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AllEarth Solar Power Dealers Blog


What Is Net Metering, and How Does It Work?

Posted by AllEarth Renewables on March 2, 2017 in Net Metering, Residential Solar, Consumer, Going Solar, Dealers

What is Net Metering and How Does it Work?
The solar industry has grown exponentially in the last decade, and with it, so have policies, incentives, and systems for making solar more accessible to the people who want to use it. One of the most important of these systems is net metering. If you're considering making the switch to solar, it's important to understand how net metering works, and how it might apply to you.

What is Net Metering?

Net metering is a means by which you can either minimize your power bill or even make money off of your solar installation, if the amount of power you produce is more than your house needs to run each month. As defined by the Solar Energy Industries Association, net metering "allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid." Solar owners receive credits on their monthly bills from the electric company that are equivalent to the power they produce. 

Requirements for Net Metering

The main requirement for net metering is that your solar system must be grid-tied to facilitate the transfer of energy from your solar system to the utility. If you are considering an off-grid solar system, keep in mind that you will not be able to take advantage of the net metering incentives in your area if you choose to go this route.

Other net metering requirements vary by state, with some states having implemented net metering capacity limits, compensation regulations, and policies around renewable energy credits (RECs). Not all states allow for net metering, but currently 41 states and Washington, D.C., have some form of net metering policy in place.

In addition, some states allow for other types of net metering, including Aggregated Net Metering (ANM), which, according to the National Conference of State Legislatures, "allows for a property owner with multiple meters on one property or adjacent properties to implement net metering, such as with a group of university buildings or adjacent farm properties."

The other major forms of net metering are Virtual Net Metering (VNM), which "expands aggregated net metering, allowing a property owner with multiple meters to distribute net metering credits to different individual accounts, such as to tenants in a multi-family property or condominium owners," and Community Net Metering (CNM), which "allows for multiple users to purchase shares in a single net metered system, either located on-site or off-site."

Benefits of Net Metering

Net metering has a number of benefits ranging from the financial to the environmental. Depending on the size of your solar system and the amount of solar you produce each month, you can greatly reduce your monthly electric bills, and even profit from it.

Net metering also gives you peace of mind if you live in an area with harsh winters or many cloudy days per year, since the energy you produce on sunny days will be sent back to the grid in exchange for credits that can power your home when the weather is affecting system production. In this way, the grid serves as a sort of backup power system, eliminating the need for costly generators or batteries.

And finally, net metering allows you to gain perspective on your energy usage on a monthly basis—perhaps even a daily basis, depending on the transparency of your billing statements. Having a clearer sense of how much energy your household uses may help you make lifestyle adjustments that will lead to an even smaller monthly carbon footprint.

If you're interested in going solar, you should do some research into your state's rules and regulations around net metering. For those who have access to it, net metering is a great way to simplify your solar production. And for those who don't have access to net metering, don't worry--many states are expanding their existing net metering regulations, and othes are introducing legislation to implement new net metering programs. Reaching out to your local utility and elected officials to let them know that you want a robust net metering program in your area can go a long way. 

Want to learn more about net metering and other incentives that can help you go solar? Download our free guide, "The Homeowner's Guide to Investing in Solar."

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