How Net Metering Works
Let’s say Florida Solar One installed your solar energy system. While you’re away, your house is generating energy but you’re not using it. Meanwhile at night, when you have the lights and TV blaring, your solar system is sitting idle. You could buy an expensive battery to store the extra energy you generate during the day, but there’s another option that allows you to send your extra power to the grid in exchange for banked energy credit that you can use when you need it. It’s called net metering.
When your home is equipped with a solar energy system, it sends the excess energy that’s generated back into the grid to power other homes. An electrical converter called an inverter turns the DC (direct current) power coming from your renewable energy source into AC (alternating current) power, which matches the voltage of the electricity flowing through the power line.
As that excess energy is being generated, your power meter spins backward rather than forward, giving you a credit that you can use to pay for your future energy use (you can roll over excess electricity to your next bill, just as many cell phone companies let you roll over minutes).
If you’ve generated more energy than you’ve used at the end of the year, your electric company may pay you back for the extra power at the retail rate. If you have market-rate net metering, the utility company will pay only a wholesale rate, which is less than retail and won’t earn you anything (it’s kind of like giving away your extra energy), but you’ll still save on your overall power bill.