Net Metering

Net Metering: What Is It And How Does It Operate?

When you have an electric system with net metering, any extra energy your solar panels produces is “stored” in the grid. Net metering gives you credit for any excess power your solar panels generate.

Suppose it rains or is overcast, and your solar panels aren’t producing enough power. In that case, the utility company will flow electricity into your home and deduct the cost from your accumulated credits. Customers who choose to go solar only have to pay for their energy. Net energy metering (NEM) is the cornerstone policy of the solar industry.

What Does Net Metering Entail?

Let’s pretend you’ve installed a solar panel system, and your community offers net metering. Your electric meter will run backward when your photovoltaic system produces more electricity than you use at any given time of day.

If your energy use exceeds the power generated by your solar panels, which can happen at night or on overcast days, you will have to reverse the direction of your meter and draw power from the grid. Net metering means that you will be billed by the end of the month or year for the distinction between the quantity of energy you put into the grid and the amount of energy you take out of it.

A properly designed solar energy system can match your annual electricity use at home. Your solar panels will generate more electricity in the summer when the sun rises higher in the sky and stays out later than in the winter when it rises lower and sets earlier.

By giving you credit for the extra power your solar panels produce, net metering can offset the impact of seasonal variations in output.

Note: Is it true that “net metering can give you a new monthly paycheck?”
Net metering allows you to get credit on your electricity bill for the extra power your solar panels produce. Unfortunately, in most circumstances, your utility will not compensate you monetarily for the solar power you produce in excess. Some states allow you to roll over power generation credits into the following year. In contrast, others will reduce your credits if you produce more electricity than you use in a year. That’s why it’s crucial to have a system big enough to meet nearly one hundred percent of your electrical needs as feasible without making too much extra power.

What Is The Purpose Of Net Metering?

First, utilities and the power system can profit from adding low- or no-cost solar energy by implementing net metering laws developed for this purpose. The cost of power is typically highest in the summer when temperatures are high, and the sun is shining brightest, but solar energy can help offset this expense.

How Does Net Metering Affect Monthly Electric Bills?

Most homes create more electricity than they need during the summer and draw more power from the grid throughout the winter. Your utility won’t compensate you for overproduction monthly because of these predictable fluctuations.

Instead, you’ll rack up extra credits over the summer and use them to your advantage in the fall and winter. Even if you create far more than you need in some months and far less in others, with the appropriate design, your system may generate enough power to equal your total electricity demand for an entire year.

A credit equal to the net number of kilowatt hours you feed back into the grid throughout the month is issued when your solar power system produces more electricity than you need. If your monthly electricity consumption is higher than your production for that month, you will need to make up the difference by purchasing electricity from your utility. In such a case, you would only be charged for the electricity you use rather than the total rate.

Alternative Net Metering Systems

Regular net metering is the most common method of getting solar energy credits back. However, other options may be available to you based on your location and the policies of your state and utility provider.

Buy All/Sell All

The buy all/sell all metering approach allows customers to sell all the energy their solar panels produce to the local utility. In exchange, the utility provides the customer’s residential energy needs at the standard retail cost. For this kind of net metering, you’ll need two meters, and your bill will reflect the difference between what you produce and what you use. You can sell all of the electricity your solar panels produce instead of using it yourself with buy all/sell all net metering.

Net Billing

Historically, big commercial solar installations have been the most typical use case for net billing. Still, as the number of residential installations of distributed solar energy systems grows, this trend is beginning to shift. Net billing functions similarly to net metering, allowing you to send excess electricity from your solar system into the utility’s power grid for storage.

A kilowatt-hour generated by your solar panels is often worth the same as a kilowatt-hour generated by the grid under net metering. Net billing, on the other hand, usually results in a compensation rate that is less than the cost of electricity. If your solar panels generate more energy than you use, you can “sell” the excess to your utility company and receive a credit against future bills.

Note: What about going off the grid?
Net metering transforms the power system into a massive solar battery. Nevertheless, you won’t be able to use the grid as a giant battery if you opt for an “off-grid” solar panel setup; instead, you’ll need your batteries to keep the lights on when the sun goes down. Most homes (and businesses) are better off when connected to the primary power grid.

Get Solar And Save Money With Net Metering.

If you want to keep all the solar power you generate and use later from the grid, net metering is the ideal strategy for you. With net metering in place, homeowners can reduce their reliance on the grid and save tens of thousands of dollars over the lifespan of their solar panel installation.

While there are several methods by which utilities can reimburse households for installing solar panels, net metering is now the most popular and fruitful solar policy. The Database of State Incentives for Renewables and Efficiency (DSIRE®) keeps tabs on net metering and other solar incentives and rebates, so find out if your state offers them and head over there to find out if you qualify.


Net metering is a system that allows businesses and homeowners with solar panels to gain credit for any excess energy they produce and feed back into the grid. This helps offset the electricity cost they consume when their solar panels are not producing enough power while promoting renewable energy sources.

Your solar panels will generate more energy in the summertime when the sun is higher in the sky and stays out later than in the winter when it is lower and sets earlier. The excess energy produced is credited back to the owner’s account, which can be used to offset future electricity bills.

Net metering is a valuable incentive for those considering installing solar panels, and it helps to encourage the growth of solar energy across the country. However, there are ongoing debates around net metering policies and how to compensate solar panel owners fairly for the energy they generate. As solar technology continues to evolve, net metering policies will likely also adapt to better reflect the changing needs of the energy market.

At Sun Services USA, we manage the entire process, including site survey, engineering, utility applications, and installation! Even if there are no significant updates, we’ll check in with you once per week to keep you informed. If you have any queries or require assistance, please get in touch with our team.

Questions Often Asked About Net Metering

Common concerns voiced by homeowners regarding net metering are addressed below.

You don’t have to utilize all of your net metering credits in one billing period, and in most jurisdictions, you can carry them over from one month to the next and sometimes even from one year to the next. Hence, you can save up credits throughout the summer billing cycles to use during the winter billing cycles when your solar energy system generates less electricity.

To take the benefit of net metering without installing solar panels, many states have adopted VNEM rules. Virtual net metering typically involves subscribing to a neighborhood solar energy cooperative. The solar farm’s output will be fed into the grid, and all customers will share equally in the net metering credits earned. You can save between 5 and 15 percent on your annual electricity expenditures thanks to the discounted sale of the energy generated by your farm share.

The California Public Utilities Commission (CPUC), which regulates private utility companies, adopted NEM 3.0, the state’s latest net metering policy, in December 2022. The rate at which utility customers with solar energy systems are reimbursed for extra electricity they provide to the grid will be drastically cut when NEM 3.0 is implemented on April 14, 2023. You can save a lot of money during the lifetime of your solar energy system if you submit a comprehensive interconnection application by April 13.

While solar is the most prevalent, you can net meter with other types of distributed generation systems, such as wind turbines, depending on the net metering requirements in your state.