What is Solar Net Metering and How Does it Work

Net Metering for Home Solar

As solar panels become more and more popular, there is an increasing need for homeowners to understand their options. Ideas like solar net metering can affect the way that you use the electricity produced by your solar energy systems.

Early on, solar panel systems were viewed as a way to get off of the electric grid, reducing monthly electric bills and offering freedom from the utility companies.

While getting off the grid is still a popular concept, another option is known as solar net metering. Under this system, homeowners can use the excess electricity produced by their rooftop solar panels to offset the power they draw from the electrical grid. 

What Is Solar Net Metering?

Your home’s solar panels don’t generate electricity around the clock. They work most effectively during the afternoon hours, when the sun is at its peak. But once the sun sets, you’ll either need to rely on the power grid or on excess solar electricity stored in batteries in your home.

When you use batteries, you may experience fluctuations in the amount of power available, especially during the winter when peak sun hours are reduced. This can leave you vulnerable to energy shortages.

With solar net metering, you instead send excess energy produced back into the grid, and the utility company pays you for the energy you offer. By balancing the amount of energy produced against the amount you draw from the grid, you’ll either see a reduced energy bill (if you use more energy than you produce) or you’ll receive a credit for sending more energy than you used.

How Does Net Metering Work?

When you install solar panel kits on your home, you’ll begin producing solar electricity almost immediately. By signing up for net energy metering, you’ll be connected to the electric grid in a way that allows you to not only draw from the grid but to also transfer your excess solar electricity back into the grid. This helps to provide your electrical utility service with the energy they need to supply other customers.

Because solar panels produce energy during the daytime when demand is at its lowest, solar net metering allows you to share that excess supply with the community and provides you with an offset to your energy costs. Ideally, this lets you smooth out any peaks and valleys in your electrical usage, especially during evenings and the shorter days of winter.

Benefits of Net Metering

There are a number of reasons why net metering is so popular. These include:

Savings

The most common reason that homeowners opt for solar net metering is because of the savings that it can offer. It allows homeowners to avoid big spikes on their bills in the summer, at a time when air conditioning eats up much of their energy production. It also negates increased energy costs during the winter, when shorter days keep panels from producing enough energy for their needs.

Convenience

Because you remain connected to the electric grid under a net metering arrangement, you’ll never run out of power, no matter how great your needs may be. Basically, you get the best of both worlds: The reliability of the grid and cheap, renewable solar energy.

Flexibility

Net metering isn’t just for solar panels. Most states have rules that allow you to add net metering for other forms of energy as well, including wind and geothermal energy production.

Types of Solar Net Metering Agreements

Depending on where you live, there are a few different kinds of net metering agreements available. Let’s take a quick look at the most common arrangements.

Net Metering

Basic solar net metering involves a single energy meter, which runs forward when you consume energy and backward when you supply energy to the grid. When you contribute more energy than you consume, you’ll receive a credit for the amount you added to the grid, which can be used on future electric bills.

Feed-In Tariff

In these agreements, your home will actually have two different meters: One to measure consumption and one to measure your contributions. The meter measuring your usage will be billed at a lower rate than your contribution meter, which can quickly provide you with a surplus energy credit. Feed-in tariffs offer homeowners a greater incentive to participate in net metering.

Net Purchase and Sale

Similar to a feed-in tariff, these agreements involve two different meters. However, the prices are reversed, and the rate for your contribution will be lower than the rate for consumption. While this isn’t as advantageous for homeowners, it’s still a good way to save on energy costs overall.

Aggregate Net Metering

If your property has a number of buildings, each with their own solar array, an aggregate metering agreement allows you to connect each building to the grid, receiving credit for the contributions made by each set of panels. This is especially popular on farms and ranches, especially with the ease of DIY solar kits.

Virtual Net Metering

Under this system, multiple residents can band together to form a single net metering agreement. Residents in apartment buildings can install a centralized solar system, with each participant receiving a share of the production based on their investment in the system. While the energy is produced collectively, each participant maintains a separate account with the utility company.

Neighborhoods can also participate in these agreements by building a communal solar farm, which can be used to power homes throughout the neighborhood.

Does My State Offer Net Metering?

While solar net metering is an increasingly popular option, it’s not available in every state. However, 41 states have rules mandating the availability of net metering, and there are two others that have provisions allowing net energy metering. Check with your local utility company to see if your state offers net metering.

The Future of Net Metering

Solar power continues to play an increasingly important role in our lives, and technology like solar battery chargers will only become more common. This is also true with solar net metering agreements, which represent one of the best ways to get the most value out of your solar panel system.

As the technology progresses and solar panels become standard in new construction homes, net metering will only become more common, giving homeowners the chance to save money while being environmentally responsible.