What is Net Metering?
Net metering is an incentive system that allows utilities to credit solar energy system owners for the electricity generated by their solar panels. With this system, you only have to pay for the electricity that you use beyond what your solar panels produce. Net metering legislation and implementation is different across the country, and various utility companies will have their own policies within their locality.
How Does Net Metering Work?
Image courtesy of FPL
Net metering is viewed as a billing mechanism for both residential and commercial customers as a way to receive any excess energy from solar panel owners. For example, if a homeowner has a solar panel system on their rooftop, they may generate more electricity than their home needs during the day time. If the home is net-metered, then the electricity meter will run backwards to provide a credit to the homeowner, which can be used towards electricity consumed at night or at other periods in time when the solar panels produce less energy (i.e. during a cloudy day). Customers are only billed for their total “net” energy use.
Solar energy panels usually reach their peak electricity production during the afternoon because the sun is stronger at that time of the day and most people are not at home using electricity. Home electricity use is more common during the morning and evening times. Net metering allows your household to account for those daily shifts in electricity usage.
As stated in the example above, excess electricity in a net metering system is sent back to the utility grid. This causes your meter to run in reverse. You can use that electricity when you are lacking the necessary amount of solar power and ensures that your shortages of solar power will be covered by the excess solar you produced on a previous day. Net metering provides you with the security that you will be covered for a rainy day!
When your solar panel system generates more electricity than you needed for the month, then you will receive a credit on your energy bill, which is based on the net number of kilowatt-hours you provided back to the grid. Any extra electricity that you need during the month will be charged to you (if you do not have enough solar stored up).
The Power of Net Metering
Net metering allows utility customers to generate their own electricity from the power of clean and effective solar panels. Most solar panel owners produce more electricity than they consume, and net metering allows them to export the excess power back to the grid. Overall this saves the homeowner money on future energy bills. For example, California public schools and agencies will save $2.5 billion in electricity costs over the next 30 years because of the net metering system.
Net metering also creates jobs from the demand for solar panels. This demand leads to even more jobs for solar panel installers, electricians, manufacturers and others who work in the solar industry. Currently, the solar industry employs more than 250,000 U.S. workers and many of these jobs can be credited back to successful net metering policies.
Net metering is the most common form of utility credit for those using solar power. As of 2018, 41 states and Washington D.C. have enacted net metering laws and two other states have utilities that permit a net metering program.
Net metering will provide you with utility bill credits for the excess electricity that your solar panels produce, but they will not give you a cash payment for the excess electricity. The credits will simply apply to your monthly energy bill. If you generate more electricity than you use in a year, then some utilities, depending on the state you live in, will let you carry over the credits into the next year.
Going Off Grid?
Net metering is like having the electric grid as a giant solar battery. If you install a solar energy storage system to allow your home to be “off the grid” , then you will not have the benefits of net metering. Staying connected to the grid is your best option for energy credits. Solar battery systems are useful for hour by hour fluctuations in solar electricity generation, but they are not efficient enough for seasonal fluctuations that net metering can provide.