Net Metering For Solar Panels

Net Metering For Solar Panels

Investing in solar panels is a great way to save money on your monthly electric bill and contribute to a healthier environment. But unlike fuel-generated electricity, solar panels are only able to create energy when the sun is out. This means homeowners with solar panels need to find another way to satisfy their energy needs after the sun goes down.

Net metering is one of the most popular options for doing that. If you’re unfamiliar with the term, you’ve come to the right place. Continue reading to learn:

  • What net metering is
  • How it works
  • Why solar metering matters to you
  • And more information about this important topic in solar energy

What is net metering?

Net metering (also sometimes called solar metering) is a billing mechanism that enables people who generate some or all of their own energy to use that energy at any time. It’s most commonly used by people who have solar panels installed on their properties.

Solar panels are a very effective way to power your home during the day. But they lose their fuel source (the sun) at night. That means if a homeowner with solar panels had no other system in place, they would need to use fuel-generated electricity from the utility grid at night and in the early morning.

Net metering is one way to resolve this problem. With it, a homeowner with solar panels will still be able to use the power that those panels generate whenever they want.

How does solar metering work?

Solar metering works like this: when your solar panels produce more energy than you consume in a day, the excess energy is sent back to the electrical grid. When this happens, the meter that a utility company uses to track how much electricity you consume in a month goes backward.

Then, when you need to pull electricity from the grid because your solar panels aren’t producing enough to satisfy your needs, the meter goes forward again. This is where the term net metering comes from. At the end of the month, you are billed for the total amount of electricity that you pulled from the grid minus the amount that you put back into it.

For example, in most places, solar panels generate much more energy during the warm summer months than they do during winter. So during summer, you may put more energy back into the electrical grid than you pull from it. But during winter the opposite will likely be true.

You essentially get a credit for the electricity that you put back into the grid, which you can use any time you need it. The net effect is a reduction in your annual energy bill.

The benefits of net metering

Net metering has a positive impact on homeowners, utility companies, and local economies. In this section, we will take a look at why that’s true.

The most important benefit of net metering for homeowners is its ability to lower electricity bills. If a homeowner has a solar energy system and they are participating in net metering, their electricity bill will be lower than it would be if they weren’t. This is because net metering allows homeowners to use all of the solar energy they generate instead of just the amount of energy they need in a given day.

Net metering is also beneficial to utility companies because it enables utility companies to better manage peak electricity loads. It does that by reducing strain on distribution systems and minimizing energy losses while power is being transmitted.

Finally, solar metering also helps local economies. It does so by **increasing the demand for solar energy. **This creates more job opportunities at every stage of the solar panel supply chain.

Net metering and off-grid solar panel systems

Unfortunately, net metering is not possible with solar panel systems that are entirely off of the electrical grid. That’s because net metering has to be done in partnership with a utility company. If you aren’t connected to the grid, you can’t feed your excess solar energy back into it.

That being said, there are alternative options for homeowners with off-grid solar panel systems. The best option for these individuals is to invest in home solar batteries, such as the Tesla Powerwall or the SonnenCore.

These batteries offer another way to store, access, and use the excess power that your solar panels generate. They enable homeowners to use solar energy at night without having to be connected to the electrical grid.

Net metering availability varies by state

As of the time of writing, there is no overarching federal legislation that dictates whether states are required to offer their residents net metering or not. However, almost every state has developed its own policies for the billing practice.

The following states are the only in the country that don’t currently have any net metering policies:

  • Alabama
  • Tennessee
  • South Dakota

Additionally, the states of Texas and Idaho have voluntary net metering policies. This means that utilities are free to offer net metering or not based.

Finally, the following states have distributed generation compensation rules other than net metering:

  • Nevada
  • Arizona
  • Hawaii
  • Mississippi
  • Indiana
  • Georgia
  • Maine

If your state isn’t listed in any of the above categories, then it has passed legislation that mandates utilities to offer net metering in some capacity.

Understanding the different types of NEM programs

Most net metering (NEM) programs use a single meter to track a homeowners’ net energy consumption over a given month and bill energy created and energy used at the same rate.

However, there are several alternative NEM programs that might exist in your area. Here’s a look at how those work.

Feed-In Tariff Model

The feed-in tariff model involves using two separate utility meters: one for tracking your energy consumption and another for tracking the excess power that you send back to the electrical grid.

Under the feed-in tariff model, homeowners receive different rates for the energy they consume and the energy they generate.

Often, this model is used because a local government wants to encourage the adoption of solar energy. They might subsidize the utility company to pay homeowners a premium for the power that they send back to the grid.

Net Purchase and Sale Model

The net purchase and sale model is the opposite of the feed-in tariff model. It also features two separate utility meters with different billing rates. However, under the net purchase and sale model, a utility company will charge you more for electricity than they pay you for the energy that you generate with your solar panels.

This model still enables homeowners to receive credit for the excess energy that they generate. But it’s a worse deal for them than the standard NEM model and the feed-in tariff model.

Aggregate Net Metering Model

Aggregate net metering is only used when a customer has multiple meters installed on their property. The model enables homeowners to track all of their electricity consumption and generation together instead of individually.

For example, imagine that you have a farm with individual utility meters for your home, your barn, and your workshop. Under the aggregate net metering model, your consumption and generation data for all three meters would be pooled together to provide a single net consumption figure.

Virtual Net Metering / Community Solar Model

Virtual net metering is similar to the aggregate net metering model in that it combines data from multiple meters into a single net consumption figure. The difference is that instead of pooling together multiple meters from a single customer, this model lets utility companies pool together multiple meters from different customers.

For example, imagine that you live in an apartment building with solar panels. Under the virtual net metering model, you and everyone else in your building could receive a discount on your electricity bill based on the amount of solar energy that the building’s panels send into the electrical grid.

Potential problems with solar metering

Net metering is generally a positive thing for consumers. It enables them to save utilize excess solar energy that might otherwise go to waste and save on their monthly electricity bill.

However, many electric utility companies see solar metering as a threat to their current business models. That’s because utility companies have to pay high fixed costs to ensure that all of the poles, wires, meters, and other equipment necessary to maintain the electrical grid is always functioning.

Generally, residential customers have to pay a fee each month to help the utility company cover all of these fixed costs. The problem is, the charge is typically based on how much energy a customer consumes in a given month.

Homeowners with solar energy systems may not use any energy in a given month, even though they benefit from having access to the electrical grid quite a bit. Some utility companies fear that as solar energy becomes more popular and net metering continues growing, they won’t have enough funds to cover their fixed costs because of this effect.

The final word on net metering for home solar panels

Most homeowners with solar panels will be able to benefit from signing up for net metering. The billing practice enables you to put the excess energy that your solar panels generate to use instead of wasting it, making the cost of solar panels more reasonable. And you’ll get to save money on your monthly electrical bill in the process.

There is quite a bit of variability between how different states legislate net metering. But even the models that are most unfriendly to consumers are still miles better than letting your excess solar energy go to waste.

But if net metering doesn’t exist in your area, you may want to look into adding a solar battery to your home. Doing so will provide you with similar benefits to solar metering while also providing you with additional energy independence.

Matt Hope
Last Reviewed By: Matt Hope
Published: 2022-05-25