Net metering is a billing arrangement that allows owners of solar panels or other renewable energy systems to receive credit for the electricity they generate but do not use, which is fed back into the grid. This process involves a special meter, known as a net meter, that measures the difference between the electricity generated by the solar panels and the electricity consumed from the grid.
Here’s how net metering typically works:
- Energy Generation: When a solar power system generates more electricity than the property consumes, the excess energy is fed back into the electrical grid. This surplus electricity is typically measured in kilowatt-hours (kWh).
- Bidirectional Metering: A bidirectional (or “net”) meter is installed to measure the flow of electricity in two directions. When the solar panels produce more electricity than is being used on-site, the excess electricity is fed back into the grid, and the meter runs backward.
- Credit Accumulation: The excess electricity sent back to the grid results in a credit on the customer’s utility bill. This credit is usually applied at the retail rate, meaning the customer receives the same value for the excess electricity as they would pay for electricity consumed from the grid.
- Consumption from the Grid: During periods when the solar panels are not generating sufficient electricity (such as at night or on cloudy days), the property draws electricity from the grid as usual. The net meter records this consumption, and the customer is billed for the net amount of electricity consumed (electricity drawn from the grid minus credits earned).
- Billing and Settlement: At the end of a billing period (often monthly), the utility company calculates the net amount of electricity consumed or generated. If the customer has generated more electricity than they have used, they may receive a credit. If they have used more than they have generated, they will be billed for the net consumption.
Net metering is a crucial incentive for residential and commercial solar panel owners, as it allows them to offset their electricity costs and, in some cases, even receive compensation for the surplus energy they contribute to the grid. This mechanism promotes the widespread adoption of renewable energy systems by providing a financial incentive for individuals and businesses to invest in solar power. Keep in mind that net metering policies may vary by location, so it’s essential to check with the local utility company and understand the specific regulations in your area.
