Net Metering for Home Solar Panels: How Does it Work?

solar panels net metering image

It’s not possible for your solar panels to produce the exact amount of electricity you will need each month. So, most people tend to install solar systems that will for sure cover all their needs, which means sometimes, or better say pretty often, there will be some extra electricity they didn’t manage to use. The question is, what’s happening with that unused power?

You don’t have to worry because the energy generated by your system will not perish, nor someone else will get to use it. There are ways for you to exhaust all your resources. We are talking about net metering, which is also known as net energy metering (NEM).

What is net metering?

Net metering is a solar incentive which provides you to store the extra energy in the grid system, in exchange for some credits. In situations that cause solar panels to stop working, like when it’s night time or low income of sunlight, you will be able to use those credits, and “take back“ that energy from the grid.

It’s quite simple. Net metering will allow you to bridge all those differences that arose throughout the year between needing more electricity at one moment and creating more than you need at the other. The unwritten rule is that most of the houses will generate an excessive amount of electricity during the summer months, and then use some amount of power from the grid when the cold winter comes along.

This is not the only procedure utility companies are using in order to help and praise homeowners for going solar, but it’s very common. In 41 states, there are mandatory net metering rules everyone has to apply, and two more countries have utility companies that permit this practice.

net metering solar system image

How does the system work?

Besides helping you balance electricity usage during the whole year, net metering is also a great practical solution for maintaining solar harmony in everyday life. The thing is, we usually spend more electricity in the mornings and evenings, when we are at home, while the solar system is the most productive in the early afternoon. But with NEM, you don’t have to think about those things, you can just use the electricity as you pleased.

So, we established that the surplus energy your solar panel system provided went into the grid. But how does it all work when you are in a solar power deficit, and you need more electricity? Very simple, your meter will run in reverse.  In that case, everything will work the same as the time before you went solar.

How utility companies process net metering?

If we are talking about the first scenario where your solar system has produced more electricity than you need during one month, the utility bill will have a credit based on the number of kilowatt-hours you sent to the grid. The scene where you don’t have enough electricity to cover all power needs in the house implies that you have to “buy“ electricity from the utility company. If that happens, you will need to pay for what you’ve spent from the grid, minus the credit you have for pouring excess energy in the previous period.

Given those movements are quite predictable on an annual base, the utility company usually won’t send you the bill after those months when you generated some extra electricity. That way, you can build up credits during summer, so you can use them when the winter comes if needed. The great thing about solar is that you can assess the average annual needs and design a clever solar system, so you are always in perfect balance regarding the net metering.

What happens when you go off the grid?

Going off the grid isn’t something solar experts often recommend, because there is no need for that. When you are connected to the grid, and you use a solar panel system as the primary source of electricity, it’s like you have a reliable storage system that will never fail you. Otherwise, you will be forced to use some kind of home solar battery system, which can provide you only with hour-by-hour variations in the domain of solar electricity generation. No home system can replace all the benefits of net metering.


Net metering is definitely another great thing you can add to the pros list if thinking about installing the solar system and turning to the alternative way of living. It will confirm your decision is the right one. Just make sure to check is the net metering valid in your state, and have in mind that even if it’s not mandatory, like in Idaho or Texas, some utility companies still allow it.

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