What Is Net Metering

Net Metering

Net metering allows residential and commercial customers who generate their own electricity from solar power to sell the electricity they aren't using back into the grid. Many states have passed net metering laws. In other states, utilities may offer net metering programs voluntarily or as a result of regulatory decisions. Differences between state legislation, regulatory decisions and implementation policies mean that the mechanism for compensating solar customers varies widely across the country.

What happens when solar panels generate more electricity than you need during the day?

The answer is, YOU CAN SELL IT. As Mustafa Solar is a certified solar company by Alternative Energy Development Board (AEDB) for net metering, our systems can SELL the excessive energy back to the grid.

What Is Net Metering?

Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. For example, if a residential customer has a PV system on their roof, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods when the home's electricity use exceeds the system's output. Customers are only billed for their "net" energy use. On average, only 20-40% of a solar energy system’s output ever goes into the grid, and this exported solar electricity serves nearby customers’ loads.

How Does Net Metering Work?

When you have a rooftop solar system, it can often generate more electricity than you consume during daylight hours.

With net metering, the homeowner is only billed for the "net" energy used each month, that is, the difference between the energy produced by the solar power system and the energy consumed by the house over the monthly billing period.

When your house or business is net-metered, you'll see the meter run backwards, and that means, depending upon local policies, you may get a credit to hedge against the electricity you use from the grid when it's not sunny or at nighttime. You are then billed only for your "net" energy use. The excess energy generated gets put back to the grid for your neighbors to use. (Read about net metering for businesses on the Sun Power Business Feed.)

The Benefits of Net Metering

Net metering can save homeowners hundreds of dollars on their utility bills every year, so it's a good reason to make the money-saving choice and go solar sooner rather than later.

There's another benefit from net metering. Since your solar system is generating electricity near the point where it will be used, this reduces strain on the grid's distribution and transmission infrastructure and minimizes energy loss from sending voltage many miles from the nearest power plant. While some claim that net metering represents an unfair burden on non-solar electricity customers, many net metering cost-benefit studies have found the opposite to be true.

Giving Customers Control over Their Electricity Bills

Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume; net metering allows them to export that power to the grid and reduce their future electric bills.

Creating Jobs & Encouraging Private Investment

Net metering provides substantial economic benefits in terms of jobs, income and investment. Net metering increases demand for solar energy, which in turn creates jobs for the installers, electricians, and manufacturers who work in the solar supply chain. Today, the solar industry employs more than 230,000 American workers in large part due to strong state net metering policies which have allowed the solar industry to thrive.

Protecting the Electric Grid

Unfortunately, some utilities perceive net metering policies as lost revenue opportunities. In fact, net metering policies create a smoother demand curve for electricity and allow utilities to better manage their peak electricity loads. By encouraging generation near the point of consumption, net metering also reduces the strain on distribution systems and prevents losses in long-distance electricity transmission and distribution. There are a wide variety of cost-benefit studies around the country that demonstrate the value solar provides to local economies and the electricity system as a whole.

Want to support net metering policies in your state? Advocate for solar energy. Your voice counts!

Want to learn more about how net metering policies work with solar? Learn more about net metering and other solar topics on Energy Sage.

Click on the map below to visit the Database of State Incentives for Renewable Energy (DSIRE), which catalogues various policies for renewable energy nationwide, including net metering. 38 states plus Washington, D.C. and Puerto Rico have mandatory net metering rules in place.