What is Net Metering and How Does it Work?

The environmental benefits of solar power systems are well known, but did you also know that solar power provides economic benefits?

The right size solar power system can produce enough electricity to power your home or business for the entire year. In other words, you can actually be compensated for “going solar.”

Here’s How Net Metering Works:

Sunlight is collected through solar panels on the roof of your building during the day. The sunlight creates DC electricity, which is converted into AC electricity through your solar system’s inverter. This AC electricity is what is used to power your home or business.

During the day, the sun is generating electricity, which also happens to be when electricity usage is typically at its lowest. Most solar panels create more electricity than you actually need during the day. Whatever you don’t need goes right back to your utility grid. It passes through your electric meter, spinning the meter backwards.

The meter lets your utility company know how much electricity you have put back into the system. Then, at night, when your panels are not generating electricity and usage is higher, your meter spins forward again. You draw electricity from your utility as you would without a solar power system.

The system the utilities use to track this is called net metering. By monitoring your meter, the utility company can figure out how much electricity you actually put back into the grid and took out of the grid – your “net” amount of electricity used.

You can track this usage on a monthly or annual basis and receive a credit on your utility bill for the excess electricity your panels produce.

Through net metering, customers are free to generate their own “clean” energy while saving money, contributing to their community and adding power to the grid.

As of 2016, 41 states (plus Washington, DC) have adopted some kind of net metering policy, though policies vary widely from state to state and utility to utility.

In some cases, net metering can mean big savings. California public agencies and schools, for example, are projected to save $2.5 billion in electricity costs over the next 30 years with net metering.

Every year, Germany increases its share of renewable energy across the country. On one especially sunny, windy day in Germany last year – May 8, 2016 – the country produced more electric power than it consumed. Customers actually got paid to use electricity.

That day, 87% of the power produced in Germany was created through renewable sources at solar, wind, hydro and biomass plants. (Germany hopes to be on 100% renewable energy by the year 2050.)

Whether or not net metering policies continue will depend on individual states. Some states – like Nevada – have already discontinued net metering. Reasons for states not offering citizens net metering options range widely from a reluctance to change existing utility infrastructure to political motivations.

Ultimately, consumers will drive the future of net metering and its adoption at the state level.

Want to learn more about net metering policies in your state and how much you could save with a solar power system? Calculate your projected solar panel savings with this solar calculator.