staff held seven stakeholder meetings in 2017 to receive feedback on Staff's study of the appropriate distributed generation tariff reflecting equitable cost of service for the program. 

The Commission issued an order on July 12, 2017 finding that the net metering program shall continue as the distributed generation program until the new distributed generation tariffs are approved.  

Customers who sign up before new rates for the distributed generation program are established by the MPSC in a utility rate case after June 1, 2018 will also be able to maintain the terms and conditions under the net metering program for 10 years from the date of enrollment.

A customer is considered "enrolled" in the program if they have submitted a complete application to their utility. A utility has 10 business days from the submission date of the application to inform the customer whether the application is complete or deficient. The customer is given 60 days from the date of notification to rectify a deficient application.

When a final distributed generation tariff is approved for each electric utility in rate cases filed after June 1, 2018, new customers, and any existing customer who have surpassed 10 years on a previous program, will fall under the new distributed generation tariff.

After completing the standard electric utility interconnection process with the electric provider and receiving final approval to begin generating electricity, the customer may reduce their electric bill by generating some or all of their electric needs and receive a credit from the electric provider for any excess generation delivered to the electric provider during the billing month. Distributed generation customers will continue to pay monthly customer charges or system access charges. Distributed generation projects must be sized no larger than required to meet the customer's expected annual electricity needs. More details about distributed generation are provided below.

The distributed generation program will be available to a utility's customers until the size of the program reaches 1% of their provider's previous 5-year peakload average in MW. The program size will be measured against the total of the generator nameplate capacities for all participating customer's generators. One of Michigan’s utilities has reached its program cap for Category 1. Upper Peninsula Power Company reported they have closed their Category 1 Program as of July 22, 2016.      

Renewable energy credits (RECs) belong to the distributed generation customer. A customer may be able to work out a purchase arrangement with their utility. REC prices are generally market based.

Before making any decisions about participating in the distributed generation program, ask your utility for a sample bill.

Net Metering for Small Generators flow chart


Distributed Generation Program for projects 20 kW and under – Net Metering

The distributed generation program is available to any customer meeting the generator size requirements (20 kW and under) and using a UL 1741 certified inverter. Typically, residential customers would fit under this size category.

The distributed generation program for these types of projects features:

• Billing based on net usage.

• A credit for the full retail rate for all excess kWh.

• Use of the customer’s existing meter, if it is capable of measuring and recording the flow of energy in both directions.

• A generator meter available at cost, if requested by the customer. (The generator meter is for the customer’s benefit. Utilities are not obligated to read a customer’s generator meter.)

• Use of a certified inverter that meets international standards for electrical safety. The commonly accepted standard is based on Underwriters Laboratories (UL); standard number 1741 and tested using IEEE 1547 testing standards. The inverter manufacturer will be able to produce proof of this certification.

• A maximum interconnection cost of $100, consisting of the interconnection and distributed generation application fees. Utilities are not permitted to bill for any additional study fees, testing, or inspection charges.

• Distributed generation program credits for excess generation that can carry forward indefinitely.


 Distributed Generation Program for projects over 20 kW up to 150 kW - Modified Net Metering

This distributed generation program category is available to any customer meeting the renewable generator size requirements. Typically, these would be commercial, industrial, or institutional customers.

The distributed generation program for these types of projects features:

• Customers who pay the full retail rate for electricity deliveries from their electric provider and receive the generation portion of the retail rate or a wholesale rate for deliveries of excess generation to the grid.

• No charge for the engineering review for interconnection.

• Customers who pay all interconnection costs (combined $100 interconnection and distributed generation program application fee), distribution study fees and any required distribution system upgrade costs.

• Customers are not subject to standby charges.