Understanding Solar Net Metering

Electric meter with stacks of coins

It is no secret that solar power is becoming one of the most popular forms of generating electricity in the 21st century. In 2014, solar power in USA grew by 6.4%, which was a 30% increase over 2013 and this year seems poised to set an even better record. While most people will immediately attribute solar energy's insane growth to the rapidly falling costs of photovoltaic cells, inventive financing methods which mitigate the high upfront costs of purchasing a solar power system are the real winners here. These financing methods currently rely on Net Energy Metering, a billing mechanism that is proving to be one of the most important drivers of solar adoption in the US.

What is solar net metering?

Solar power has traditionally been looked at as an off-grid solution, helping people generate electricity all on their own, or live comfortably where a grid connection was not possible. However, if you are living on an electrical grid, then it now can make sense to use both it a photovoltaic power system and electricity from the utility. Any power the system produces while your home is using energy will be consumed immediately without ever going out to the power grid. But, what if your system is producing more power than what you are using at any given time? Or what about power produced while the sun is high in the sky in the middle of the day, but no one is home and no power is being used? Shouldn’t you still get some benefit from this?

Net Energy Metering, or simply Net Metering, solves exactly this problem. At the end of each billing cycle your utility only charges you for the difference between the amount of energy you used and the amount you produce, or the net amount of energy that was supplied to your home. If you visit a home with solar installed and watch the meter, when the amount of energy produced by the system exceeds the amount being used in the house you can actually see the meter spin backwards! It’s that easy to see Net Metering in action!

Solar Net Metering Diagram
The idea behind solar net metering was a simple, but powerful one. There was no need to install any new equipment to support it, nor did the utility need to make any changes to their billing and accounting procedures. Net metering also made batteries redundant, which if opted for can greatly increase the cost of solar power.

As per a federal law called the Public Utility Regulatory Policies Act (PURPA), utilities must now allow homeowners with their own power systems to connect to the grid. 44 states and Washington DC have implemented mandatory net metering rules which permit their residents to sell electricity back to their utilities.

How does solar net metering work?

Typically, a resident will need to get in touch with their utility in order to find out how they can connect their solar power system with the grid. If you have used more electricity than what your solar panels provide, you will be billed for the net amount, and if you produced a surplus, your utility will credit you for it. How much payment you can expect for your electricity will depend upon where you live. In some states, the utilities pay the residents at current retail rates, while in others, wholesale rates are paid.

The net meter along with Feed-In-Tariffs has finally allowed everyday people to become energy producers and sellers. An unprecedented effect in its own right, net metering has made a large contribution to the speed with which renewable energy is being adopted throughout not only the US, but the world as well.

Interested in finding out more about how solar power can help you? Verengo Solar has helped thousands of homeowners make the switch to solar power and we will be happy to help you do the same. Start by getting a free quote from us to understand how much going solar can save you. One of our experienced solar consultants will get in touch with you to help you gain a better understanding of what your options are shortly after.

What Can You Save With Solar?

With no end in sight for soaring electricity rates, your switch to solar will secure affordable power for your home & family for years to come.