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What is Net Metering?

Last Updated: Feb 02, 2016 02:04PM PST

Net Energy Metering is a billing system that allows solar homeowners to receive credit from the utility company for any excess power their solar energy system provides. On a Net Metering plan, every time your system produces more electricity than you can use, the rest of the electricity is fed back into the grid, making your meter run backwards.

This is great for solar homeowners because when you use electricity after the sun sets, you must pull electricity from the grid. If you have net metering and your system produces excess energy while the sun is out, you may be able to cancel out or significantly reduce the cost of any energy you use at night. This means at the end of every billing period you are only charged for your “net” usage—the amount of energy pulled from the grid less the amount of energy you returned to the grid.

Here’s an example, say…

During the month of November, your monitoring site says you produced 1,000 kWh, but your utility bill says you consumed 500 kWh and generated only 300 kWh. Confusing right?

If you produced 1,000 kWh but the utility bill only recognizes that you generated 300 kWh, it means the remaining 700 kWh unaccounted for was already used to power your home.

Instead of billing you for the 500 kWh that was pulled from the grid, your utility company will subtract the 300 kWh of your excess kWh produced and only charge you for 200 kWh.

So your utility bill reads...

  • Consumption:  500 kWh
  • Net Generation:  - 300 kWh
  • Net Usage:  200 kWh

This is the amount your utility company will bill you for—your “net consumption.”

The terms “Net Generation” and “Net Consumption” are easily confused. It is important to note that these do not indicate the amount of electricity you used or produced, but merely how much your electric company is able to record. Below are a some explanations that illustrate these tough terms in more detail.

Net Generation Explained

While you’re still required to maintain connection to the grid (unless your home is on a battery backup system), solar is installed to have the energy you produce go toward powering your household. Any excess electricity that you are not able to consume at that moment is sent to the grid. Your utility company keeps track of that excess to document how much to credit you. A credit will appear as a negative number—i.e. -300 kWh.

This is called Net Generation. The prime examples of net generation are measured at times when you and your family are not home in the middle of the day and your solar array is at its peak performance. The electricity will first go to your fridge and any lights or other electronics left on. The rest will go straight to the grid.

Consumption Explained

Your utility company’s measurement of consumption follows the same principle. Your solar system is wired so that all the energy you produce goes to your home’s energy needs first. Then, any excess is subsequently directed to the grid. Therefore, the utility company cannot measure how much electricity you have consumed from your solar production, only how much electricity you pull from the grid.

So let’s say, it’s 4pm. Solar production is declining for the day but the kids are home from school, using their computers and you’ve begun a load of laundry, turned the lights on in the kitchen and started defrosting some chicken in the microwave. Most of the electricity needed to run all of those lights and electronics must be pulled from the grid as your solar panels are now producing at a low capacity.

With a net metering plan, your utility company will credit you for the power your panels generate, saving you big bucks over the years. While they can’t read your SunPower Monitoring System, your utility company can always tell how much energy you’ve given to or taken from the grid!

Your True-Up Bill

Many net metering plans also allow your electricity to be billed annually, allowing for the credits in the high producing months to roll over to the low producing months when you may incur some electric charges. Your annual bill (also known as the true-up bill) will be paid on the month following your solar anniversary, one year after your solar system was energized. Please contact your utility to find out if they offer the annual true-up bill as an option.

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Last updated on: 2016-02-02 22:04:11 UTC
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