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Net metering has aroused some debate recently, with some states wanting to reduce the benefits that these customers receive by installing residential solar systems.

Proposed legislation to end net metering in Minnesota, California, Indiana, Illinois, and Kentucky has been central to this struggle and could seriously hamper the growth of solar energy if these bills see the light of day. 

Keep reading to find out about net metering, how it works, and why it’s got power companies in an uproar.

What Is Net Metering?

With a grid-connected solar system, homeowners can use electricity from the grid when necessary. They can also take advantage of net energy metering to help them reduce their electricity bills. 

When you install solar panels, they often generate more electricity than you need. In this case, you can feed the excess back into the grid, so the utility company can distribute it elsewhere.

In return, the utility company gives you a credit on your electricity bill. 

Types of Net Metering

Depending on the power company you’re connected to, you may get to benefit from one of three power-sharing policies. These are: 

Net Metering

This process involves selling your surplus electricity to the utility operator. In return, you get credits toward any energy you use from their grid.

This credit operates on a like-for-like basis, so you get a credit that’s equal to the rate you pay for electricity. You only need one electricity meter to keep track of this system. 

Buy All/Sell All

With this model, you sell all the energy your solar panels generate back to the power company. They buy it from you at wholesale prices.

You get all your electricity from the grid and pay full price for it, minus the cost of your solar energy. You need two separate electricity meters for this, and you don’t use any of the electricity generated by your solar panels. 

Net Billing

Net Billing works like net metering, but you cannot carry any credits over to a future billing cycle. This arrangement is most common in a commercial setting. 

The Argument Against Net Metering

While power companies save on electricity-generating infrastructure when they offer net metering, some of them feel short-changed by these systems.

That’s largely because the more people opt to save on solar using net metering, the harder it becomes for them to calculate their annual budgets.

Fortunately, for now, high-ranking state officials have blocked most of the legislation aimed at net metering policy changes. This is a positive step toward increasing solar installations, protecting jobs in the solar industry, and reducing carbon emissions. 

Now’s the Time to Go Solar

Whether you’re installing solar panels in Minnesota, or anywhere else, it’s vital to understand how to maximize net metering so you can benefit from your solar panels. 

For now, homeowners can still sign up for net metering in most states, so it pays to get on board while you can still take advantage of the federal ITC, which expires in 2024.

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