Updated: Jan 12, 2022
Net Metering: Take Credit for Going Solar
Homeowners know that installing a photovoltaic solar system enables them to cut their power bills. Going solar is one of the smartest things a homeowner can do, both in terms of reducing energy costs and increasing home value.
In fact, a photovoltaic system can reduce your power bills essentially to zero for many months of the year. But how does solar energy actually decrease your monthly power bill in practice? The answer lies in a fundamental solar concept called net energy metering, referred to both as “net metering” and NEM. Net metering encourages homeowners to go solar by giving them credit where credit is due, in terms of the energy their system generates relative to the energy their home consumes.
Spin Your Meter Backwards
Perhaps the best way to visualize net metering is to imagine your electric meter spinning backward when the sun is shining. When you go solar, your home and the photovoltaic system will remain interconnected to the power grid, and you will switch to a new net metering billing arrangement with your utility company. So that your utility company can keep track of your solar credits, you’ll also receive a new power meter that measures both the amount of energy you consume from the power grid as well as the electricity your solar system feeds back onto the grid.
For example, during the day when the sun is shining brightly and the energy consumption in your house is low because you and your family are away at school and work, your solar system will send most of the energy it generates to the power grid. For that energy your home supplies, you’ll receive credit from your utility on a monthly basis via net metering.
How Your Power Bills Will Change
While you won’t actually be paid in cash for the energy your system supplies to the grid, you will receive credit against the power you consume during times when the amount of energy your home uses exceeds the amount your system generates, such as at night or on overly cloudy days. Under a net metering billing arrangement, your utility will keep track of your consumption and production on both a monthly and annual basis. In most utility service areas, each month you’ll receive both your standard bill that contains basic service fees as well as an additional statement that provides details about your net charges and credits based on your electric rates and the data from your bi-directional power meter.
In terms of your power bills, the biggest change after you go solar will be the new statement you receive annually beginning around the first anniversary of your solar system’s interconnection to the power grid. This annual statement – commonly referred to as the “true-up” statement – summarizes your solar credits and electricity charges for the entire year and serves to reconcile any balance between the amounts of solar energy you’ve supplied and the grid power you’ve consumed.
If you’ve consumed more energy in total than you’ve consumed, you will owe your utility money at this time. Unfortunately, if you’ve supplied more than you’ve consumed, those credits will not roll over into the next true-up period. Since there is some inherent variability in the amount of energy your photovoltaic system will generate and how much your home will consume in a given year, each true-up statement is likely to be slightly different year-to-year. When you go solar, the experts at Complete Solar Solution will size your system to enable you to benefit financially during each true-up period. Your home’s historic energy consumption, average local sunshine levels, the configuration of your home and roof, and your local utility’s rates are all factors that contribute to the design calculation for your solar system. In optimizing the system design according to these factors, the goal is to make your annual production and consumption balance come out as close to even as possible during each true-up period, since you won’t benefit from excessive overproduction.
Net Metering Versus Solar Batteries and Off-grid Solar Systems
Many people are interested in completely disconnecting from the grid when they first investigate solar options for their homes. However, the vast majority of solar systems installed over the last decade remain connected to the local power grid in order to benefit from net metering and other incentive policies. So-called off-grid solar systems do not benefit from net metering because they aren’t able to supply excess energy back to the utility and receive credit. Since your utility calculates and effectively “stores” your solar energy through net metering credits, many solar industry experts encourage homeowners to think of the utility itself as a massive solar battery. Today, for homeowners in the nation’s top solar markets, installing a solar battery system or disconnecting from the power grid doesn’t make financial sense precisely because you won’t be able to benefit from net metering. All major solar companies including Complete Solar Solution work almost exclusively with grid-tied solar systems that take advantage of net metering policies to create financial benefits today and over the long term for homeowners.
Net Metering Is Transforming the Power Grid Nationwide
Net metering is a crucial solar policy that allows a homeowner to benefit financially by becoming both a supplier and consumer of energy in partnership with the local utility. In fact, net metering has helped propel the growth of the US solar industry because of the real financial value it creates for both homeowners and utilities. Today, according to the Alliance for Solar Choice – a leading solar organization that champions net metering nationwide – 43 states including California have adopted net metering policies. These policies allow homeowners, corporations, schools, and other institutions to go solar and receive full credit for the solar electricity they generate that is used by the local grid.
While there is debate about just how much value net metering creates for utilities, today both homeowners and their local utility companies can benefit from going solar through net metering.
As more and more “distributed generation” assets like rooftop solar systems are installed in neighborhoods across the country, communities reduce the overall amount of energy their utility companies need to get from fossil-fuel-based power plants that harm the environment and contribute to climate change.