What is Net Metering?

As you are exploring and learning more about photovoltaic (PV) solar power systems you may see the terms ‘net-metering’ and ‘grid-tied’ used to describe how your system will utilize the energy it produces. These terms carry a lot of weight and generally translate into a lot of savings.

While the concept of net-metering is what actually helps save you money, it is integral to first understand what it means to have a grid-tied PV system.

Before you install any solar panels, all of the energy that you use in your home comes from the grid. In other words, you rely on electric companies, power plants, cables, and power lines to supply your electricity. To have a PV system that is tied to the grid means that, at times when your solar panels are not producing enough energy (i.e. at night or during a storm) you can still pull electricity from the grid. Grid-tied PV systems also allow you to send excess electricity into the grid as well.

The converse of a grid-tied system is an off-the-grid system. Off-grid  systems are much more expensive to set up because they involve installing batteries to store excess energy. This allows electricity to still be used when the solar panels are not producing enough energy. A large part of the expense is the batteries themselves, which need to be replaced every 5-10 years. Very few solar power users opt for an off-the-grid system because of this additional expense.

When you only get your electricity from the grid you use a standard meter, or the gauge that measures how much electricity you use per month. This gauge can only wind forward, showing you cumulatively how much energy you have used to-date.

As opposed to a standard meter, the gauge for a net-metering system can wind both directions. This makes it possible for you to have a negative amount of energy usage at the end of the month. This amount can be credited to your account to use at any time free of charge. At the end of the day, the electric company will only bill you for the net amount of energy that you used in excess of what your solar panels produced.

Here is an example:

Divide your day into three sections, morning, afternoon, and evening. In the morning you use 10 kWh and your solar panels produce 10 kWh of energy. In the afternoon you use 5 kWh and your solar panels produce 20 kWh. In the evening you use 15 kWh and your solar panels produce 5 kWh. In total you used 30 kWh while your panels produced 35 kWh. Those 5 kWh that you did not use will be sent back into the grid giving you an extra 5 kWh to use from the grid later on free of charge.