Net Metering: What is it, How Does it Work?

Net metering is an excellent way for homeowners and energy companies to work together to make use of natural energy sources.

The electricity which is produced by solar panels on a roof is used to power all of the electrical items in the house, including kitchen appliances, computers, the television, the lights and any other devices. ‘Net metering’ is a program whereby the excess energy which is not needed during this process is returned to the utility company, and the household receives an equivalent amount of units on their electricity meter. The meter will run backwards to add these units on.  Essentially, the utility companies are buying some of the solar power which the house produces.

Advantages of Net Metering

Net metering is important for a number of reasons. By allowing consumers to generate electricity through the use of renewable energy, they will be able to actively participate in the creation of a more eco-friendly grid, and towns and cities will be able to meet their renewable portfolio standards. It also frees up utility companies to invest in things such as distribution and transmission.

Where Net Metering is Available

Net metering is widely available in many countries. In the US, the law states that all public utility companies must offer net metering to their customers and there are currently bills pending which may require net metering for private companies as well.  Depending on the state, laws will vary in terms of the net metering program, with some forcing a limit on the number of people who can use net metering at one time. Almost every state has a limit on the amount of wattage each person can produce from their solar panels for this program.

What if I want Net Metering for my Home?

The idea of becoming involved in net-metering appeals to many people. However, some hesitate to do so out of concern for the costs involved in setting it up. The reality is that no special meter is required, as most standard electricity meters can run both backward and forward. Depending on the utility company the person is using, they may be provided with a second meter, so that they have one for each direction. Some companies are now beginning to implement the TOU, or time of use meters, which are able to record the exact time which the In terms of billing, net metering is very simple. The utility company will continue to read the meter each month, but the electricity which they have ‘bought’ will be subtracted from the amount which has been used.