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What Is Net Metering? 5 Little Known Things To Consider

What Is Net Metering?

Net metering is an electricity billing process for people who generate all or part of their own electricity. It works by selling electricity that isn’t used back to the utility company. 5 things to consider with Net Metering include:

  1.  What Type Of Net Metering Does Your Utility Company Offer
  2.  How Does Aggregate Net Metering Work?
  3.  How Does Conventional Net Metering Work?
  4.  How Does Gross Metering Work?
  5.  How Does Virtual Net Metering Work ?

If you have a renewable energy source, such as solar panels, you will definitely need to sell back excess electricity to the electric grid.

Why? Because any surplus energy that you can’t use or store in a battery would simply be wasted. This way you earn credits against your utility bill, and even more get support as a homeowner in adopting sustainable electricity systems.

According to the Office of Energy Efficiency & Renewable Energy, “Solar power is more affordable, accessible, and prevalent in the United States than ever before. U.S. solar power capacity has grown to about 97.2 gigawatts (GW) today. This is enough to power the equivalent of 18 million average American homes. Today, over 3% of U.S. electricity comes from solar energy as solar photovoltaics (PV) and concentrating solar-thermal power (CSP).”

With the boom in solar energy, this is one of the reasons why most states have adopted Net Metering programs.

What Are The Benefits Of Net Metering?

Let’s look at some of the advantages you’ll get by signing up to a Net Metering Scheme.

How Net Metering Can Save You Money On Your Monthly Electric Bill.

Overall, the main value in taking part in Net Metering is that you get paid for the electricity produced by your solar panel system. 

In the USA there are incentive schemes to help you earn money from the solar panel array you install. There are three major initiatives, Net Metering, SRECs and The Federal Solar Tax Credit. These are available to you if you live in the right area. 

Combining all 3 initiatives is a powerful way to reduce your electricity bill and move towards becoming self sufficient in energy. Unfortunately the Federal Grant Sysytem is being phased out.

How Net Metering Helps You To Recover Initial Solar Costs Faster.

Putting in a solar panel system is an investment. It’s critical you get a return fast, including breaking even and earning a profit. Having Net Metering will quickly allow you to reach these milestones. 

To calculate your energy needs, how much your solar panel system will cost and your breakeven points why not check out our guide on How Much Solar Panels Cost.  

How Net Metering Reduces The Growing Stress On The Electric Grid.

For many people, being a good citizen is part of their motivation to switch to solar energy. Through Net Metering, you can support your local community and take a little of the burden off the electric grid. 

It’s this type of initiative that helps to keep electricity prices at a reasonable level.

How Net Metering Promotes Renewable Energy

One of the most obvious motivations in being a good citizen is of course doing your bit towards reducing the effects of climate change. 

Building and developing an alternative electricity pool will help utility companies manage their resources more efficiently so they can invest more in renewables and boost sustainability at a grass roots level. 

How Solar Net Metering Works? 5 Things To Consider.

When looking at installing solar panels, some questions come up such as,
  • “AmI eligible for net metering?”
  • “Does my state have net metering rules?”
  • “Is my state offering net metering?”
Unfortunately, the answers to these questions are mainly not at a Federal level but managed on a State by State basis. Which means you would have to contact your State’s utility companies to get this information. However, despite this, whatever State you are in there are 5 considerations that are common to all Net Meterage systems. So what do you need to know?

What Type Of Net Metering Does Your Utility Company Offer

When speaking to your local utility company, the first thing to ask is what type of Net Metering they offer and do they suit your needs. As the systems don’t all work the same. Broadly, there are 4 types, 

  • Aggregate Net Metering
  • Conventional Net Metering
  • Gross Metering 
  • Virtual Net Metering

They are all calculated differently and have different roll over rules which vary by State.


How Does Aggregate Net Metering Work?

This allows a property owner to total the use of all their energy metres and offset it from one renewable energy metre on the property. 

It needs to be one customer, one property, one solar panel system, but you can have multiple metres pn the property. For example, a condo building.

The 17 states following this program are:

  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Maine
  • Maryland
  • Minnesota
  • Nevada
  • New Jersey
  • New York
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Utah
  • Washington
  • West Virginia

Other names for this program include community net metering and virtual net metering.


How Does Conventional Net Metering Work?

Also known as individual net metering, it connects multiple metres and properties to a single metre. According to the NCSL, “It is also referred to as individual net metering, connects a generating source to a single meter, such as a house or building. The recent expansion of net metering policies allows generating sources to be connected to multiple meters or multiple properties.” This is the most common form for householders.

How Does Gross Metering Work?

Strictly speaking, Gross Metering differs from Net Metering but it’s worth mentioning. Essentially, they have different billing mechanisms, and are connected to your house in a different way.

With Gross Metering, your solar panels are connected directly to the energy grid of your utility company and all your electricity goes to them. They then pay you a set fee.

With Net Metering, your solar panels are connected to your home and as you generate energy, any surplus is then sent to the grid.

Most people prefer Net Meters over Gross Meters.


How Does Virtual Net Metering Work (VNM)?

According to California’s Public Utility Commission, this type of Net Metering, 

“Allows multi-tenant building owners to install a single solar system to cover the electricity load of both common and tenant areas connected at the same service delivery point. The electricity does not flow directly to any tenant meter, but feeds directly back onto the grid.”

Basically, it allows the property owner to allocate the energy credits back to the tenants.

Is Net Metering Worth It?

When looking at whether Net Metering is good for my household, whatever State you are in, and no matter what your personal circumstances, signing up for a Net Meterage scheme is a win-win for you and the utility company.

Solar panel installation is a tremendous investment and Net Metering will help you payback that investment, fast, no matter if it’s,

  • Aggregate Net Metering
  • Conventional Net Metering
  • Gross Metering 
  • Virtual Net Metering

If you would like to see how the leading solar panel suppliers compare against each other and how you can save on your utility bill click on the link to our FREE calculator at the bottom of the page.

Answer a few questions to find the best solar deal in your area.

Benefits of Solar

Lower average monthly electric bills

Fixed electricity rate for 20+ years

Unused electricity sold back to the grid

Federal, State and local incentives

Increase home value and faster home sales

Learn More

What Is Net Metering? 5 Little Known Things To Consider
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