Net metering is a billing arrangement used by many utility companies that allows homeowners and businesses with solar panels or other renewable energy systems to receive credit for the excess electricity they generate and feed back into the grid. Here’s how it works:
- Generation of Excess Electricity: When your solar panels produce more electricity than your home or business consumes, the excess electricity is sent to the utility grid.
- Metering: A special bi-directional meter measures both the electricity you consume from the grid and the excess electricity you send back to the grid. This meter is capable of “spinning” backward when you generate surplus electricity.
- Credit for Excess Electricity: You receive a credit on your utility bill for the excess electricity your solar panels generate. This credit is often at the same rate you would pay for electricity when drawing from the grid, effectively reducing your electricity costs.
- Offsetting Future Electricity Bills: The credits earned during sunny periods can be used to offset your electricity costs during cloudy days or at night when your solar panels are not producing electricity. This allows you to effectively “bank” excess energy.
- Annual Settlement: In some cases, if you have accumulated excess credits over the course of a year, your utility company may settle with you annually. You might receive a payment for any remaining credits or carry them forward to the next year.
Net metering enables solar system owners to maximize the value of their investment by ensuring that the surplus energy they generate benefits both themselves and the broader community. It promotes the use of renewable energy sources and encourages homeowners and businesses to invest in solar power systems. Keep in mind that net metering policies and regulations can vary by location and utility provider, so it’s essential to check the specific rules in your area.
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