What Is Solar Net Metering?


Last Updated: January 25th, 2023

When it comes to the solar power movement, even a novice knows there are many benefits to equipping one's home with a solar energy system. There are, of course, unique features to make converting from traditional power more attractive for prospective users. One of these features is a concept and process known as net metering. Net metering allows you to take advantage of stored excess power and save on your regular utility bills. Let's explore this concept in further detail.

The basics of net metering

In essence, net metering is the process whereby residents using solar energy systems to generate electricity feed unused electricity back into the grid. This process has an advantage to the customer's billing procedure. When a person has installed solar panels on their roof, chances are there will be times when the panels will collect and produce more electricity during the daytime than the home requires. A net-metered home will send the excess electricity back through the grid and give the customer a credit against the electricity used during the night or at other times when the home's electricity use is more than the output of the system.

Don't fear, most meters are capable running backward and forward. If your meter does not have this capability, your utility company can make the necessary adjustments. You may even have two meters-one that runs forward and one that runs backward.

The advantage here is that the customer is only charged for the "net" electricity used. This is significant because only 20 percent to 40 percent of a solar power system's generated output goes into the grid. Plus, any extra power sent back to the grid can be used for neighboring homes.

Net metering advantages

As a customer, net metering gives you the opportunity to produce your own electricity in a clean and efficient manner. From a financial standpoint, net metering will help your pocketbook. As mentioned, solar power systems generally produce more power than is needed. Since the unused power is sent back to the grid for later use, your bill can be reduced. The Solar Energy Industries Association recently reported that public agencies and school in California using net metering will save as much as $2.5 billion in utility costs over the next three decades.

Again in California, estimates show that the average resident will save between $700 and $1,000 annually on their utility bills. Those are big-time savings. Wherever you live, if you use the net metering feature, you will continue to be billed each month.

Net metering also provides a lucrative opportunity for economic growth, employment expansion, and income and investment improvements. As net metering becomes more common and popular, more and more residents and business will desire to switch from traditional power to solar power, thus creating job opportunities for solar power system designers, installers, manufacturers and electricians. Currently, there are more than 170,00 people in the U.S. employed in the solar power industry. That number could grow steeply as people become more aware of net metering. In fact, net metering has been introduced as a way to incentivize people to install and use solar power systems in their homes and businesses.

Prevalence of net metering

Legislation has actually been enacted to make net metering legal and possible throughout the United States. Presently, there are 43 states that have official net metering policies. Only Idaho, Texas, South Dakota, Tennessee, Mississippi, Alabama and South Carolina do not have state policies. Most states have limits on individual system capacities as well as system types and technologies.

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