Solar Net Metering: What You Need To Know

net metering

According to the February 2024 report, 4,227,503 million homes in the US installed solar panels for free of cost electricity. Free electricity, a clean environment, no tension of bills, and net metering; what do you need more? 

Many people don’t know about solar power net metering. If you are one of them, you must understand this concept to get extra benefits from your solar system. 

What is Net Metering?

Suppose you have a solar system of 10kW on your rooftop. It can produce 35-45kWh per day, which makes 1200-1500kWh per month. Annual electricity production would be 12000-18000kWh. On average, your energy consumption can be 800-1200kWh per month. 

Simply put, 60-80% of the energy your solar system produces is used in the household. It means, 20-40% of the power is sent back to the grid, which is then credited to your electricity bills. It is called reverse metering. You can use this energy during downtimes. In values, between 300-600kWh energy is moved back to the grid for net metering per month. 

 

 

Note: The quantity of energy your solar can produce directly depends on the weather conditions, the direction of the sun, and the system’s efficiency. 

How Does Net Metering Work?

With a net meter, you only need to pay for the net power consumption. During the day, your solar can produce more electricity than you need. The surplus power goes back to the solar grid. Ultimately, your meter goes backward and gives you credits for the production of extra electricity. During the night or on a cloudy day (when your solar cannot produce energy), the credits are consumed by your household. 

What’s NEM 3.0?

If you are a solar customer in California, it is a new version of the net metering policy for you. California Public Utilities Commission (CPUC) introduced this policy in December 2022 and activated it on 15th April 2023.  

 

NEM 3.0 is the latest version of NEM 2.0. The following changes were made in this new version of the net metering program. 

  • Lower Credit Rates

Compared to NEM 2.0, NEM 3.0 has reduced the credits for the excess power production going back to the grid. The value of the credits is now dependent on the value of the electricity in the real-time market. Unfortunately, it is lower than the retail rate. 

Net Metering Vs Net Billing

There are two terms you can confuse as a solar customer: net metering and net billing. Using net metering, you can earn full credits for the surplus electricity produced by your solar. It directly reduces your energy bills. However, net billing gives you lesser credit for the extra electricity your system produces. Simply put, net billing depends on the current market rates which are always lower than the retail market. 

  • Storage Incentives

The NEM 3.0 version of the net energy metering program has encouraged the addition of battery storage to the solar system. With this addition, solar system users can save the excess energy to use when the electricity rates are higher in the market instead of sending it back to the grid. The most significant benefit of adding battery storage to the solar system is quick payback. 

 

Pro Tip: Use this energy during the evening (4-9 PM) each day.

Why Does Net Metering Exist?

Net metering was introduced for many reasons. The most common are described below: 

  • It provides financial incentives. Credits on the excess energy consumption make it a more appealing choice for home and business owners. 
  • Say goodbye to fossil fuels and other non-renewable energy resources. The net metering solar program is effective in producing a sustainable environment. 
  • Depending on the grid can cause power shortages. However, using solar systems for energy use can balance the energy supply and load on the grid. The excess energy production by solar systems will meet the neighborhood’s needs. 
  • It can enhance energy security and lower electricity bills by generating power using sunlight. Furthermore, you can get rid of dependence on traditional utility companies by using the solar system. 

Final Words

Now, you have understood what is net metering for solar. It is time to decide on long-term benefits. High energy usage, reduced electricity bills, and zero downtimes. Light up your homes and offices with sun energy and benefit from the net metering credits! 

FAQs:

Is net metering worth it?

Absolutely, net metering is worth it for solar customers. It reduces electricity bills allowing you to use the credits of extra power during dark. Whether a home or a business owner, both can save a lot of money by benefiting from its financial incentives. 

Is net metering going away? 

Some states, like California, have modified net merging policies for solar users. But it does mean that the net metering is going away. Solar users are still benefiting from this program, enjoying lower electricity bills and credits for extra power production. 

Why are people against net metering?

Some people claim that net metering is increasing the electricity bills for non-solar customers. Furthermore, they say that it puts extra pressure on the main grid, reducing spending on important energy systems. Similarly, some say that the rate of credits is too high compared to the actual expense of the utility companies.

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