Net metering for alternative energy customers is not new; however, it can be confusing for those customers considering adopting solar power. Solar energy systems inevitably result in reduced (or eliminated) electric bills, but this isn’t just because the sun’s energy is free. It’s also due in part to a process called net metering.
So, how does this affect your electric bills? And how does it work? Here’s what you need to know.
What Is Net Metering?
Solar energy systems are designed to provide enough electricity to meet the specified needs of a home or business, based on complex calculations and the customer’s budget. Often, however, PV systems capture more energy and create more electricity than is needed in a given day. When this happens, excess electricity is funneled up the grid and back to the utility company for its discretionary use.
This process, known as net metering, obligates the utility to compensate customers for their contributions. Individual state regulatory policies establish the terms for net metering as well as the retail rate you will be credited for any excess energy your system generates.
How Does the Process Work?
When your solar energy system produces an excess of electricity, a special billing meter measures the amount and essentially simulates your power meter rolling backward. At the end of the month, your usage is offset by the amount of excess energy that went back to the grid. Your bill will ultimately reflect the net amount of power used after these credits.
In many cases, you won’t be paying the utility company for any electricity at all. Instead, your bill will reflect a credit that you can use at a later date, should your system fail to produce a sufficient amount of power due to clouds or shorter days.
Most utility companies maintain a running calculation of your excess energy amount, holding your credit for use later in the year. If a balance remains at the end of the year, the amount is applied as a credit to the January bill.
How Much Can I Save?
The utility companies are required by law to pay you the retail rate for excess electricity produced by your solar energy system. In other words, the amount the company must pay you per kilowatt hour is the same amount you would pay to the power company per kilowatt hour used.
For many homeowners, this is enough to offset most of the charges on their electrical bills.
Net metering is one of the biggest perks of grid-tied photovoltaic systems. To discuss a solar panel system for your home or business, contact Intermountain Wind and Solar.
As the premier provider of alternative energy systems in the Intermountain West, we can assist customers in Utah, Wyoming, Colorado, Idaho and Nevada with all of their solar energy system needs. Contact us today to learn more about how net metering can benefit you.