What Is Net Metering and How Does It Benefit You?
By: Eric Huesca, SEO Content Writer
October 13, 2022
Net metering has been around for a while, but it seems to be gaining more attention lately. That’s because, as our reliance on renewable energy sources increases, net metering becomes an increasingly important part of the energy landscape.
So, what is net metering? Simply put, it’s a policy that allows customers with solar panels or other renewable energy generators to sell their excess power back to the grid. This policy can have a big impact on homeowners and businesses who want to go green, so let’s take a closer look at how net metering works and some of its benefits.
A happy customer holding their savings
How Does Net Metering Work?
In order to understand net metering, it helps to first understand how your electric bill works. Your utility company charges you for the electricity you use each month, and they also charge you a monthly service fee. The amount you’re charged for electricity depends on how much energy you use, as well as the time of day that you use it.
For example, you may be charged more for electricity used during peak hours than you are for electricity used during off-peak hours.
Now, let’s say you have a solar panel on your roof. During the daytime, the solar panel will generate electricity that you can use in your home or business. But what happens when you generate more electricity than you need? That’s where net metering comes in.
With net metering, you can sell your excess electricity back to the grid. So, instead of paying for all the electricity, you use each month, you’ll only pay for the difference between the amount of electricity you generate and the amount of electricity you use.
Here are a few steps you can take if you want to start selling your excess electricity back to the grid:
1. Find out if your utility company offers net metering.
Not all companies offer it, so you’ll need to do some research. While finding a company that offers net metering may be your first priority, it’s also important to make sure the company is reputable and has good customer service.
2. Once you’ve found a company that offers net metering, sign up for the program.
You’ll likely need to provide some information about your energy usage and your renewable energy system. During the signup process, you’ll also be able to choose how you want to be compensated for the electricity you generate.
3. Start generating electricity!
This is the fun part. Once you’re enrolled in a net metering program, you can start generating your own renewable energy. Be sure to monitor your system so that you’re not producing more electricity than you need.
4. Monitor your electric bills.
You should see a decrease in your electric bills after you start selling excess electricity back to the grid. If you have any questions, be sure to contact your utility company. They should be able to help you understand your bill and net metering charges.
5. Enjoy the savings!
Not only is net metering good for the environment, but it can also save you money on your electric bills. So, sit back and enjoy the fruits of your green energy labor.
What Are the Benefits of Net Metering?
There are many benefits of net metering, but here are some of the most important ones:
1. Save money on your electric bill
As we mentioned before, net metering can help you save money on your electric bill. By generating your own electricity, you can offset the cost of the electricity you would otherwise have to purchase from your utility company.
According to the U.S. Department of Energy, the average homeowner can save about $100 per month by going solar. That’s a savings of more than $1,000 per year!
Furthermore, since net metering credits you for the electricity you generate, you can use those credits to offset the cost of your electric bill during peak hours. This can further reduce your monthly electric bill.
2. Get paid for the electricity you generate
In some cases, you may even get paid for the excess electricity you generate! While not all states have policies in place to compensate solar generators, some do.
For example, California’s net metering policy requires utility companies to pay solar customers the retail price of electricity for the power they generate. This means that if you generate 100 kilowatts of electricity during the daytime and only use 50 kilowatts, you’ll get credited for the other 50 kilowatts on your next electric bill.
3. Reduce your carbon footprint
By generating your own renewable energy, you can help reduce your carbon footprint. Solar panels, wind turbines, and other renewable energy generators don’t produce harmful emissions, so they’re far better for your environment than other typical fossil fuel-based power plants.
During the first year of operation, a 5-kilowatt solar system can offset more than 8,000 pounds of carbon dioxide emissions. That’s the equivalent of planting more than 100 trees!
4. Increase energy independence
By generating your own electricity, you can increase your energy independence. This means that you won’t be as reliant on your utility company or the electric grid.
If there’s an outage, you’ll still have power, and you won’t have to worry about higher electric rates. You may even be able to sell your excess electricity back to the grid, which can further offset your electric bill.
5. Enhance the value of your home
According to a study by the Lawrence Berkeley National Laboratory, homes with solar panels sell for an average of 4.1% more than homes without solar panels.
This means that if you have a $300,000 home, you could see an increase in value of more than $12,000 just by installing solar panels!
6. Get tax breaks and incentives
There are also numerous tax breaks and other financial incentives available for homeowners who install solar panels.
For example, the federal government offers a tax credit worth up to 30% of the cost of your solar installation. There are also state and local incentives that can further offset the cost of going solar.
7. Create jobs
Solar energy is one of the fastest-growing industries in the United States. In fact, it’s estimated that there are now more than 209,000 solar jobs in the country.
By installing solar panels, you can help create jobs in the solar industry and support the growing economy.
8. Help make the world a better place
Finally, by installing solar panels, you can help make the world a better place. Solar energy is a clean and renewable resource that can help reduce our reliance on fossil fuels.
Plus, as more people install solar panels, the cost of solar energy will continue to go down, making it more accessible to everyone.
9. Help secure a bright future for the planet
Solar energy is a key part of a clean energy future. By installing solar panels, you can help reduce greenhouse gas emissions and combat climate change.
You can also help create a more sustainable world for future generations.
Installing a solar panel on the roof of a customer
Net Metering 3.0
In October of 2015, the California Public Utilities Commission (CPUC) unanimously voted to approve a new and improved net metering program, dubbed “Net Metering 2.0.” This program was designed to provide more benefits to solar customers while ensuring the stability of the grid.
Now, just a few years later, the CPUC has once again updated the program, this time called “Net Metering 3.0.” Here’s what you need to know about this latest change.
In August 2020, for the second time in just a few years, the CPUC voted to make changes to California’s net metering program.
Let’s take a closer look at some of the key takeaways:
1. It's Not Yet Finalized
The CPUC has not yet finalized the new NEM 3.0 policy, so there is still some time for things to change. Since the decision is not yet final, the state of California has delayed making a decision on NEM 3.0 until further notice.
2. Proposed Changes Can Reduce the Value of Solar Credits by Up to 75%
The most significant change proposed by the CPUC is a reduction in the value of solar credits. Under the new policy, solar customers would receive credits that are worth less than the credits they currently receive.
3. Utilities Recommend Two Fees for Solar Panel Customers
Utility companies are proposing two costs for solar customers that, when combined, could cost new SCE, PG&E, and SDG&E solar clients more than $100 per month on average. The first fee is a monthly “grid usage charge” that would be assessed on all customers, solar and non-solar alike.
4. Existing Solar Customers Will Be Grandfathered In
This is a major issue: current solar customers will be grandfathered into their previous net metering plan. This means that they will continue to receive the full value of their solar credits, even if the new policy goes into effect.
5. The Decision Has Been Delayed
The CPUC has delayed making a decision on NEM 3.0 until further notice. This gives the state of California more time to make a decision on the policy. As of now, it is unclear when the CPUC will make a final decision on NEM 3.0.
How to Prepare for NEM 3.0
If you’re a solar customer in California, it’s important to stay up-to-date on the latest developments with NEM 3.0. Here are a few things you can do to prepare:
- Keep an eye on the news: Be sure to keep an eye on the news for updates on NEM 3.0. The CPUC is expected to make a final decision on the policy in the coming months, so there will likely be more news about NEM 3.0 in the near future.
- Talk to your solar installer: If you have questions about how NEM 3.0 may affect your solar installation, be sure to talk to your solar installer. They will be able to give you more information about how the new policy may affect your system.
- Make sure your system is up-to-date: If you’re planning on installing a new solar system, make sure it meets the requirements of NEM 3.0. These requirements have not yet been finalized, but they are expected to be released soon.
- Stay informed: Be sure to stay informed about the latest developments with NEM 3.0. This will help you make the best decisions for your solar installation.
NEM 3.0 is a proposed new net metering policy in California that would cut the value of solar credits by up to 75%. The policy is not yet finalized, but it has the potential to significantly impact solar customers in California. If you’re a solar customer in California, be sure to stay up-to-date on the latest developments with NEM 3.0.
The Final Word on Net Metering
Net metering is a great way to save money on your energy bill, and it’s also good for the environment. If you’re considering solar power for your home, be sure to ask your installer about net metering and how it can work for you.
In short, net metering allows you to offset your energy use with solar power. When your solar panels produce more electricity than you need, the excess is sent back to the grid and you receive a credit on your bill. Then, when your solar panels aren’t producing enough power, you can draw from the grid and use those credits.
In most cases, net metering is a great way to save money on your energy bill. However, there are some important things to keep in mind. Net metering only works if you have your own solar panels. If you lease or finance your solar panels, you may not be able to take advantage of net metering.
While net metering can save you money, it’s important to remember that you’re still responsible for paying the monthly service fee for your electricity. This fee is separate from the credits you receive for the electricity your solar panels produce.
Bottom line: Net metering is a great way to save money on your energy bill, and it’s also good for the environment. If you’re considering solar power for your home, be sure to ask your installer about net metering and how it can work for you.
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