What is Net Metering?

Generally, most solar energy systems are tied to the grid. So your home is capable of using power from your solar energy system or the grid. This ensures you have energy for your home and save on your electricity bills. Any excess electricity your system generates will flow into the grid. This benefits the grid and your utility company, and in return, you will be credited for energy that goes into the grid. These credits are used when your system isn’t able to generate electricity and your home will need to draw power from the grid. With this arrangement, at the end of the month, you will be billed for your net electricity usage. This arrangement is known as net energy metering or NEM and is an important policy for the solar industry.

How does net metering work?

When you install a solar energy system into your home, a part of the installation will involve your utility company connecting your solar energy system to your home electrical meter. This meter measures the electricity that your solar energy system produces and the amount of energy your system draws from the grid. If your home doesn’t have a net-capable meter, it will be upgraded to one.

During the day, when your solar energy produces more energy than your home consumes, it will be sent into the grid, which runs your meter in reverse. This will be counted as credits by your utility company for any electricity you will consume from the grid. If your home uses more electricity than your system can produce. You will pull electricity from the grid running your meter forwards. The meter will keep track of the electricity going back and forwards throughout the month. At the end of the month, you will be billed the net amount of electricity you have consumed.

Ideally, your solar energy system should be making enough electricity to match your home’s energy consumption for an entire year. Although keep in mind that conditions throughout an entire year aren’t always the same. You might see much more energy through the summer months, compared to the winter months. Day to day, rain and cloudy weather can disrupt the energy your solar energy system can produce. So racking up the most credits whenever possible throughout the year will help you account for any dips in your energy generation.

How do electricity bills work with net metering?

In terms of billing, you will generally produce much more electricity during the summer months. During these months you will see lower electricity bills, as your system will be operating at its peak efficiency and excess energy will help build up your credits. Your solar energy system will have to generate enough power to match your home needs and even excess to feed into the grid to generate credits. You may even come across bills where you won’t have to pay for the electricity generated.

On the other hand, you will see much more bills during months with rainy and cloudy days which interfere with your solar energy system’s ability to generate electricity. This is when your home will start drawing electricity from the grid to supplement the lack of electricity your system produces. You will end up adding to your electricity bill under these circumstances if you don’t have any credits left over. While your solar energy system will be able to produce electricity during the winter months. The reduced sunlight during the winter will probably hold you back from gaining credits during these months. You will still see savings from any energy generated during these months.

What about going off the grid?

If you have a solar energy system that is off the grid, you will not be able to take advantage of net metering. Net metering by nature is a policy that comes from your utility company for a grid-tied solar energy system. While your solar energy system and home aren’t tied to the grid, you will still have the benefit of having backup batteries for energy when your system isn’t producing energy. Although the size of the backup batteries will determine how long an off-the-grid home can go without generating electricity.

The difference between Net Metering and SRECs

One thing that people get wrong is that net metering can provide you with an additional source of income. This is not the case, as this sort of incentive is found in SRECs. Solar renewable energy certificates (SRECS) allow homeowners in certain states to earn SERCs for the energy their system generates. These SRECs can be sold in certain states for additional income. Some utility programs also offer per-kilowatt-hours credits for the energy your system generates.

The key difference is that net metering doesn’t directly result in a cash payment. As the credits generated by the excess electricity are counted and valued by your utility company. However, you can carry these credits for months and even years with some utilities in some states. Both are great incentives that will aid you financially and make the most out of your solar energy system.

Get started with solar energy today

If you are looking to start your transition to solar energy, we are here to help. Our website also has a free online estimate tool that generates a personalized report for you from a simplified questionnaire. That report will contain the potential savings you can net, and the cost of a solar energy system installed on your property. You can also contact us directly via phone at +1 (602) 363-8919 or via email at Scott@elitesolarenergy.org for more information regarding solar energy for your property.