If you have solar panels on your roof, you hardly use all the energy they produce. All the excess sent to the grid, connect to your utility’s power supply. If you don’t get anything in return for this extra energy, solar panels can be a tough investment to justify. While home battery storage can help you conserve energy that you don’t use immediately, there is a simpler (and cheaper) option available to address this imbalance.
Net metering is a way for utilities to pay you for the electricity you produce, ensuring that you get something in return for the solar power you produce but don’t use. While net metering is the most common and well-known method of compensation, there are others — such as the net billing policy.
It’s not true that feeding solar power into the grid amounts to a major payday each month, but if you educate yourself in advance, it could pay off for your solar investment in the long term. We’ll explain everything you need to know about net metering policies below so you can better understand how they can help you save money and recover the cost of your solar panels faster.
Can solar panels save money?
Interested in understanding the impact of solar on your home? Enter some basic information below, and we’ll provide an instant free estimate of your energy savings.
What is net metering?
Net metering is a billing system to ensure you get credit for the power you produce that flows into the grid for the utility and others to use. Your electricity meter rotates to measure the amount of electricity you get from the grid. With net metering, it spins the other way around when you send solar energy back to the grid, reducing your overall bill.
“Typically, your meter can go both ways and at the end of the month you only pay for what you take from the grid,” explained Gilbert Michaud, assistant professor of Environmental Policy at Loyola University Chicago.
This allows your home to use electricity from your solar panel during the day and electricity from the grid at night or when your solar panel cannot cover your needs.
How does net metering work?
There is some special equipment required to tie your solar system into the larger grid. This requires permission from your utility, too. Once your system is installed in your home, your solar company must take care of all the paperwork and approvals through local regulators and utilities.
According to Michaud, setting up for net metering may require having a new meter installed in your home, or it may mean a simple technical tweak to your existing one. equipment. He believes in most instances smart metering technology is likely already installed.
If net metering is available in your area, it should happen automatically and your utility should credit you for the kilowatt hours your solar system sends back to the grid. Under true net metering, you are credited at the same rate you pay to buy electricity from the utility: If you use a kilowatt hour and send one back to the grid, you don’t pay. This changes in some jurisdictions.
What will net metering do to my electricity bill?
How precisely net metering affects your bill may vary depending on the laws in your state or local jurisdiction and the policies of the utility involved. Like net metering rates, these rules and regulations have also changed recently.
In general, however, net metering can reduce electricity bills for most people. If your utility is residential solar friendly, you may even receive credits for the excess electrons you send to the grid.
Since net metering is managed by your utility, any credits should be itemized on the same bill you got before you added solar panels, although you should confirm with your utility.
Types of net metering
While net metering acts as a bit of a catchall term, there are variations that are more accurately named something else. Here are a couple you may encounter in the wild.
Net metering is the most common arrangement, and works by selling any excess power generated by your solar panels to the utility operator in exchange for credits, which offset any electricity you need to use from the grid. . The credit is applied at the retail rate, which means the rate you pay for electricity. Only one meter is needed to track it, although you may need to upgrade your meter if you go solar.
Net billing is a way for utilities to capture the small amount of energy you produce. This usually happens by paying you a lower, wholesale rate for the energy you produce and release into the grid, while charging you a higher, retail rate for the energy you take from the grid.
California’s recent net metering update is a technical shift to net billing, and the amount of solar sent to the grid is part of the heated discussions. Proponents of the agreements say solar electricity isn’t as valuable to the grid in the middle of the day when residential solar panels send it out. But rooftop solar — as a local, clean energy source — provides few benefits to the grid, and opponents of California’s net billing plan say the rate solar owners pay is not accurately reflects that.
At the end of the day, the new net billing is expected to cut payments by 75% for electricity sent to the grid but increase the adoption of batteries, which are expected to recover their installation costs faster than solar alone.
Buy all/sell all
This less common arrangement means that your solar array is metered separately from your home usage. Your solar production goes directly to the grid where you are paid, usually in billing credits.
While the energy used in your home is purchased from a utility like any other customer. It requires two separate meters, and you pay the difference — if any — between what you buy and sell.
How can I save the most with net metering?
Every situation is different, and there are many strategies you can use to maximize your savings from your solar system, such as adding batteries or an EV charger. True electron counters can time their personal energy use when their solar system is at peak production to avoid paying for energy from the grid. With a battery and time of use rates, you can take energy from the grid when it is cheapest and send energy to the grid when it is most expensive, maximizing your savings.
Basically, the more familiar you are with the details of your utility’s rate policies and the workings of your own system, the more you’ll save and the quicker you’ll pay back your solar investment.
Has net metering gone?
It’s important to keep an eye on the changes happening around net metering policies, according to Michaud.
“Utilities are not big fans of net metering in many areas,” he explained.
As a result, some jurisdictions will not allow you to size your system larger than you need for your typical energy consumption. This prevents homeowners from installing additional solar panels to get billing credits.
Some states are moving away from paying the same rate for the generation and use of electricity to more complex formulas to determine more accurate compensation rates.
Michaud added that utilities are also instituting fees for people with solar net metering, “which changes the economics and payback period for people who invest in solar systems.”
Bottom line: Familiarize yourself with how your state, local government and utility treat net metering and any potential changes on the horizon before investing in your own system.