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How Does Net Metering Work?

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How Does Net Metering Work?

By Holly Glem | July 03, 2017

Typically, people who install solar panels on their homes do so in an effort to reduce their utility bills. They want to save money when heating, cooling, and powering their homes and also lower the amount of energy they consume from non-renewable sources. 

An important part of the process that allows residential solar panel owners to reduce their carbon footprint and enjoy savings on their utility bills is called net metering. 

What Is Net Metering?

Net metering is a process that allows utility companies to measure your energy consumption and production to apply savings to your home energy bills. In essence, after solar panels are installed on your home you begin producing power. Any excess power you don’t use will be sent back to your utility company. Your electric meter will run backwards. You will feed excess energy to the utility company during the day and then receive it back during the nighttime, at no cost. Any excess energy you don’t use at night, your utility provider will credit your bill for the energy that your solar panels generate and send to the grid. 

Here’s how it works: your panels generate solar energy during the daytime hours, energy that often exceeds the amount that your house uses on any given day. What happens with the excess energy that your panels create? Around 20 to 40 percent of this power is sent back through your meter and to the power grid where it is either stored or used to power the homes of other energy consumers in your neighborhood or city. 

However, your panels do not generate solar power during the nighttime hours, forcing your home to use energy from the power grid. When you use power during the night, you start with a negative balance from your utility provider. You are then only charged the amount of energy that is not offset by the energy that your panels generated and sent to the grid that previous day. 

For instance, if your panels generated and sent 80 kwh of power to the grid that day and you used 100 kwh of energy that night, you would be billed for 20 kwh through the net metering process. On the flipside, if you generated 80 kwh to the grid that day and used 60 kwh that night, you would be credited for 20 kwh.

Your credits build up over the course of an entire year. This accumulation of credits comes in handy if your home consumes a lot of energy on cloudy days. The credits that your solar panels build up on sunny days allows you to offset any utility charges you incur on days that are overcast.

Helpful Tips About Net Metering

The opportunity to build up credits and save money on your utility expenses may seem like an exciting prospect that you are eager to take advantage of right now. However, before you start shopping for solar panels at one of the solar power companies in your area, you should first learn some basic tips for using net metering to your advantage. These facts can help you appreciate how net metering actually works and what impact it can have on your energy costs.

First, you should realize that most utility companies do not give you full credit for each kwh of energy that your panels produce. In fact, many providers only credit you around 0.5 to 0.25 kwh for every credit that your panels generate. However, most companies conform to industry standards and pay reasonable amounts for your credits.

Depending on what time of year you have your solar energy system installed, the savings to your expenses may not be evident right away. Factors like changes to your energy usage, such as when you use your air conditioner during the summertime, or seasonal changes of the sunlight can all impact how much energy your panels create, how many credits you build up, and how much of your costs you are ultimately able to offset with your solar power system. You may not see savings every single month, but over the course of an entire year, your overall energy spend should be lower.

Tips for Energy Efficiency

While you are waiting for your solar power credits to be applied to your bill, you can take some simple measures in the meantime to help you lower your energy costs. These efficiency tips do not cost a lot of money and can help you reduce your home's dependency on power that is generated by non-renewable sources.

First, if you have not done so already, you should install LED light bulbs throughout your home. These bulbs use 15 to 25 percent less energy than traditional bulbs found in most homes. They last longer, make your home more ecofriendly and most importantly, help save you money on your energy bills. 

You also should install a smart thermostat in your home. Smart thermostats allow you to keep track of your energy consumption and can help you program when your heating and cooling system should run. For example, you can set it to inactive status when you go on vacation so you don’t consume energy you don’t need. Best of all, you do not need solar panels to use a smart thermostat at home.  

Following these tips for energy efficiency and being informed about net metering and what your utility provider offers is a great start towards making your home more environmentally friendly.

If you’re ready to take the next steps to start saving even more money on your energy bill, give us a call at Blue Raven Solar and we’ll help you determine if going solar is right for you.




Topics:   Learn About Solar, Savings

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