Net Metering

What is Net Metering?

Put simply, net metering is a utility billing mechanism available in most states that offers a credit to residential and business customers who are making excess electricity with their solar panel systems and sending it back to the grid.

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

Net Metering For  Businesses

The commercial solar power industry is one of the biggest benefactors of net metering. The policy originated in the U.S. as early as 1979 to compensate green energy proponents for investing in renewable energy. As the cost of generating solar electricity has come down, the debate over net metering policies has escalated in some areas—specifically, the rate at which solar credits are valued and special charges that might be assigned to renewable energy generators. When more renewable energy is generated than is used, the utility provides a credit back on the surplus at the full retail price. However, some argue a wholesale rate would be more equitable, since the solar power system owner does not pay for the maintenance of the utility’s infrastructure.

Policies, levels of support and availability vary widely from state to state. While most states allow net metering, different approaches have been taken to policies regarding capacity limits, eligible technology, the costs of connecting your system to the distribution grid and REC ownership. The National Conference of State Legislatures (NCLS) offers a detailed overview of these different approaches to net metering.

The Database of State Incentives for Renewables & Efficiency® (DSIRE) is funded by the U.S. Department of Energy and is touted as being the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Simply visit their site and input your zip code to find incentives and policies available near you.

Are there any other benefits of net metering?

The most obvious benefit of net metering is that it can help reduce your yearly spending on electricity. Other benefits include:

  • Enabling your organization to monetize the electricity your commercial solar system produces without having to install a second meter or battery storage system.

  • Helping to reduce demand on the grid, especially during peak consumption periods.

  • Encouraging active participation in alternative energy production, which helps protect the environment and preserve natural energy resources.