Net Metering: 101
What is Net Metering?
According to Solar Energy Industries Association (SEIA), net metering, simply put, "is a billing mechanism that credits solar energy system owners for the electricity they add to the grid." In other words, if a home with a solar panel system adds more energy to the grid than it uses, the homeowner is effectively paid back by the utility compamy for that energy. This usually comes in the form of a credit on the utility bill.
Net metering is not a nationally regulated policy, states and individual Utility Companies differ on how (or if) solar panel owners are credited for creating surplus energy through their solar panel system.
How Does Net Metering Work?
If you want to have a net metering billing arrangement, your Solar panel system must be connected to your electric utility’s distribution system. While your solar equipment is producing electricity, your home will consume that electricity first, before pulling any power from the grid. When your solar equipment produces more electricity than you need, the extra electricity flows backward through the utility meter on your property.
For those on a standard rate schedule, the flow of excess electricity backward onto the grid results in a lower monthly meter reading by the electric utility, thus lowering your electric bill. If you are on a time-of-use rate schedule (meaning that you are billed at a higher rate for energy used during on-peak hours, and at a lower rate for energy used during off-peak hours), any excess electricity that flows backward through your meter during on-peak hours will reduce your electric bill at your on-peak rate, and any excess electricity that flows backward through your meter during off-peak hours will reduce your electric bill at your off-peak rate.