There are over 1 million solar panels installed in the U.S. across the 48 contiguous states.

More and more Americans are taking advantage of its benefits. One such benefit is net metering.

But what is net metering? How does it benefit solar users, and can you leverage net metering for your home?

Read on to find out more about net metering.

What Is Net Metering?

Net Metering

So what is net metering anyway?

Net metering is the process of subtracting surplus energy from your solar panel systems from your monthly utility bills. It’s an arrangement made between your home and your local utility company to make use of leftover energy.

Sometimes your solar panels produce more energy than your house actually needs. In some circumstances, that extra energy can be used by spreading it across other homes. Utility companies know this and try to capitalize.

Your electricity provider tracks the wattage being produced by your solar panel system and takes any extra power back to its grid. Doing so provides homeowners with nice credits on their utility bills.

How Does Net Metering Work?

How Does Net Metering Work

Net metering usually works in two ways. The first method requires the utility company to track your electrical usage from your solar panels. They can track the surplus energy and note that down for your net metering credits.

The other method actually involves an energy meter. Most modern home meters allow you to measure electrical flow in both directions. Utility companies can see when your home uses power and when it doesn’t.

At the end of the month, you pay the net difference between what you owe to your utility company and the value of the surplus energy. That’s where the name “net metering” comes from.

So, Why Is It Valuable for Homeowners?

solar panel roi

The low-hanging fruit for net metering is that homeowners with solar can effectively “sell” their surplus energy back to utility companies. This means your monthly energy bills will be lower.

It also benefits homeowners who might not get a ton of sunlight in the fall or winter months. Utility companies allow them to save these net metering credits to use for colder months to mitigate electricity costs.

Net metering credits can also be used when solar panels need to be repaired. Say your home needs to rely on a utility company for a short period of time. You don’t need to worry about paying more for electricity.

In other words, net metering is another way for homeowners to financially benefit from their solar systems. Understand that net metering only allows you to spend credits commensurate to the energy you actually use.

You won’t be able to get money from utility companies if you have unused credits by the end of the year. Some companies let you pick the expiration date for these credits, so you can save them until right before winter starts.

Working With Utility Companies With Net Metering

For those asking “what is net metering?” understand that it’s an effective way to save money on utility bills for any and all surplus energy produced by your panel. Use this guide to help you understand what net metering is.

For more informative articles on solar panels and other topics, check out the rest of our site!

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