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What is net metering?

Net metering is the process through which renewable energy producers measure and sell their surplus energy back to the utility company. When your solar electric system is generating electricity, your meter spins backwards to “bank” any electricity you do not use. At night or during times when you use more electricity than your solar electric system is producing, the meter spins forwards to collect the stored energy. At the end of a billing cycle, if you have produced more energy than you have consumed, you can sell the net electricity back to the utility company.

How does net metering work?

Net metering uses a bi-directional meter to measure and/or track the "net" difference between the amount of electricity your solar electric system produces and the amount of electricity you consume during each billing period. This can be accomplished on a cumulative or time-of-use basis, depending upon your rate schedule.

At the end of each billing period, you may receive a credit for any energy you have generated that is in excess of the energy you have consumed. If your energy consumption is greater than the energy produced, you will be billed for the net difference.

What are the benefits of net metering?

Net metering is designed to reduce demand during long, hot summer days when energy demand is heaviest, while providing energy credits that allow solar producers to reduce their electric bill and even sell energy back to the utility company.

Net metering offers additional benefits, depending on the size of your solar electric system. If you purchase a smaller, less expensive system, you can still offset most or all of your electricity needs because of the higher value of your excess electricity. If you purchase a larger system, you can "bank" or store your excess electricity on the grid and offset all of the electricity you would otherwise purchase from your utility.

Common Misconceptions

1. If my solar electric system produces more electricity than I need, my electric service provider must buy it from me.
   
   False: Electric service providers may, but are not required to, purchase any excess electricity you produce at the end of each year of your net metering agreement. California state law specifically states that your electric service provider does not have to buy your net generation. However, some utilities, especially those specializing in "green" electricity, may be willing to buy your excess solar or wind electricity for resale to their other customers.
   
   
2. My electric service provider will pay me full retail rates for my excess electricity.
   
   False: If the utility is willing to buy this "net" annual generation, they do not have to pay you full retail price for it. While the actual rate paid is determined by the electric service provider, it would likely be less than retail and closer to wholesale rates, which are much lower.
   
   
3. I will have to spend hundreds of dollars on special meters, inspections or fees to get my solar electric system hooked up to the electric grid.
   
   False: You are only responsible for having a simple bi-directional meter, the type you probably already have. If your generating system meets national safety and performance standards, you cannot be charged for additional tests, certification or fees.
   
   
4. The kilowatt-hours of electricity I might still need to buy from an electric service provider will cost me more than before I became a net metered customer.
   
   False: Your electric service provider cannot charge you anything extra for being a net metered customer and no charges can be imposed on the electricity you generate.

Time of use net metering employs a specialized reversible meter that tracks electricity use during different periods of the day, which can vary with differing seasons.

Time of use rates reward customers when they conserve electricity during peak hours when demand for energy is highest. Peak hours occur during midday and early evening hours; off-peak periods generally span nights and weekends.

Net metering includes several different options to meet the needs of your organization. Your utility company can help you determine which option will provide the best possible scenario for your energy usage.