How Does Net Metering Work?

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Discover what advantages exist and how you can benefit from a residential solar panel system. It is important you understand all the programs, credits, rebates, and incentives associated to going solar, so you can make the right decision for you and your home. If you are working with a solar provider like Blue Raven Solar, you will have a simple and straightforward solar experience, with experts available to answer any of your questions. 


Rooftop solar is typically installed as an effort by homeowners to reduce utility bills and/or to decrease their reliance on nonrenewable energy. Because residential solar systems are designed to utilize the energy from the sun to power homes and to conserve utility expenditures, these objectives are reliably met. The process by which those end results are produced, net metering is arguably the most integral part of the residential solar experience (next to, of course, the sun).  


Explore net metering specifics and understand its relationship to the objectives listed above. 

Electrical meter and panels installed on exterior of house

What is Net Metering?

Net metering is the process allowing local utility companies to measure household energy consumption and solar energy production. A standard utility meter only tracks utility consumption, so the power company can bill you accordingly, whereas net metering calculates the difference between energy consumption and production. When a home produces more than it consumes, utility companies can take the difference and credit homeowners for each “excess” kilowatt hour they produce. A net meter is installed during your solar system installation.  


Utility companies (and state policy) determine how, when, and if credits are awarded to the homeowner, and the amount each credit is worth. Some companies keep track monthly, others yearly. If a utility company credits customers for production at the same rate they bill for utility consumption, for example, the net metering rate is one-to-one. This scenario proves solar to be a viable and lucrative opportunity for almost all eligible homeowners – the system essentially pays for itself! Throughout the nation, 38 states require their utility companies to offer net metering. 

Single level house with brick accents and solar panels installed on front part of roof

And Why is it Necessary?

Net metering serves several purposes.  


If panels produce excess energy during the day, that excess is subtracted from the utility usage and homeowners are charged for the energy, not offset. For instance, if your panels generated 80 kWh of excess energy on Monday and you consumed 100 kWh on Monday night, you would be billed for 20 kWh. Alternatively, if you generated 80 kWh of excess energy on Monday and only used 60 kWh on Monday night, you would be credited for those extra 20 kWh. Can you see the savings already?  


Credits can build up over the course of an entire year for some. Due to the nature of the system, it takes at least one full year (through all four seasons) to accurately assess production versus consumption. The day-to-day variation (cloudy/sunny) and the season-to-season variation (shorter/longer days) efficiency balances out throughout the year. The accumulation of credits during certain parts of the year builds up your overall balance. You will find about a year into your installation your utility bill has nearly disappeared, and this is because of net metering! You could even take a few steps to use less kWh during the day so you can offset your utility bills even more, especially if you live in a state like Florida, where excess energy credits are calculated at the end of a 12-month period, and you are actually paid back for the kWh you do not use.  


Net metering tracks these equations and mediates the short and long-term usage of solar energy and utility. Net metering programs and benefits play a big part in helping homeowners make the decision to go solar.  


After the first year of experiencing net metering, you will have a good idea of how much money solar power is really saving you and depending on when tax season correlates with your installation, you might even see more savings because of the 30% federal tax credit and other local incentives.

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How Does This Affect You?

Net metering policies differ from state to state, and sometimes, from utility company to utility company. While some states do not have legislation requiring utility providers to offer net metering, companies in those states likely have something similar or an alternative way to earn savings from excess energy production. For example, the Texas government does not require net metering, but many larger utility companies will buy back excess energy at near retail rates. Learn more about net metering policies in your state. 


In some states, net metering programs can be coupled with solar rebates because some utility companies will credit homeowners for having solar systems. Oregon pays solar owners 20 cents per watt in a program for new owners, with a maximum payout of $5,000, which can be around 40% of a system cost. 


The US Department of Energy along with other power providers continue to study and refine net metering. The Solar Energy Industry Association found net metering not only benefits the solar owners, but it also benefits their neighbors, because more energy is available and provided. If you go solar but your next-door neighbor cannot, you will be giving them a bit of energy! Most solar systems do not completely offset their grid usage, but prices are reduced, some to as low as $12 a month. 

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Are You Ready to Go Solar?

The time to go solar is now. The availability of technology, the low costs, and the benefits are simply unprecedented, and we want you to take advantage of this opportunity.  


Along with our financing products, net metering opportunities, and future savings, Blue Raven Solar products and services are covered by warranties ensuring your system provides you with power during every hour of sunlight. If your original system is not covering your previous energy costs, we will upgrade your system for free (terms apply).  


Did net metering policies tip the scale and make you ready to make the switch? Blue Raven Solar is a top solar installer and we have received several awards based on our merit, our customer relationships, and our business practices. We believe the future of energy is available today. Millions of people have made the decision to go solar and the industry is growing quickly.  


We would love to help you make the switch to clean, renewable energy for your home.  


Request a free quote from one of our solar experts today. 

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