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  • Writer's pictureAdam H. Cooke

What is Net Metering? I

Net metering (also known as net energy metering) is a utility rate program in which your electric company must purchase excess solar energy that your solar panels produce at full-retail electricity rates.

If your solar energy system produces more power than your home uses, it sends the excess to the grid. Your utility then pays you for the extra electricity. Rooftop solar panels are a great way for you to save money. The best places to install solar panels are not the ones with the greatest amount of sunshine. It's the ones that have the best net-metering policies.

Let's have a closer look at net metering and how it can help you get more money in your pocket.

What is Net Metering?

Net metering is a credit system that allows you to return solar electricity to the grid. It also offsets the electricity you use from the utility in future. This gives you the economic value of the solar energy you produce. You can eliminate any monthly electricity costs if your solar system has been properly sized.

The middle of the day, when the sun shines, is when solar panels produce the most electricity. Problem is, the middle of the afternoon happens to be the time you use the most electricity. Your panels are producing way more electricity that your home actually needs.

The excess electricity generated by solar panels is sent to the grid when it produces more electricity than the home uses. Net metering is used to manage excess generation. Your utility will credit your account for the full retail price of solar energy when a net-metered system sends it to the grid.

At night, when the solar panels stop producing electricity, you pull power from the grid and spin your electric meter backwards. The utility then calculates the difference between how much electricity you have sent to the grid and how much you used in determining your final bill at the end of each billing period. This is net metering.

Will White, a solar expert, discusses net-metering in this video.

Are Net Metering Credits Transferable from Month to Month?

It all depends on the utility. However, most full-retail net billing programs allow energy credits for transfer from month to month. If you produce more electricity than you use in a given month, excess net metering credits may be used to offset the electricity taken from the grid for the following month.

You'll usually have more credits during the summer months when the days are longer and sunnier. These summer credits can be used to reduce your electric bill in the winter.

The true-up policy of your utility, which is how often they buy credits out, will determine whether credits can be carried over month to month. This policy can be found within their net metering policy.

What are the Advantages of Net Metering

Utility bill savings

Net metering is a great option for solar homeowners because it saves them money on their utility bills. Over the life of your solar panel system, net metering could save you thousands of dollars.

Solar panel systems can be used to offset the entire cost of solar customers' electricity use within a billing cycle, as we have already mentioned. But, electric bills are subject to fixed charges that net meters cannot eliminate.

Payback periods are shorter

The payback times for areas that offer full retail net meters will be shorter than those that don't. Because solar homeowners will save more on their electricity bills and recoup their investment costs quicker, this is why they are so popular.

A solar power system installed in New Jersey could pay back in 4 to 5 years. This is due in large part to net-metering. It could take 12 years for a system in South Dakota to pay off, as the state does not have any form of net-metering.

Your solar payback time is not just affected by net metering. The length of the payback period will depend on many factors, including the size of your solar system, how much electricity you use, and whether there are any rebates or incentives for solar panel installation.

This reduces the grid's stress

Because residential solar panels reduce stress on the electric grid distribution network, utilities and their customers reap the benefits. Solar homeowners don't draw power directly from the grid, but instead use their own electricity.

Additionally, if a solar system generates more energy than is needed, it can be used by non-solar customers to provide electricity for their energy needs. This reduces the load on utility power plants.

It is crucial to relieve some of the stress on the electric grid, especially in California, where heat waves are more frequent and utilities cannot meet their energy needs.

Is Net Metering possible in all states?

Technically, net metering is required in 38 states and Washington D.C. Some major utility companies in Idaho, Texas and Texas also offer net metering for residential solar customers, although they are not required to.

South Dakota, and Tennessee are the only two states without any form of net meters or alternative net meters in place. These states may not be the only ones that do not have net metering or alternative net metering rules. Utility companies in the United States have been trying to reduce net metering programs to increase their profit margins and solar savings. In states such as Louisiana or South Carolina utilities have been successful. Net metering changes are also planned for California which is the most solar-friendly state.

Get solar while net metering remains available to make the most of your savings

We are going to be open with you: net metering's best days are gone. The future of net-metering is not looking good. Net metering, despite being the driving force behind solar industry is being attacked by greedy electric utility firms looking to cut their profit margins.

You can get the most savings from net metering if you go solar as soon as possible. You run the risk that your utility will cut the program. This means that you'll end up paying less long-term.

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