If you are considering purchasing a solar system, a term you may have heard is net metering. Net metering refers to the process by which homeowners are able to access and use a surplus of stored energy that they collect on higher production days over a period of time (most often in the summer months).

This extra energy is sent to the utility grid, then during times when your solar system is not producing energy (such as at nighttime), your electricity meter will actually run backwards, drawing energy from the electric grid to power your home.

Understanding Net Metering

Here’s the equation: Power Consumed from the Grid – Power Produced and Transferred to the Grid = Net Power Consumption

Let’s break it down with an example.

Let’s say your household uses 1,000 kilowatt hours (kWh) of electricity during any given month. During that month, your panels produce 850 kWh. When you get your utility bill for that month, your home would only be charged for 150 kWh of electricity because that’s all your home pulled from the power grid.

So, let’s say your house only used 700 kWh of electricity one month, but your panels produced 850 kWh. Your utility company would then credit you for that additional 150 kWh on your next bill.

Benefits of Net Metering

Save on your monthly electric bill.

Think about the freedom of not having to worry about that electric bill each month! Especially with annual rising energy costs.

Recover initial costs faster.

Net metering helps to recoup the initial investment of the cost of the solar system. For those who finance, this means a faster payback period, simply because of the saved energy expenses!

Reduce growing stress on power grid.

The demands on the power grid have reached an all-time high, and will continue to get worse. This bogs down utility companies and makes it hard for them to deal with outages.

 

There are many discussions taking place across the country on how to evolve the current programs. Net metering updates may factor in such things as a more accurate valuation of the solar energy flowing into the distribution grid; rate structures that charge more for electricity at certain times of the day (or night) or look at where on the grid the excess electricity is being generated; credits at a wholesale rather than retail rate; and the impact of residential solar energy storage batteries.

If you are already benefiting from net metering for your solar system, you likely will be shielded from any significant reductions — you will be “grandfathered” in, regardless of any changes that may impact the rate design of new solar customers.

In order to take advantage of current net metering policies, be sure to visit our Solar page to find out if solar is a good fit for you!