How Net Metering Works (and Can Save You Money)
Homeowners with solar can earn money by selling unused solar energy to their utility company through net metering. You can save money on your electricity bill by switching to clean, renewable energy—one of the easiest ways to do so is by generating your solar energy.
What is the definition of Net Metering?
Net energy metering (NEM) is a technique employed by electric utility companies to calculate your electricity bill based on your net energy consumption. NEM is a terrific benefit for people who generate excessive solar power.
Your energy consumption and production are typically the determining factors. With net metering, you are fully credited for the electricity generated by your solar panels. Because you will only be charged for the electricity you consume minus the electricity you produce, this can often result in a zero or harmful electric bill.
How does net metering work?
Setting up a solar panel system is simple, as the sun is an available resource. Your home will be powered by the electricity your panels produce. If your panels aren't producing electricity at nighttime, for example, your electricity meter will move in the opposite direction, drawing electricity from the electric Grid to power your home.
Using net metering can save you money. Here's how.
You will get a credit on your monthly electricity bill if your solar panels produce more power than your home uses.
Here's the equation: Power Consumed from the Grid – Power Produced and Transferred to the Grid = Net Power Consumption
An example may help to clarify how the billing works. Your household may consume 1,000-kilowatt hours of electricity in a given month. Your solar panels will generate 850 kilowatt hours, but you'll only be charged for 150-kilowatt hours. Your monthly utility bill will only be for the electricity your home consumed, as all of it was taken from the Grid. So if your home consumed 700-kilowatt hours of electricity one month, but your solar panels generated 850 kilowatt hours, your utility company will credit you for the additional 150-kilowatt hours on your next bill.
Are credits rolled over?
Net metering programs are frequently structured to permit surplus electricity generated by homes to be rolled over to subsequent months, much like cell phone minutes. If your property generates more electricity than you can use in a given month, you may use net metering credits the following month to offset the electricity your household consumes. During the summer, you can stockpile credits to use in the winter, resulting in harmful electricity bills for many people. Wouldn't it be nice to have a harmful electricity bill?
Net Metering States
Solar panel installations and net metering policies vary significantly from state to state. Many of these legislative measures are intended to encourage individuals to install solar panels on their property to produce energy. Certain states and utility companies may offer net metering for solar as an incentive in addition to net metering. States with Renewable Portfolio Standards may provide tax credits or property tax deductions.
38 of the 50 states, as well as the District of Columbia, currently employ net metering. Net metering is currently mandated in 29 states and the District of Columbia, and 17 of those states offer alternative net metering schemes. In states like Idaho and Texas, net metering is still available even though net metering is not mandated on a state level. A list of states that currently offer net metering is provided below.
The Advantages of Net Metering
Reduce your monthly electricity bill: There's already been a lot said about how net metering can drastically cut down your monthly electric bill. It's also an investment in future electricity cost stability since prices rise annually. With net metering, you don't have to worry about paying your monthly electric bill.
Save money on startup costs: It helps you recoup the cost of installing a solar PV system by offsetting your energy bill. If you're paying for your system, you'll save money and thus pay off your loan more quickly.
To reduce the growing strain on the Electric Grid: As energy demands rise, there is an ever-increasing need for power on the Grid. As a result, utilities struggle to keep up, resulting in more frequent power outages and downtimes during rush hours. At night (unless you have a solar battery), you only pull in energy for your solar power system, thus reducing the Grid's burden as you do not pull energy during the day (unless you have a solar battery).
Net metering allows you to return electricity to the Grid for other non-solar consumers, decreasing the Grid's general dependency on fossil fuel energy that is beginning to run out due to your contribution.
What Is the Significance of Net Metering?
Your solar energy system may produce more electricity than your home or business consumes. That's why it matters! Solar panels produce more electricity than homes or businesses consume during the day, while they may require a lot of energy at night. Because of net metering, you are compensated for the total value of the solar electricity your system generates.
The generated electricity is fully credited to the home or business with net metering. If net metering is not in place, the homeowner may not receive full credit for the solar energy produced by the rooftop solar panels. In sum, without net metering, the Grid might not credit the homeowner for the surplus electricity generated by the solar panels.
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