Net Metering in Solar Explained


What is Net Metering? Why Does it Matter?

How Net Metering Works

The laws regarding solar panel installations and solar net metering policies can vary drastically from state to state. Many of these legislative measures are designed to encourage people to install solar panels on their property to produce electricity. Some states may offer tax credits or property tax breaks, while others may have state promoted Renewable Portfolio Standards (RPS). Certain states and utility companies also offer net metering for solar as another type of incentive.

What is Net Metering in Solar Energy?

Net metering, or net energy metering (NEM), is a system used by electric utility companies. This system determines your electric bill based on your net power consumption. Net metering is a tremendous advantage for homeowners and business owners who produce excess electricity for the grid. This includes solar power!

Net metering is a great system for home and business owners with solar. It allows you to be fully credited for the electricity that your panels contribute to the grid. That means that you will only be charged for the difference between the amount electricity you use, vs. the electricity produced.

How Does Net Metering Work?


How does net metering work?

Power Consumed from the Grid – Power Produced and Transferred to the Grid = Net Power Consumption

The great advantage of solar energy over regular electricity is that you can literally generate it out of nothing. Your home will use this electricity to power your appliances and electronics. If your home needs any extra energy, it will draw that from the grid.

For example, let’s say your household uses 1,000 kWh of electricity during any given month. During that month, your panels produce 850 kWh. When you get your utility bill for that month, your home would only be charged for 150 kWh of electricity that you used from the grid. Net metering for solar projects allows you to save big on your energy bills.

But if your panels produce more power than you use, that extra power is sent to the grid directly. So let’s say your house only used 700 kWh of electricity one month, but your panels produced 850 kWh. Your utility company would then credit you for that additional 150 kWh on your next bill.

Why Does Net Metering Matter?

Net metering for rooftop solar systems allows you to receive the full value for the solar electricity that your system generates. That’s why it matters!

Often times the amount of electricity produced by homes and business is not the same as the amount of power consumed. Your solar panels will produce energy during the day, while your home may use a significant amount of power when the sun is down.

Without net metering, the solar power produced by the rooftop solar panels may not be fully credited to the homeowner. If your panels produce more energy than you use, the excess is sent to the grid. But without net metering, the grid may not be able to credit you for that extra energy. With net metering, the produced electricity is fully credited to the home or business.


To Recap

Solar power is becoming more and more popular as a way to produce environmentally friendly energy. Tax credits coupled with net metering make going green a great way to also save some green!

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Editor's note: This post was originally published in May 18, 2017.

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