Net Metering vs. Net Billing: Understanding How You Get Paid for Solar Power
Solar power offers a fantastic way to reduce your reliance on the grid and potentially save money on your electricity bills.
But when it comes to how you get compensated for excess energy your panels produce, things can get a little confusing.
Two common programs - net metering and net billing - sound similar, but they differ significantly in how they value your solar output.
Net Metering: Banking Your Sunshine
Think of net metering like a solar energy bank. During sunny days, when your panels generate more electricity than you consume, the extra energy flows back to the grid.
Your meter tracks this and awards you credits at the retail rate - the same price you pay for electricity from the utility company.
These credits essentially "bank" your excess solar production for later use. On cloudy days, when your panels generate less, you can tap into these credits to offset your energy use from the grid.
Net metering simplifies your bill - you only pay for the net difference between your energy production and consumption.
Benefits:
Credits valued at the retail rate maximize your savings.
One-to-one credit exchange simplifies bill calculations.
Encourages greater solar adoption by making systems more valuable.
Drawbacks:
Utilities argue that net metering credits overcompensate for the actual value of electricity delivered.
Net Billing: Selling Your Surplus
Net billing takes a different approach. Instead of banking credits, you essentially sell your excess solar energy back to the utility company.
They purchase it at the wholesale rate, which is typically lower than the retail rate you pay.
While you receive some compensation, it won't be as much as with net metering.
Benefits:
May be a better option for those who generate a significant amount of excess solar power.
Drawbacks:
Lower compensation rate for your solar production compared to net metering.
Choosing Between Net Metering and Net Billing
The best program for you depends on your specific situation. Here are some factors to consider:
Your energy consumption patterns: If you generate more solar power than you consume, net billing might be a better option to sell the excess.
Net metering policies in your area: Not all areas offer net metering, and some have limitations on credit rollover or system size.
The Takeaway
Both net metering and net billing offer ways to benefit financially from your solar investment.
Understanding the key differences between the two programs will help you make an informed decision about which one best suits your needs.
Consult with a solar installer in your area to determine which program is available and how it can impact your solar energy savings.
