Net Metering: 8 Questions Asked and Answered

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Solar technology has made significant strides since its humble beginnings. Previously, generating a substantial amount of solar energy required large panels and was very time consuming. Thanks to technology advances, today’s smaller panels can generate the same amount of energy within a matter of hours.

In fact, the National Renewable Energy Laboratory (NREL) reports between 2010 to 2020, the price of solar dropped by about 70%. They also reported that the average efficiency of solar panels increased from around 15% in 2010 to about 20% in 2020.

Solar may be thought of as a luxury for the rich, but it is now an affordable option for anyone. It is also encouraged by state and federal governments through incentives for going solar.

Solar technology is constantly improving. One of the biggest improvements in recent years has nothing to do with the physical setup of your solar system. Rather, it’s how solar energy is being stored and used through a process called net metering.

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What is Net Metering?

Net metering lets you use the extra electricity your solar panels produce to save money on your electric bill. In exchange for energy, your utility company gives you credits on your account. With net metering, instead of wasting that extra electricity produced, it gets sent to the power grid for others to use.

Here’s the cool part: when your solar panels send generated electricity back to the grid, your electricity meter starts going backward! It’s like getting credit for the extra electricity you generate. Then, when your panels aren’t producing enough, you can use that credit to get electricity without having to pay extra.

Think of it like this. Imagine you have a lemon tree that you use to make lemonade for a lemonade stand. Some days, your tree produces way too many lemons, and some days it doesn’t produce enough.

On the days that you have too many lemons, you sell your lemons to a local fruit stand. Instead of giving you currency in return, they give you a coupon for free lemons at a one to one rate.

There will be days that your tree doesn’t produce enough lemons. On those days, you can go to the fruit stand and exchange those coupons for lemons.

So, net metering is like this lemon exchange system. When you have too many lemons, you trade with the fruit stand and get coupons. When you need more lemons, you use those coupons to get what you need.

It helps you balance out your lemon supply and demand. It also helps you be sure you always have enough lemons to keep your lemonade stand up and running.

When you produce too much electricity, you send it back to the grid. In exchange, your utility company will give you credits. When you need more electricity, the grid sends you the energy you need and uses the credits to pay for it.

In the same way, net metering helps you balance the electricity you produce from your solar panels.

This is a graphic depicting how net metering transfers energy.

Do I Qualify for Net Metering?

To determine if you qualify for net metering, it’s important to understand that power companies will have varying policies and regulation. Some have very friendly net metering programs, while others may have stricter requirements or no program at all.

Good news though, according to Solar Power World, only three states offer no incentive or compensation programs. Those states are Alabama, South Dakota, and Tennessee. To find out if you qualify, you’ll need to check the specific policies for your power company.

You can usually find this information on your state’s official government website or by contacting your local utility company. They will have the most up-to-date information on net metering policies and how it works in your area.

Net Metering FAQ

What are the benefits of Net Metering?

There are many benefits to net metering, but here are four main points to consider:

  1. With net metering, you can save money on your electricity bills by getting credits for the extra electricity you produce. You can then use those credits when needed, instead of paying out of pocket.
  2. Net metering lets you generate your own clean electricity from sunlight. This helps protect the environment by reducing the use of harmful fossil fuels like coal and natural gas.
  3. When you participate in net metering, the extra electricity you send back to the grid can help others. It does this through reducing strain on the power grid and making electricity more available for everyone.
  4. Net metering programs encourage the use of solar power by making it easier and more appealing to install solar panels. This leads to more solar energy being produced, which is good for the environment. It also decreases our reliance on non-renewable energy sources.

 

Net metering is a win-win situation. It saves you money, helps the environment, supports the power grid, and encourages the growth of solar energy. And it’s all through solar panels for your home! It’s a pretty cool way to make the most out of your solar panels.

This is a graphic depicting 4 benefits of net metering.

Net Metering versus Net Billing

In some states where net metering is not an option, there’s something called “net billing” instead. It’s a way to compensate you for the extra energy your solar panels produce.

With net billing, the utility company finds how much it would cost them to make or buy that extra energy elsewhere. They then pay you an amount that reflects that cost. This is called the “avoided cost” of electricity.

In states with net metering, the rules are different. In those places, if you produce extra power, the utility company has to buy it from you. They have to buy at the same price you pay for the electricity you use from the grid. That price is called the retail price.

 

In a nutshell, for net billing policies, the payment is based on a utility company’s cost. For net metering policies, it’s at the same price you pay for electricity.

This is a graphic depicting the differences of net metering and net billing.

What does Net Metering Look Like in Idaho?

For customers with Idaho Power, residential and customers with small businesses can connect up to 25 kilowatts to the grid. Other types of customers can connect up to 100 kW of generation. Customers will earn credits for the extra energy that they produce.

Check out these Net Metering Policies for a few Idaho Utility Companies:

 

What does Net Metering Look Like in Colorado?

For customers in Colorado, municipal utilities must offer net metering. When you have Net Energy Generation (NEG) in a month, it gets applied as a credit to your next electricity bill. Each NEG credit you earn can be used to offset 1 kilowatt-hour of electricity you use in the future.

Check out these Net Metering Policies for a few Colorado Utility Companies:

What about the NEM 3.0 Policy in California and other changing policies?

California’s Net Energy Metering 3.0 policy is a big deal for how people get paid for extra energy they make. It’s not just important for California, but also for the Rocky Mountain states nearby.

Each state has a group called the Public Utility Commission (PUC) that looks at new rules for energy. They’re always thinking about how to help consumers and promote clean energy. Since California is a leader in renewable energy, its new NEM 3.0 policy will have an impact on other states.

If you live in a Rocky Mountain state like Idaho or Colorado, it’s important to pay attention to your state’s PUC. That way, you can make smart choices about your own solar energy use. You can also advocate for your state’s PUC to implement policies that you agree with.

How is Net Metering Calculated?

When it comes to net metering, it’s all about two main things. How much electricity your solar panels generate and how much electricity you use from the grid.

How net metering works is simple. Your utility company calculates the electricity you send back to the grid and subtracts it from the electricity you used. This gives you the “net,” which is the difference between what you used and what you shared.

If you share more electricity than you use, you earn credits that can lower your future electricity bills. It’s like a give-and-take system that benefits both you and the environment!

We’ll Be With You, Every Step of the Way

We’re here to help homeowners and business owners like you make smart choices when it comes to solar energy.

You can rest assured that we have the knowledge, experience, and dedication to handle all aspects of the solar installation process. Our team will be there every step of the way to provide you with a smooth and successful solar journey.

We take pride in building long-lasting relationships with our clients, and that’s why we back our work with warranties. We’re not interested in recommending solar to someone who won’t benefit from it. That would be a waste of time and money for both of us.

We genuinely want to help you make the best decision about solar energy. If you’re curious to see if solar is a good fit, we’ve created a quick solar score assessment just for you. It will give you an idea of whether going solar is a good fit for you.

Check it out below!

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You may be more well suited than you think. Get your solar readiness score.

Helpful Resources

Find Energy – A resource for finding a utility company and their net metering policies near you.

The Three Types of Solar Homeowners Need to Know About – Interested in the different types of solar? This article breaks down each kind of solar energy system and what they can do for you.

The 7 Steps of Going Solar – Curious about the process? This article breaks down 7 Steps of Going Solar, so you know exactly what’s going to happen during your solar journey.

Net Metering Policies for popular Big Dog Solar Service Areas:

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