Net metering, what is it and why it is important for solar?

— updated June 9th, 2015 —

Some days, solar panels generate more energy than a home uses. Some days they generate less. How is this accounted for? In Maryland and 42 other states, as well as the District of Columbia, net metering ensures that solar users receive full credit for the electricity their system generates.

Net metering allows residential solar energy generators to offset their energy consumption with their energy production. Essentially, when solar system is producing more electricity than the home is using at that moment, the electric meter runs backwards. When a solar customer is using more electricity than their solar system is producing, the electric meter runs forward. At the end of the month, the final electric utility bill is the total usage minus the electricity that your solar panels produced.

During the summer especially, it is possible to have a net credit on a utility bill. Maryland rules allow customers to roll over excess credits to the next month. The state places limits on system size. A residential solar system has to be less than 2 MW as well as less than 200% of a customer’s baseline annual energy usage. For example, a customer whose usage is 10,000 kWh a year can install a system that generates no more than 20,000 kWh to be eligible for net metering.

Net metering ensures solar customers capture the fair value of the electricity their system generates. This helps them pay back the cost of their system in a timely manner. Net metering and the distributed solar energy it supports have also been shown to be a net positive for the electric grid and non-solar users as well. This is because net metering encourages the production of high-value electricity in close proximity to other electricity grid customers.

For example, solar systems produce lots of energy in the warm months during the same time of day when utilities must provide lots of expensive power for air conditioning systems. Solar energy generated on homes is used by electrical loads very close by and doesn’t have to be transmitted over long distances from a power plant. Because this local power is available at peak times, power companies can avoid switching on additional power plants to cover the load thereby reducing harmful emissions from those plants as well. In these ways, net metered solar benefits solar users and non-solar users alike.