What is Net metering?

Net metering is a method of electric invoicing that allows you to store excess energy generated by your solar panels on the grid. Net metering credits you for the energy your solar panels produce that you don’t use. When your panels aren’t producing enough energy on a gloomy or rainy day, the utility grid will supply your home energy and count it against the credits you’ve accumulated over time. You will only be charged for your “net” energy usage as a solar customer. Net metering, often known as net energy metering or NEM, is the underlying policy of the solar business.

How does net metering work?

Assume you install a solar panel system that is net metered. When your solar panels produce more electricity than you consume during the day, the excess is routed back to the grid, effectively running your electric meter backwards. When you use more electricity than your solar panels produce, whether it’s at night or on cloudy days, you pull power from the grid, which moves your meter forward. You are billed for the difference between what you put on the grid and what you take off the grid at the end of the month or year, thus “net metering.”

You can produce enough electricity to match your home’s electricity demand for the full year with the right size solar energy system. However, the amount of power generated by your solar panels will fluctuate throughout the year: more in the summer months when the sun is higher in the sky and sets early, and less in the winter when the sun is lower in the sky and sets sooner. Net metering compensates for these seasonal variations in solar production by crediting you for any excess electricity your panels generate and allowing you to use it at a later period.

“Net metering can give you a new monthly paycheck” Fact or Fiction?

Net metering allows you to obtain utility bill credits for the electricity generated by your solar panels. In most circumstances, however, you will not receive a cash reimbursement from your utility for the additional solar electricity you generate. If you generate more electricity than you consume in a year, some utilities will allow you to carry over credits to future years, while others will diminish your credits. With this in mind, it’s critical to size your solar panel system to offset as much of your electricity consumption as feasible, but not to create much more than you consume.

What about going off the grid?

Net metering is essentially the same as using the grid as a large solar battery. You won’t get the benefits of net metering if you install a “off-grid” solar panel system since you won’t be able to rely on the grid as a large battery: you’ll need your own batteries to keep the lights on once the sun goes down. Staying connected to the grid is the best option for practically all home (and commercial) uses.

Why does net metering exist?

Net metering serves two purposes: first, to stimulate wider solar adoption across the country; and second, because utilities–and the entire power infrastructure–benefit from the influx of low- to no-cost solar energy onto the grid. Solar energy can assist offset the expense of obtaining electricity from other sources, particularly during the summer months, when electricity is sometimes the most expensive on the hottest–and sunniest!–days of the year.

How do electricity bills work with net metering?

Most households will generate excess electricity in the summer and need more electricity from the grid in the winter. Your utility will not give you a monthly check if you produce more than you need because these variations in production are pretty predictable. Instead, you’ll save up additional credits over the summer so you may use them at night and during the winter months when you need them. Even if you create much more than you need in some months and considerably less in others, with the appropriate design, your system may generate enough power to match your entire electricity demand for a year.

You’ll get a credit depending on the net number of kilowatt-hours you contributed back to the grid if your solar power system generates more electricity than you use over the course of a month. You must buy electricity from your utility to make up the difference if you create less electricity than you need in a given month. In these cases, you would be charged for the electricity you use, less any excess electricity generated by your solar panels.

Use net metering to save by going solar

The optimum solar policy is net metering, which allows you to store every unit of energy you generate with solar and utilize it from the grid at a later time. In fact, by offsetting their need for electricity from the grid via net metering, you can save tens of thousands of dollars over the lifespan of their solar panel installation.
While net metering isn’t the only way utilities reimburse households for going solar, it is by far the most frequent and effective. Continue reading to learn if your state supports net metering, and be sure to visit the Database of State Incentives for Renewables and Efficiency (DSIRE®), which keeps track of net metering and other regulations.

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