Many people who plan to install solar power have come across the term net metering. However, they might not be sure what it means. This simple guide will provide you with some clarity.
Defining Net Metering
In the simplest terms, net metering is a type of mechanism offered by most states for how people pay for their utility bills. Those with installed solar systems that produce excess power can send it back to the grid.
How Net Metering Works
For most people with installed solar systems, they will usually produce more power than they can consume during the day. When a homeowner signs a net metering agreement with a utility company, they will only pay for the net amount of power they consume from the grid. It is the difference between the energy a solar system produces and the energy consumed over a billing period.
When a house is net-metered, the meter will start running backward, which means that the home gets power credits. These credits go towards the energy by the home over a monthly billing cycle. As a result, homeowners only pay for the net energy they take from the grid.
The excess energy is put into the grid that is used by others connected to it. Excess power from your system goes directly to your neighbors from the local utility company.
The Benefits
With net metering, homeowners can save hundreds of dollars annually. If their system produces enough excess power, they can end up paying zero on their energy bills.
Another benefit is that since the power is being generated close to where it is used, it reduces the stress of the grid transmission infrastructure. The result is that there is less energy loss, which happens when power has to be sent over long distances. Besides that, it ensures that are fewer cases of brownouts, which are caused by the increased demand on the grid, especially during the summer months.
Net metering also helps to lower the cost of the solar system. It ensures that once you start making payments for the system, it will not put a strain on your finances. The savings you make on paying your electricity bill can go toward the payments. Combined with various incentives such as grants, it could significantly lower the cost of your system.
Finding Out about Net Metering in Your State
In most states, the rules around net metering have remained the same for years. Originally, net metering was designed for places with low solar power usage. However, as solar uptake has grown rapidly in states such as California and New York, there might be changes to how net metering works in the future.
For instance, California already has a new policy called Net Metering 2.0. In general, future policies around net metering are expected to be better than the original net metering policies.
Keep in mind that the net metering policies are constantly being reviewed. As a result, it is important to check your local regulations. Sometimes, you might find that you are missing major savings on your energy bills.
