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Net Metering: What Is It and How Does It Work?

What is Net Metering?

With the advancements in solar panel efficiency, more energy can be generated during daylight hours than is actually needed. Net metering or net energy metering (NEM) allows excess energy — 20 percent to 40 percent on average — to be sent from net-metered homes back to the grid on credit. During periods of low energy generation, the grid will send energy back. The difference can be calculated monthly or annually, and the homeowner is billed for their net usage, which can often result in no bill at all.

How Does Net Metering Work?

Most solar panel systems will be connected to a grid unless the homeowner opts for battery storage, which gives them total control over their own energy. Batteries, however, run out and are expensive to replace. Many homeowners prefer net metering as a failsafe billing mechanism. 

Smart Energy Meter In Kitchen Measuring Energy Efficiency With Figure In Background

Once your net-metered solar panel system is installed and overproducing, that extra energy will be sent to the grid. As you send excess energy to the grid, your meter will run in reverse, building credited energy for later use when your panels are producing less energy. NEM helps to balance fluctuations in seasonal and regional energy generation for a consistent and reliable year-round power supply.

Common Net Metering Misconceptions

The power company sending you actual money is a common misconception about net metering. As nice as it may sound, there is unfortunately no monetary exchange for excess energy. However, the more surplus energy sent to the power grid from your net-metered system, the more your meter runs backwards and accumulates credited energy. This will more often than not result in your net energy usage being less than what is produced and sent back to the grid, and therefore, bye bye energy bill. 

Another misconception about net metering is that it is federally regulated. While NEM is federally mandated, there are state-level variations in regulations. Some states require customers to haggle with utility companies while other states are actively developing alternative strategies that favor utility companies.   

Additionally, many homeowners with solar systems are under the impression that net metering is the only form of surplus solar solatium, but several states — Hawaii, New York, and Louisiana to name a few — have other renewable remuneration solutions that do not involve NEM at all.

Solar panels on the roof of a building, grouping of photovoltaic reflected blue sky and sunlight, So

Does Net Metering Make Solar Worthwhile?

Overall, yes, net metering helps make solar a smart investment! NEM is a foundational aspect of the solar industry that is still in the process of being perfected. Power companies are facing an inevitable future that involves an ever-relinquishing grip on energy allocation, so 2023 is a great year to contact Gurr Brothers Energy and get your net-metered or battery storage solar panel system up and running. 

Author: Hunter S.

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