Understanding Net Metering: How it Works

Fast read

How It Works: Net metering lets you use the solar power you generate first. Any extra power goes back to the grid through a special meter.

Tracking and Billing: A bidirectional meter tracks the electricity you use and send back. Your bill shows the net difference, helping you save money.


  1. Energy Savings: Lower your bills by using your own solar power first.
  2. Environmental Impact: Reduce greenhouse gas emissions.
  3. Financial Incentives: Earn credits or payments for extra power sent to the grid.
  4. Grid Support: Help reduce strain on the grid during peak times.

Hybrid Systems: Adding batteries can store extra solar power for use when the sun isn’t shining, increasing your self-sufficiency.

What is net metering?

Net metering is a crucial aspect of solar energy systems that often remains hidden behind the scenes. It’s the mechanism that allows you to measure and manage the surplus solar energy generated by your solar panels. In this guide, we will explain how net metering works, its benefits, and how it helps homeowners choose solar energy.

How does it work?

At its core, net metering is a simple concept, but its implications are significant for solar-powered households. Here’s a breakdown of how it works:

Solar Self-Consumption: When your solar panels produce electricity, it goes straight into your home’s electrical system. This power is used right away to run your appliances, lights, and other devices. This means you need less electricity from the grid systems, which lowers your electricity bills.

Surplus Solar Generation: On sunny days or when your solar panels produce more electricity than your home uses, the extra power isn’t wasted. It flows back into the grid through your electricity meter. This extra electricity can help power other homes or businesses in your area.

Bidirectional Metering: Net metering uses a special meter called a bidirectional meter, installed by your utility company. This meter measures the electricity you use from the grid and the extra electricity you send back to the grid. It moves forward when you use grid electricity and moves backwards when you send extra solar electricity back to the grid.

Monitoring and Billing: Your utility company checks your bidirectional meter regularly, usually every month. They use this information to figure out how much electricity you use and how much extra energy you send to the grid. Your electricity bill shows the “net” difference between the power you used and the power you sent back, reflecting your actual energy costs.

Benefits of net metering

Net metering offers several significant advantages to homeowners installing solar panels:

Energy Cost Savings: Using the electricity generated by your solar system first means you rely less on grid electricity, leading to lower energy bills. Any extra solar energy produced can further contribute to savings by earning you credits on your bill through net metering.

Environmental Impact: Net metering encourages the use of clean energy, which helps reduce greenhouse gas emissions. By choosing solar, you’re making a sustainable choice that supports environmental conservation efforts and reduces reliance on fossil fuels.

Financial Incentives: Depending on where you live and your utility company’s policies, any surplus energy you feed back into the grid can earn you credits or even payments. These incentives can significantly offset your electricity costs and, in some cases, might even lead to profits over time.

Grid Support: Surplus solar power helps the overall grid by providing extra electricity during peak demand periods. This additional supply reduces the strain on the grid and decreases the need for power generation from fossil fuels. By supporting the grid with your excess solar energy, you’re contributing to a more stable and sustainable energy system.

net metering

Hybrid solar systems and net metering

Most solar setups use standard net metering, but homes with hybrid solar systems add more complexity. A hybrid system combines solar panels with energy storage, typically in the form of solar batteries. Here’s how net metering works in this context:

Solar Self-Consumption: Your solar panels produce electricity to power your home right away. Any extra energy that isn’t used can be used for other purposes.

Battery Storage: In a hybrid system, extra solar power is stored in batteries. These batteries keep the surplus electricity for use later, like in the evening or on cloudy days when solar panels aren’t producing much.

Grid Interaction: Once your batteries are full, any additional electricity goes back into the grid. This excess energy can earn you net metering credits or payments.

Hybrid systems help you use solar energy stored for when the sun isn’t shining, making you more self-sufficient. This reduces your reliance on grid electricity even further and maximises the financial benefits of net metering.

Optimising benefits

To make the most of net metering benefits, consider these strategies:

Right-sizing your solar system: Make sure your solar panel system matches your household’s energy needs. If your system is too large, it will produce extra energy, giving you more benefits from net metering.

Efficient energy use: Use energy-saving practices and appliances to lower your electricity use, helping you get the most from your solar power.

Monitor your usage: Watch how much energy you use and try to use more solar energy during peak production times.

Battery integration: If you have a hybrid system, consider adding battery storage to use more of your own solar power and rely less on the grid.

In conclusion, net metering is a fundamental component of solar energy systems that empowers homeowners to efficiently manage their electricity production and consumption. Homeowners can save money and help the environment by using extra solar energy instead of grid electricity. They may also receive credits or payments from utility companies.

Net metering is important for both standard solar panel systems and hybrid setups with batteries. It helps make solar energy a smart and sustainable choice for homes.

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