All About Net Metering

27August 2019

What is Net Metering and How Does It Work?

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There are certainly a number of advantages for taking the plunge into solar energy. Perhaps one of the most beneficial aspects is the concept of net metering, or net energy metering as it is sometimes referred to. Let’s take a closer look at how this concept can put money back into your budget while putting more energy back into the grid.

What is net metering?

Net metering is a concept that allows you to put excess energy back into the power grid. This is excess energy that is generated from your home’s solar power system that is in excess of what your homes electrical appliances were using at the time this solar energy was generated. You are then given a credit for the power that you contribute to the system. This credit is then used to offset the cost of any power that you need to draw from the power grid. The difference between what you contribute and what you consume is the net difference. Want to see how much energy your home can generate?

How does net metering work?

Your home’s solar energy system will generate the most power during the day. This is also when your home typically uses the least amount of power. The excess created during the day is then transferred back to the power grid so it can be shared by other consumers. You receive a credit for the power that you share. In fact, your power meter will go in reverse to reflect your contribution.

During the evening, your solar system creates no power and you typically consume a significant amount of power. At this time you will need to draw energy from the power grid. Your power meter moves forward again. At the end of the month, you will receive a credit if you contribute more to the grid than you use. This is more likely to be the case in warmer months when longer days and higher solar insolation levels mean your solar power system is producing more power. For those months that you use more than you contribute, you will only pay the net difference between what you contribute and what you use. Interested in reducing your power bills with net metering?

What are the benefits of net metering?

There are two main benefits to net metering. The first one is a financial benefit to the owner of the solar energy home. You can greatly reduce your monthly power bills resulting in thousands of dollars in savings over the life of your solar energy system. This means that your new solar panels can quickly pay for themselves.

The second benefit is to the power grid itself. When solar energy homeowners contribute excess energy to the grid, they significantly reduce the stress that is placed on the system. This allows the power grid to function smoothly and efficiently for longer periods of time. As a result, the equipment lasts longer and the cost of maintaining the grid is reduced.

Is net metering available in all states and cities?

Net metering is currently available in 38 states as well as the District of Columbia. There are also 4 U.S. territories with net metering options. In addition, Idaho and Texas have voluntarily adopted net metering policies. The policies will vary from state to state. They may also vary within individual states as policy makers work to find the right solutions. Be sure to check the local net metering policies for your city and state.

Is net metering better than going off the grid?

The decision to go completely off the grid is a personal matter, however, there are benefits to remaining on the power grid. One of these benefits is that net metering allows you to get economic value for the power you generate in excess of your immediate needs without the need to invest in a solar battery.

First of all, net metering allows you to contribute energy to your community by transferring excess power back to the grid. This community approach to energy creation will only help to improve our energy sustainability. Secondly, using the grid to supplement your solar energy system places less stress on your power system. The power grid can quickly step in when your solar system cannot generate the energy you need at night and during the winter months.

Does net metering mean solar batteries are not worthwhile?

Net metering gives you the economic benefit of having solar battery storage without having the upfront cost of a battery. To put this another way it allows you to store the economic value of excess solar energy without the cost of an energy storage device. Given solar batteries decay over time, this is a good deal and makes solar batteries far less attractive while net metering is available. However, there are a couple of circumstances where the general rule above may not hold true.

Why can solar batteries sometimes be good even though net metering exists?

The concept of net metering is great as long as the grid is up and functional. However, in the event of natural disasters or other unforeseen mishaps that take the power grid offline, you can still use solar batteries to power your home. With grid connect solar only your solar system has to shut down when the grid fails or is down and so this is a possible advantage of solar batteries even where a net metering scheme is in place.

The second circumstance where solar battery energy storage can still be viable even though a net metering scheme exists is where someone lives in an area that is too far away from the nearest power line to connect. This is a quite common occurrence with holiday cabins and new homes in remote and regional areas.

How long will it take me to pay off a solar system installation?

There are a number of factors that go into determining the payoff for your solar energy system. This includes items such as the size of your system, the typical energy consumption for your home, the cost of installation, and the applicable tax credits. Given all these factors, the average pay off is usually between 5 and 9 years. The best approach to determining your pay off is with a solar calculator.

What are other incentives besides net metering available for solar systems?

The benefits of solar energy span many facets of our society. First, it greatly reduces our environmental footprint. Renewable energy sources, such as solar, place less stress on our already fragile ecosystem. Secondly, there are financial benefits to consumers and energy companies alike. Consumers can save significantly on monthly power bills, while the power companies can benefit from the shared energy that solar homeowners and net metering provides. This symbiotic relationship will allow the existing power grid to function more efficiently and at a lower cost.

Finally, and perhaps most importantly, we can achieve energy sustainability through the increased use of solar and other renewable energies. As the use of solar panel adoption increases among homeowners, we continue to reduce our reliance on fossil fuels and improve the sustainability of the planet.

 - Author of Solar Reviews
Author: Andrew Sendy | Home Solar Journalist

Andy is deeply concerned about climate change but is also concerned about cost of living pressures on American families. He advocates for solar energy and solar battery storage only to the extent that they make financial sense for homeowners. He is not affiliated with any particular solar company in the United States.

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