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Net Metering: What You Need To Know

Net Metering What You Need To Know
BY Roland
June 13, 2024 9:34 am

If you’re a homeowner, then you should be familiar with the term “net metering.” But what is it, exactly? Net metering is a policy that allows homeowners with solar panels to sell excess energy back to their local utility company. This can save homeowners money on their electric bills and help offset the cost of installing solar panels.

If you’re interested in going solar, net metering should be one of your top priorities. Keep reading to learn more!

How Net Metering Works

Net metering is a system that allows customers with solar panels to sell any excess energy back to the electric company. This process is made possible by a two-way meter, which tracks the flow of energy in both directions.

When solar panels produce more electricity than a customer needs, the extra power is sent to the grid. The customer then receives a credit on their next bill for the value of the electricity they generated. These credits can be used to offset the cost of any power drawn from the grid at night or on cloudy days.

In some cases, customers may even receive a check from their utility company if their credits exceed their usage for the billing period. As a result, net metering can help solar customers save money on their energy bills and support the continued growth of renewable energy.

Net Metering vs Buyback Program

When a customer has a qualifying renewable energy system, like solar panels, installed at their home or business, they can receive solar bill credits for the excess electricity their system produces.

These bill credits can be used to offset the cost of the customer’s monthly electric bill. A buyback program is similar to net metering, but instead of receiving bill credits, customers are paid for the excess electricity their system produces. The amount of money paid per kilowatt-hour of electricity varies depending on the state and utility company.

But, in general, buyback programs provide a higher rate for excess electricity than what the customer would pay for electricity from the grid. As a result, buyback programs can be a more lucrative option for customers with large solar arrays who produce a significant amount of excess electricity.

Benefits of Net Metering

Net metering is a billing arrangement that allows customers who generate their electricity to receive credit on their utility bills for the power they add to the grid. In other words, customers with solar panels or other forms of renewable energy can offset the cost of their power usage by supplying power back to the grid. Net metering programs vary from state to state, but they all share the same basic premise: customer-generators are compensated for the power they produce.

So, what are the benefits of net metering? First and foremost, it helps to encourage the use of renewable energy. By providing a financial incentive for customers to generate their power, net metering makes it more likely that people will invest in solar panels or other forms of renewable energy.

Additionally, net metering provides a way for utilities to make use of excess renewable energy that would otherwise be wasted. For example, if a customer with solar panels produces more power than they need during the daytime, they can supply that power back to the grid, and it can be used by other customers. This helps to improve the overall efficiency of the electric grid.

Finally, it’s important to note that net metering is not just good for customers and utilities – it’s also good for the environment. The more renewable energy we can use, the less we have to rely on fossil fuels, which helps to fight climate change. Overall, net metering is a simple and effective way to support the transition to a cleaner and more sustainable energy system.

How Electricity Bill Works With Net Metering

Generally speaking, most households will have extra electricity production in the summer and more grid usage in the winter. When you produce more than you need, your utility won’t give you a monthly check because these production variances are quite predictable.

Instead, you will accumulate extra credits throughout the summer so that you can use them as needed at night and in the winter. Even if you produce significantly more energy than you use in certain months and significantly less in others, with the appropriate design, your system can generate enough power to match your annual electricity consumption.

You will be given a credit depending on the net number of kilowatt-hours you contributed back to the grid if your solar power system produces more electricity in a month than you use. You must purchase electricity from your utility to make up the difference if you generate less electricity than you consume in a given month.

In such cases, you would only be responsible for paying for the electricity you consume.


If you’re considering a solar panel system for your home, it’s important to understand the different policies in place that will affect how much money you save. Net metering is the best policy out there since it allows you to store every unit of energy you produce with solar to be used at a later date from the grid.

Thanks to net metering, homeowners can save tens of thousands of dollars over the lifetime of their solar panel system by offsetting their need for electricity from the grid.


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