What Is Net Metering?
If you’re considering solar panels for your home or business, you may have heard about a unique incentive called net metering.
Net metering is a billing agreement between solar panel owners and utility companies. Under a net metering agreement, your utility company will credit you for any electrical power your panels send back to the grid.
Of course, that’s just a brief explanation. We’ll explain net metering in-depth by covering the following information:
- How net metering works
- The benefits of net metering
- Net metering FAQs
We hope by the end of this blog you have a better understanding of net metering and how it can benefit you as you make the switch to solar energy. We’ll start by explaining how net metering works.
Interested in adding solar panels to your home or business? Contact Photon Brothers at 720-370-3344 (Colorado) or 805-351-3371 (California). Our highly-trained solar engineers can answer your questions and explain net metering in more detail. Plus, we can provide a FREE in-home energy assessment to help you plan the perfect solar panel setup for your property.
Note: Proposed net metering changes will go into effect likely in June 2022.
How Net Metering Works
When the sun is shining, solar panels are highly effective at generating power for a home or business. In fact, solar panels are so effective during the day that they often produce excess power. This excess power can be stored in solar batteries for later use or sent to the utility company under a net metering agreement.
You can think of a net metering agreement like an energy savings account: For every kilowatt-hour (kWh) of electricity you send back to the grid, your utility provider supplies you with an energy credit. These credits are stored in your “energy savings account” and can be applied to your monthly or annual utility bill.
After each billing cycle, the amount you owe will depend on how much electricity your property pulled from the grid during the billing period, minus the net metering credits you choose to apply to your bill.
Many solar system owners save their net metering credits for winter when there are more low-sunlight days. That way, they do not have to pay as much when they pull electricity from the grid to supplement their solar power on cloudy days or during stormy weather.
The Benefits of Net Metering
Solar energy system owners benefit from net metering in the following ways:
- Reduced energy costs: No matter how robust your solar panels are, there will be times when you need to pull electricity from the grid (at night, on overcast days, etc.). Using net metering credits will reduce the amount you owe your utility company throughout the year.
- Faster payback period: The money you save on your utility bills because of net metering can go towards paying off the initial cost of your solar equipment, shortening your solar payback period.
- Increased sustainability: When you send energy back to the grid, you’re reducing the strain on finite resources by actively supplying renewable power to other buildings in the area.
Net Metering FAQs
We know you probably have more questions about net metering. We’ll attempt to answer your questions by covering some FAQs about net metering.
How do I know if net metering is available in my area?
Call your utility provider or visit their website to see if they offer a net metering agreement. Chances are, they do: Currently, 41 states have established net metering policies in place.
How does electricity get sent back to the grid?
When your solar panels produce extra power at any point during the day, your electric meter runs in reverse to send power back to the grid.
How much are net metering credits worth?
Utility providers can issue net metering credits at the full retail electricity rate or a lower wholesale rate based on the amount of power (in kWh) you supply to the grid. To find out specific rates in your area, contact Photon Brothers at 720-370-3344 (Colorado) or 805-351-3371 (California) to speak with one of our Solar Consultants, or you can contact your utility provider.
Do net metering credits expire?
Typically, yes. Net metering credits have “rollover limits” that can expire if they are not used within a specific timeframe.
Can I cash out my solar credits?
No, they must be applied to your utility bill.
Can net metering credits be transferred if I move?
The answer to this question depends on your utility provider. Some utility providers allow you to transfer your credits to a new account if you move within an approved area. However, if you move out of state or change utility providers, you forfeit your unused net metering credits.
Have More Net Metering Questions? Call Photon Brothers Today.
Contact Photon Brothers at 720-370-3344 (Colorado) or 805-351-3371 (California). Our solar engineers are familiar with net metering details in these states, so we can answer your questions or point you to someone who can.
We can also provide you with an upfront estimate on the cost to install a custom solar energy system in your home or business. Our solar engineers do not use high-pressure sales tactics and give truthful information—which is why we have 5-star customer reviews everywhere you look.