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Net metering for home solar panels

Last updated 2/28/2019

What is net metering?

Net metering (also known as net energy metering) is a solar incentive that allows you to store energy in the electric grid. When your solar panels produce excess power, that energy is sent to the grid and in exchange you can pull from the grid when your system is under-producing like during nighttime.

With the right size solar energy system, you can produce enough electricity to match your home’s electricity use for the entire year. However, the amount of electricity your solar panels produce will vary throughout the year. Net metering (also known as net energy metering, or NEM) helps you account for these differences by crediting you for the excess electricity your panels produce so you can use it later.

While net metering is not the only way that utilities compensate homeowners for going solar, it is by far the most common: as of 2016, 41 states and Washington D.C. have mandatory net metering rules, and two more have utilities that permit the practice. To find out the policies in your state, use the Database of State Incentives for Renewables and Efficiency (DSIRE®), which tracks net metering and other policies.

how net metering works during the day and at night Don't overpay for solar! Weigh your options and save.
“Net metering can give you a new monthly paycheck”
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With net metering, you can receive utility bill credits for the electricity that your solar panels produce. However, you won’t receive a cash payment from your utility for your excess solar electricity, no matter how much you generate. If you do generate more electricity than you use in a year, utilities in some states will let you carry credits over into future years, while others will reduce your credits.

In general, most homes will produce excess electricity in the summer months and will use more electricity from the grid in the winter. Because these variations in production are fairly predictable, your utility won’t send you a monthly check when you produce more than you need. Instead, you will build up extra credits during the summer months so that you can draw from them at night and during the winter months when you need them. With the right design, your system can generate enough power to match your total electricity use for a year.

How net metering works

Solar energy systems typically hit peak electricity production in the afternoon, when many people aren’t home using electricity. By contrast, home electricity use is typically higher in the mornings and evenings. Net metering helps you to account for these ups and downs in your day-to-day electricity production and usage.

With net metering, excess electricity is fed into your electric utility’s grid when your system is producing more than you need. When this happens, your meter actually runs in reverse. When your system isn’t producing enough electricity, you can draw it from your utility just as you did before you went solar. This “back-and-forth” between your system and the grid ensures that your excess production will still be used and your shortages will be met. With net metering, the excess electricity your home produces covers the times when you don’t produce enough.

When your solar power system generates more electricity than you use over the course of a month, your utility bill will receive a credit based on the net number of kilowatt-hours you gave back to the grid. If you produce less electricity than you use in a given month, you must buy electricity from your utility to make up the difference. In these instances, you would pay for the electricity you use, minus any excess electricity your solar panels generated.

graph of energy usage with net metering throughout the day
What about going off the grid?

In essence, net metering is like having the grid serve as a giant solar battery. If you install an energy storage system to take your home “off the grid,” you won’t have access to the benefits of net metering. In most cases, staying connected to the electric grid is your best option – while home solar battery systems can account for hour-by-hour variations in solar electricity generation, they aren’t large enough to provide the seasonal “smoothing” benefits of net metering.

With net metering, you can save by going solar

Thanks to net metering, homeowners are credited for the energy that their solar panels generate at the same rate that they would pay to their utility. As a result, you can save tens of thousands of dollars on electricity costs over the lifetime of your solar energy system. Calculate your solar savings to get an instant estimate of just how much you can save with a solar energy system, or register your property to start getting quotes from local solar installers.

Net metering in your state

State Net Metering? Alternative Policy?
Alabama No No
Alaska Yes No
Arizona Yes No
Arkansas Yes No
California Yes No
Colorado Yes No
Connecticut Yes No
Delaware Yes No
District of Columbia Yes No
Florida Yes No
Georgia No Yes
Hawaii No Yes
Idaho Yes* No
Illinois Yes No
Indiana Yes No
Iowa Yes No
Kansas Yes No
Kentucky Yes No
Louisiana Yes No
Maine Yes No
Maryland Yes No
Massachusetts Yes No
Michigan Yes No
Minnesota Yes No
Mississippi No Yes
Missouri Yes No
Montana Yes No
Nebraska Yes No
Nevada No Yes
New Hampshire Yes No
New Jersey Yes No
New Mexico Yes No
New York Yes No
North Carolina Yes No
North Dakota Yes No
Ohio Yes No
Oklahoma Yes No
Oregon Yes No
Pennsylvania Yes No
Rhode Island Yes Yes
South Carolina Yes No
South Dakota No No
Tennessee No No
Texas Yes* No
Utah Yes No
Vermont Yes No
Virginia Yes No
Washington Yes No
West Virginia Yes No
Wisconsin Yes No
Wyoming Yes No

* Indicates that policy is not mandatory, but some utilities allow it

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