Net metering is a method of electric invoicing that allows you to store excess energy generated by your solar panels on the grid.
We’ll go over all you need to know about net metering in this article.
Let’s dive deep into how electricity bills work with net metering, and the benefits, and disadvantages of net metering. Let’s go!
Is net metering worth it?
Going solar becomes a more appealing investment with this incentive, especially for properties with little daytime consumption.
During the day, homeowners can convert their roofs into mini-power plants, which is deducted from their nighttime use.
This implies that if your solar energy system generates more electricity than your home requires, the excess is delivered to the power grid, where your utility will compensate you.
Rooftop solar panels are a terrific method to save money because of net metering!
In fact, the best states for solar installation are those with the best net metering rules, not those with the most sunshine.
Solar panels offer a shorter payback period and a higher return on investment where net metering is provided.
If you don’t have this benefit, you’ll only save money on electricity bills if you use solar energy directly, and any surplus generation will be lost unless it’s stored in a solar battery.
In general, areas with favorable net metering rules will see more home solar systems.
How does net metering work?
In a nutshell, net metering provides you credit for returning solar energy to the grid and also offsets future electricity you could take from the utility, providing you the full economic value of all the solar energy your solar panels generate.
You may be able to remove all of your monthly electric expenditures if your solar system is suitably sized.
Solar panels generate the greatest electricity when the sun is shining in the middle of the day.
The issue is that the hottest part of the day is also when you consume the least amount of electricity.
As a result, your panels are generating far more energy than your home requires at the time.
When solar panels generate more electricity than a home requires, the surplus is fed into the grid. This is when net metering enters the picture.
Your electric meter spins backward when a net-metered system transfers solar energy to the grid, and your utility credits your account for the full retail value of electricity.
You then use electricity from the grid at night when your solar panels aren’t producing, spinning your electric meter forward once more.
The utility nets how much electricity you provided to the grid versus how much you used to determine your total cost at the end of the billing month, hence the name net metering.
Read Also: Benefits of solar energy for commercial use
How does net metering affect your utility bill?
Net metering increases the value of solar power systems for households by allowing you to “sell” any excess energy produced to your utility provider.
It’s crucial to understand how charges and credits are handled, though:
Utility providers will not write you a check for the power you contribute, but you can earn credits for it.
Instead, the credits will be deducted from your power bills.
If your net metering credit is more than your use during a billing period, the difference is carried over to the next month.
Although some electricity companies may continue to roll over your credit indefinitely, many have a yearly expiration date that resets your credit balance.
With all of this in mind, you can cut your annual electricity bill to zero.
During the sunny summer months, you can save up credit and use it during the winter months when solar generation drops.
When your solar power system has just the proper capacity to cover your annual home use, you’ll get the best results.
Oversizing your solar array isn’t a good idea because you’ll wind up with a lot of unused credit each year.
To put it another way, you can’t overproduce each month and charge your power company.
Some power companies will let you choose when your annual net metering credits will expire.
Benefits of net metering
Find below the benefits of net metering
Utility bill savings
The utility bill savings are the most significant benefit of net metering for solar homeowners.
Over the life of your solar panel system, net metering can save you tens of thousands of dollars.
Solar panel systems can be structured to offset all of a solar customer’s energy use charges within a billing cycle, as we mentioned before.
However, net metering cannot eliminate some set charges found on most electric bills.
Shorter payback periods
Payback periods will be substantially shorter in areas that offer complete retail net metering than in areas that do not.
This is due to the fact that solar households will save more on their electricity bills, allowing them to repay their investment expenditures more quickly.
Net metering isn’t the only factor that influences the length of time it takes for your solar system to pay for itself.
The size of your photovoltaic system, the quantity of electricity you use, the cost of your installation, and local solar incentives and rebates all factor into how long it takes to pay off your solar panels.
Reduces pressure on the grid
Residential solar panels aid utilities (as well as their consumers) by reducing the amount of stress on the electric grid distribution system.
Solar households utilize their own electricity instead of getting power from the grid, therefore there are fewer individuals drawing power from the grid directly.
Furthermore, when a solar system transmits extra energy to the grid, that energy is used by non-solar utility users to meet their own energy needs.
This relieves even more strain on utility-scale power plants.
Relieving some of the strain on the electric system is especially critical now, as heatwaves become more prevalent and utilities struggle to satisfy electricity demands in certain regions.
Read Also: Solar farming – 3 key benefits
Disadvantages of net metering
There is minimal to no harm from the consumer’s perspective.
You are generating energy and saving money on your electric bill.
From the standpoint of the power company, they are losing money.
Because the consumers’ load requirements vary with the solar output, it makes it a little more difficult to regulate their load.
When the sun shines brilliantly, for example, the load on the electricity company is reduced.
If a large thunderstorm blankets a city, thousands of customers’ solar production may be disrupted, and the utility company must make up the difference almost seamlessly, a difficult task.
Understanding the term – Host consumer
The customer is self-sufficient in terms of power.
They usually already have a relationship with the distribution company and/or a private business, which makes using the net meter easier.
In terms of controlling the amount of electricity utilized and/or billed, the host customer is given both independence and empowerment.
What is a monitoring process?
The methods of metering range from one country to the next.
Depending on the country’s existing energy or environmental legislation, processes might also vary greatly from area to region or state to state.
It basically determines how much power customers can use at any one moment.
The majority of monitoring and reimbursable fees are done on a monthly basis.
Advantages of using the monitoring process.
- A minimal fee is imposed.
- There is only one meter used.
- Currents are measured in both directions.
- There is no need for prior arrangements or notices.
- Credits can be carried over to the following month.
Disadvantages of using the monitoring process
- Deficit payments were necessary in some circumstances.
- It may be necessary to settle a residual account or obligation on an annual basis.
- Revenue collection shortages are a problem for municipal and government-controlled grid systems.
- Net metering/power generation system owners are not required to pay the full cost of the regional or national grid.
Other terms include:
Aggregate net metering
Multiple meters on a property can be offset by a single solar system using aggregate net metering.
Assume you live on a ranch with a house, a barn, and a workshop, all of which have their own meters.
All three meters are included in the total net energy use on the property under this agreement.
This works in the same way that ‘traditional’ net metering does.
The only distinction is that you can track multiple meters on a single property.
Virtual net metering
Virtual net metering differs from traditional net metering in that it allows several consumers to share a solar energy system and participate in net metering.
Individual tenants can be metered and billed under their own account under this arrangement, which allows shared houses such as apartment buildings to establish a centralized solar system.
Similarly, residents in the neighborhood can construct a community solar farm to provide power to several residences in the area.
Those that invest in the community solar scheme gain a piece of the shared system’s ownership.
They would be entitled to credits and/or compensation based on their percentage ownership in the system.
Rounding up
Are you considering going solar?
Make a phone call to your local utility and inquire about their net metering policies. Many have their policies available on the internet.
They’ll explain how they credit you for the solar energy you generate, which is crucial to know if you want to get the most out of your system.
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