Residential solar is typically installed as an effort by homeowners to 1) reduce utility bills and/or 2) decrease reliance on non-renewable 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 efficiently and reliably met. And the process by which they are produced, net metering, is arguably the most integral part of the residential solar experience (next to, of course, the sun.)
Scroll to explore net metering in detail and to understand its relationship to the objectives listed above. To learn more about net metering policies in your state, click here.
What is Net Metering?
Net metering is the process that allows local utility companies to measure household energy consumption and solar energy production. A standard utility meter only tracks utility consumption, whereas net metering calculates the difference between energy consumption and production. When a home produces more than it consumes, homeowners are credited by utility companies for each “excess” kilowatt hour.
Utility companies (and state policy) determine how, when and if credits are awarded to the homeowner, and the amount credits are worth. 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!
However, if the net metering rate is set too low, customers will not have the opportunity to effectively offset their investment and would not typically be considered a financially viable alternative to utility.
And Why is it Necessary?
1) Solar panels do not generate energy after the sun goes down and require homes to utilize energy from the power grid at night. When this happens, and it will happen, homes enter a negative balance with their utility provider.
However, homeowners are only charged for the energy that is not offset by the solar power generated during the previous day. For instance, if your panels generated 80 kWh Monday and you consumed 100 kWh Monday night, you would be billed for 20 kWh. Alternatively, if you generated 80 kWh Monday and used 60 kWh Monday night, you would be credited for 20 kWh.
2) Credits build up over the course of an entire year – 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) efficiently balances out throughout the year. And the accumulation of credits during certain parts of the year builds up your overall balance. You will find that a year into your installation your utility bill has virtually disappeared.
Net metering tracks these equations and mediates the short and long-term usage of solar and utility. Without it, overproduction would be ignored and homeowners would lose the opportunity to affordable and responsibly contribute to the power grid.
Are You Ready to Go Solar?
We’ve said it before and we are sure to say it again: the time to go solar is now. Never before in the history of photovoltaics have entire solar systems been readily available to the average homeowner. It is simply unprecedented, and we want you to take advantage of the opportunity.