What Is Net Metering? A Simple Guide for Solar Homeowners
Many people interested in installing solar power come across the term net metering but don’t fully understand what it means. This simple guide will help you understand how net metering works and how it can save you money.
What Is Net Metering?
Net metering is a billing system offered in most states. It allows homeowners with solar systems to send excess electricity they generate back to the power grid. In return, they receive credits on their electricity bill.
How Does Net Metering Work?
Most solar systems produce more energy during the day than a home uses. With a net metering agreement, your utility company tracks both the electricity you consume from the grid and the excess power your solar system sends back. You only pay for the net amount of electricity you use over each billing period — that is, the difference between what you consume and what you produce.
When your solar system generates more electricity than you need, your meter runs backward, giving you energy credits. These credits help offset the energy you use when your system isn’t producing, like at night or on cloudy days.
The excess energy you produce doesn’t go to waste — it flows to the grid and is used by other homes in your area.
Benefits of Net Metering
Net metering can lead to significant savings on your electricity bill. In some cases, homeowners with solar systems pay nothing for electricity if their system produces enough power.
Other key benefits include:
Lower stress on the grid: Local solar power reduces strain on transmission lines and lowers energy losses from long-distance power delivery.
Fewer brownouts: By reducing demand spikes on the grid, especially during hot summer months, net metering helps stabilize electricity supply.
Reduced solar system costs: Savings from lower electricity bills can be used to pay off your solar installation, making solar more affordable. Combined with incentives like tax credits or grants, net metering can dramatically lower your upfront costs.
Check Net Metering Policies in Your State
Net metering rules vary by state. Originally, net metering was designed for areas with low solar adoption. But as solar power has grown in popularity in states like California and New York, policies have evolved.
For example, California introduced Net Metering 2.0, which updates the rules to reflect increased solar usage. Future changes to net metering policies could further improve savings for solar homeowners.
Remember: net metering policies are often reviewed and updated. Check your state’s latest regulations to make sure you’re maximizing your solar energy savings.
