Net metering (also called net energy metering or NEM) is a billing mechanism that allows solar system customers to push electricity to the grid for credit. This incentivizes people to go solar, provides energy for others to use and prevents waste.
Net energy is equal to the energy you produce minus the energy you consume. You consume energy when you use lights, heat, air conditioning, appliances, etc. You produce energy when the sun charges your solar panels. Sometimes you use all of the energy that your solar panels produce and sometimes you do not.
When you do not use all of the energy you produce, and if you have net metering, that excess net energy is fed into the public grid, your meter runs backwards and you get credit. Credit comes in the form of kilowatt-hours (kWh), not dollars or cents, and is applied to your electricity bill. The credit amount depends on where you live and what rate plan you are on. If you don’t have net metering, that surplus energy is wasted or must be stored in a large home battery.
Net metering helps customers offset the cost of solar, thereby encouraging its use and decreasing pollution. It also helps smooth over seasonal billing variations and prevents wasting solar energy that you have captured by allowing others to use it.
Most solar customers are on a time-of-use plan. This means your rate per kWh changes based on the day of the week, time of day, and season. When demand is high (typically on evenings, holidays and weekends when people are at home using more electricity), you are charged more per kWh used. Solar customers benefit because they can use their own solar electricity during peak-use times and sell back excess electricity produced during the day. Your credit amount usually depends on the time of day that the energy is sent to the grid, the same way that the price you pay for electricity changes.
Most of the major electric utility companies in the US have a net metering program for solar customers. There are 35 states plus DC and four US territories with net metering programs, and even if your state does not have it, some utility companies still allow for it. Check with your EnergyPal Advisor to see if your area offers net metering.