How Net Metering Works

We’ve all heard about how wonderful renewable energies can be for global warming and our planet’s energy future, but how does your pocket book feel about it? Odds are, it’s a little skeptical and that’s pretty understandable. After all, investing in a solar or wind power system for your home could potentially cost thousands of dollars. The typical pay off period for such investments can take as much as 15 years depending on where you live (though you should check in your area by getting a free solar report at Cost of Solar…it’s possible there are no-money down options that will yield savings from day one). Thankfully, energy companies are starting to offer credits and rebates to help their customers get into the solar and wind energy markets, but it doesn’t stop there. Now, many companies are starting to offer what is called net metering, and it will allow for your solar or wind power investment to both save AND MAKE you money for years to come. Sound too good to be true? I assure you, it isn’t, so let’s review what net metering is and how it works.

Let’s say that you have a solar or wind power system installed in your home. That system is generating power, and that power is converted from direct current (DC) to alternating current (AC) via an inverter so that it can be used throughout your home. However, while you’re away at work and the sun is strongest, not all the energy your home solar PV system generates is actually being used by your home, and this is where net metering comes into play. With a net metering system, your electric company will absorb all the extra energy your home generates and use it to power other homes. In exchange, your electric company will give you credits that will apply to your monthly electric bill, thus saving you money!

Check out this graphic to get a visual idea of how the system works:

If at the end of the year your home uses less energy than your system generates, and net metering is available in your area, your electric company will cut you a check for the difference based on either the retail or market rate for energy in your area!

If you’re interested in having a net metering system installed in your home, contact your local energy company to find out if it’s an option for you.

Looking for more ways to save money around your home? Check out some of our green home improvement projects: Green Living Ideas, after all, is a top 20 home improvement website!

Photo courtesy of Dominion and Ever Blue.

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Tags: energy, feed back, how it works, net metering, renewable energy, solar power

About the Author

Peter Young graduated from Pacific Lutheran University (PLU) with a degree in journalism and has made sustainability and eco-conscious living mainstays of both his professional and personal life. It was during his time at PLU that he began his journey with sustainability and it's what has led him to writing for Green Living Ideas. He currently resides in Honolulu and works for Pono Home, an energy efficiency company focused on reducing carbon emissions and promoting a healthier, greener lifestyle.