7 FAQ's about Net Metering

You can’t investigate solar without learning about net metering. Net metering is a vital tool that makes a solar power a smart investment for homeowners from day one.

1. What is Net Metering?

Net energy metering is an energy exchange arrangement between the solar producing homes and the utility companies. Whenever your solar panels produce more energy than your home needs, the excess is sent back on the power grid earning you a 1 to 1 credit.

In other words, you will see a credit on your electric bill for every kilowatt hour of excess energy you send into the utility. This will let you build up credits to use each night, and in winter months when the days are shorter. This lets you pull power from the grid when you need it without paying for it!

2. How does net metering actually work?

Your solar panels produce the most electricity during the middle of the day. However, your peak electricity usage hours are in the morning and evenings. So, what happens to all that extra electricity that your panels produce during daylight hours? 

Instead of that excess energy going to waste, net metering allows you to send it into the utility grid to be used elsewhere. When that happens, your electric meter spins backward and your utility company applies a full value credit to your electric bill. Later in the day, when you start using more electricity than your solar panels are producing at that moment, your electric meter spins forward again. 

At the end of each billing cycle, your utility company calculates the net difference between how much electricity you used and how much your solar panels sent back into the grid and charges you accordingly. Thus, the term “net metering”. 

3. What are the benefits of net metering?

The primary benefit for the consumer is lower utility bills and shorter payback periods for the cost of purchase and installation (if financed). Such cost savings are significant over the course of time, in addition to the immediate impact on the monthly utility bills.

Household solar panels also help ease the pressure on the electric grid itself, since the demand for electricity distribution from the utility provider will be less. And because the utility has additional solar energy at its disposal to send to other non-solar customers, the stress on the system is lessened even further.

States with net metering programs allow solar homes to use the grid as their "battery" for the extra energy systems produce in the middle of the day.

4. Do net metered credits carry over from month to month?

The answer to this question is, it depends. Each utility company has a net metering contract arrangement with its solar customers in which all the terms and conditions are spelled out. Many of these agreements allow for rollover credits to be banked and used at a later time, but not all net metered agreements do. 

It is important to understand the actual agreements that your utility company provides since they vary widely from place to place.

5. What are the various types of net metering agreements?

The most common type of net metering agreement is called a “feed-in” agreement. With this arrangement, the utility company installs two meters, one to measure solar energy coming into the grid, and one meter to measure utility provided electricity going into the house. These meters are not always billed or credited at the same rate, so pay attention.

Another type of agreement is called “time-of-use” rates. Again, two meters are installed, and each is billed or credited differently, but in this type of agreement, there are additional charges for using utility provided energy at peak grid usage times of the day (like the evenings). 

In such situations, small battery storage could be helpful to the homeowner in order to avoid using peak energy. This approach does require a TOU offset clause in the net metering agreement. 

6. How is net metering different from battery storage?

Unlike net metering, a battery storage system can be independent from the electric grid. So, if a homeowner installs a battery storage system along with the solar panels, then any excess electricity that the home does not use will be stored in the batteries for later use.

Battery storage systems are very useful for providing 24 hour, round the clock electric energy to the home, especially during outages.

Unfortunately, some battery storage systems can be very expensive, sometimes equalling the cost of the solar panels installation itself. As battery technology improves, the cost of these systems will go down in the future.

Also, don’t be surprised if your state or local utility does not take battery supplied energy into their grids, or give credits for battery stored electricity. Most do not, so be sure to check first if that is something you have in mind.

7. Is net metering available in all states and cities?

Currently, 38 states and Washington, D.C., are required by law to provide net metering agreements. Check out this listing of states provided by the N.C. Clean Energy Technology Center to see what laws apply in your location: https://www.dsireusa.org/

Today, the future of net metering in some states is not secure. Many utility companies are fighting hard to change the laws and do away with net metering in order to increase their profits and strengthen their monopoly on electric energy. The bottom line is that now is the best time to invest in a solar energy system for your home, before net metering is a thing of the past.

Revida Solar is here to help. Contact us and find out your options today. Create a solar energy system for your home that is both reliable and affordable for your home.