Net metering involves a billing method in which your power provider tracks excess energy output from solar panels and deducts it from the monthly utility bill. The excess generation from your solar power system is routed back into the grid when it produces more kilowatt-hours than your residence consumes.
Net metering provides homes with solar panels with better monthly savings as well as a shorter payback time. Utility companies also gain because excess solar electricity may be used to power other buildings on the same grid. Net metering boosts the environmental advantages of solar power when a power grid is based on fossil fuels. Even if a building lacks sufficient space for rooftop solar panels, it may minimize emissions by utilizing extra clean energy from nearby properties.
What is the Process of Net Metering?
Net metering programs function in one of the two ways:
- Your utility company measures the excess energy generated by the solar panels, and a credit gets to be applied to the account, which can be applied to the future electricity bills.
- Your home’s power meter measures the excess energy produced by the solar panels. Modern power meters can detect electricity flow in both ways, so they will tick up when you use power from the grid during the night and will count down when the solar panels produce too much power.
In any case, you will only be charged for the net consumption – which is the difference between total generation and consumption— at the conclusion of the billing period. The phrase “net metering” is derived from this.
What Is the Impact of Net Metering on Your Utility Bill?
Net metering increases the value of solar power systems for households by allowing you to “sell” any excess energy produced to your utility provider. It’s essential to comprehend how charges, as well as credits, are handled, though:
- You can accumulate credits for your excess electricity, but utility firms will not pay you for it. Instead, the credits will be deducted from the power bills.
- If the net metering credit is more than your consumption during a billing period, the difference is carried over to the subsequent month.
- While some power firms will keep your credit open permanently, most have an annual expiration date which resets the credit balance.
Keeping all of this in mind, you can cut your annual electricity bill in half. During a sunny summer month, you can save up credit and use it during the winter months when solar generation drops.
When the solar energy system has just the proper capacity to meet your annual home use, you’ll get the best results. Oversizing the solar array isn’t a good idea because you’ll wind up with a lot of unused credit every year. To put it another way, you can’t overproduce each month and charge the power company.
Some power firms will let you choose when your yearly net metering credits will expire. If you have this choice, it’s best to schedule it after the winter season has passed. This way, you can put all of renewable energy credits you earned during the summer to good use.