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.

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.

Benefits of Net Metering

  • You can reduce the amount of money you spend each year on energy. You can even make money if you produce more than you consume and your utility company pays you for that excess energy at the retail rate.
  • The system is easy and inexpensive. It enables people to get real value for the energy they produce, without having to install a second meter or an expensive battery storage system.
  • It allows homeowners and businesses to produce energy, which takes some of the pressure off the grid, especially during periods of peak consumption.
  • Each home can potentially power two or three other homes. If enough homes in a neighborhood use renewable energy and net metering, the neighborhood could potentially become self-reliant.
  • It encourages consumers to play an active role in alternative energy production, which both protects the environment and helps preserve natural energy resources.
  • Homes that use net metering tend to be more aware of, and therefore more conscientious about their energy consumption.
  • It saves utility companies money on meter installation, reading and billing costs.

The amount of money homeowners can save with net metering depends on how much energy they produce. A 10-kilowatt residential wind energy system can save a consumer an estimated $10 to $40 a month [source: American Wind Energy Association].

Not everyone is sold on the idea of net metering, however. To the utility companies, the idea of consumers buying less power from them (and even having to pay consumers for the energy they produce) means shrinking profits. For that reason, they have opposed many proposed state legislation that would have made it easier for consumers to use net metering.

Want to know how much your system may cost? Click here

Contact Us / Send Us an Email