How does net metering work?
In short, net metering gives you credit for returning solar electricity to the grid, and it offsets electricity you take from the utility in the future — giving you the full economic value of all the solar energy your solar panels produce. If your solar system is sized properly, you can potentially eliminate all of your monthly electric costs.
Solar panels generate the most electricity during the middle of the day when the sun is shining. The problem is that the middle of the day also happens to be when you use the least amount of electricity. So your panels are generating way more electricity than your home needs at that time.
When solar panels produce more electricity than a home uses, the excess generation is sent to the grid. This is where net metering comes into play. When a net metered system sends solar energy to the grid, your electric meter spins backwards and your utility applies a credit for the full retail value of electricity to your account.
Then at night, when your solar panels aren’t producing, you take electricity from the grid, spinning your electric meter forward again. At the end of the billing period, the utility nets how much electricity you sent to the grid versus how much you used to determine your final bill – hence the name net metering.
Solar expert Will White discusses net metering in this video:
Do net metering credits carry over from month to month?
It depends on the utility, but most full-retail net metering programs allow energy credits to carry over from month to month. So, if you generate more electricity than you used in a month, the excess net metering credits can be used to offset electricity you take from the grid the next month.
Usually you’ll have excess credits in the summer months, when the days are long and sunny. You can bank up these summer credits to cut down your electric bills in the dark winter months.
How and if credits actually can carry over from month to month depends on your utility’s true-up policy, AKA how often they buy out credits, which you can usually find within their net metering policy.
What are the benefits of net metering?
Utility bill savings
The greatest benefit of net metering to solar homeowners are the utility bill savings. Net metering can result in tens of thousands of dollars in savings over the lifetime of your solar panel system.
As we said earlier, solar panel systems can be designed to offset all of a solar customers’ energy use costs within a billing cycle. However, most electric bills include some fixed charges that net metering can’t eliminate.
