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Solar Net Metering Guide for Beginners

One way to take full advantage of the benefits of solar power is through net metering. This guide will provide beginners with the basics of solar net metering and how it can benefit you and your household.

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    Solar Net Metering Explained

    Solar energy is an increasingly popular choice for homeowners and small business owners looking to reduce their carbon footprint and save money on their energy bills. In this blog post, we’ll explore the concept of solar net metering, a billing arrangement that allows you to get the most out of your solar energy system. We’ll discuss how it works, the benefits, and how to get started with net metering for your own solar energy system.

    What is Solar Net Metering and How Does it Work?

    Solar net metering is a billing arrangement between you and your utility company that allows you to receive credit for any excess solar energy your system produces. When your solar panels generate more electricity than you need, the excess energy is sent back to the grid. In return, you receive a credit on your energy bill for the electricity you’ve contributed to the grid. This means you can use that credit to offset your energy consumption during times when your solar panels aren’t producing enough electricity, such as at night or on cloudy days.

    Calculating Solar Net Metering and Real-World Examples

    Understanding how to calculate solar net metering can help you estimate your potential savings and make an informed decision about investing in a solar energy system. In this section, we’ll walk you through the basic calculation and provide two real-world examples: one with just solar panels and another with solar panels and a battery backup system.

    How to Calculate Solar Net Metering

    To calculate solar net metering, follow these steps:

    1. Determine your solar energy production: Calculate the total amount of electricity your solar panels produce in a given month. This will depend on factors such as the size of your solar energy system, your location, and the amount of sunlight your panels receive.
    2. Determine your energy consumption: Calculate your total energy consumption for the same month. This can be found on your energy bill or by monitoring your energy usage with a smart meter.
    3. Calculate your net energy usage: Subtract your solar energy production from your energy consumption. If your solar energy production is greater than your consumption, you’ll have a net surplus of energy that can be sent back to the grid and credited to your account. If your consumption is greater than your production, you’ll have a net deficit and will need to draw electricity from the grid.

    Real-World Example 1: Solar Panels Only

    Let’s say you have a solar energy system that produces 800 kWh of electricity per month, and your energy consumption is 1,000 kWh per month.

    • Net energy usage = Energy consumption – Solar energy production
    • Net energy usage = 1,000 kWh – 800 kWh = 200 kWh

    In this example, you have a net deficit of 200 kWh, which means you’ll need to draw electricity from the grid. However, your solar panels have offset 800 kWh of your energy consumption, reducing your energy bill.

    Real-World Example 2: Solar Panels with Battery Backup System

    Now, let’s consider the same solar energy system but with a battery backup system that can store 300 kWh of electricity.

    Step 1

    Calculate the amount of solar energy stored in the battery: In this example, let’s assume that 300 kWh of your solar energy production is stored in the battery.

    Step 2

    Calculate the remaining solar energy production: Subtract the stored energy from your total solar energy production.

    • Remaining solar energy production = Total solar energy production – Stored energy
    • Remaining solar energy production = 800 kWh – 300 kWh = 500 kWh

    Step 3

    Calculate your net energy usage: Subtract your remaining solar energy production and the stored energy in the battery from your energy consumption.

    • Net energy usage = Energy consumption – (Remaining solar energy production + Stored energy)
    • Net energy usage = 1,000 kWh – (500 kWh + 300 kWh) = 200 kWh

    In this example, you still have a net deficit of 200 kWh, but the battery backup system has allowed you to store and use an additional 300 kWh of solar energy, further reducing your reliance on the grid and potentially lowering your energy bill even more.

    Equipment Needed for Solar Net Metering

    To participate in solar net metering, you’ll need the following equipment:

    1. Solar panels: These are the main component of your solar energy system and are responsible for converting sunlight into electricity.
    2. Inverter: This device converts the direct current (DC) electricity generated by your solar panels into alternating current (AC) electricity, which can be used by your home or business and sent back to the grid. The three major types of inverters are microinverters, string inverters, and DC optimizers.
    3. Net meter: A special type of electrical meter that measures both the electricity you consume from the grid and the excess electricity your solar panels send back to the grid.

    Advantages and Disadvantages of Net Metering

    Taking advantage of using net metering does come with its drawbacks, such as the cost of the solar panel system. However, the purpose of net metering is to help make solar energy an attractive investment.


    Some advantages are, but not limited to:

    1. Save money on energy bills: By receiving credit for the excess energy your solar panels produce, you can offset your energy consumption and reduce your energy bills.
    2. Reduce your carbon footprint: Solar energy is a clean, renewable source of power that helps reduce greenhouse gas emissions and reliance on fossil fuels.
    3. Energy independence: Solar net metering allows you to rely less on your utility company for electricity, giving you greater control over your energy consumption and costs.


    Some disadvantages include:

    1. Initial investment: Installing a solar energy system requires an upfront investment, although this cost can be offset by long-term energy savings and potential government incentives.
    2. Variable energy production: Solar energy production can be affected by factors such as weather and the time of day, which may impact the amount of excess energy you can send back to the grid, but at the same time this is why net metering exists to make the electric grid act as a battery bank; store excess energy on the grid and request it when you need it exchanging in a utility credit.

    How to Apply for Solar Net Metering and Billing Process

    This is not an exact way of doing it, but the general process we’ve seen. It’s best to consult with your local electric utility or solar PV installer. To apply:

    1. Research your local utility company’s net metering program: Each utility company may have different requirements and processes for net metering, so it’s important to understand the specifics for your area.
    2. Install your solar energy system: Work with a reputable solar installer to design and install a solar energy system that meets your needs and complies with your utility company’s net metering requirements.
    3. Apply for net metering with your utility company: Once your solar energy system is installed, submit the necessary paperwork to your utility company to enroll in their net metering program.
    4. Billing process: With net metering, your energy bill will show both the electricity you’ve consumed from the grid and the credits you’ve earned for the excess energy your solar panels have sent back to the grid. These credits can be used to offset your energy consumption, reducing your overall energy bill.

    Common Misconceptions About Solar Net Metering

    1. “I’ll never have an electric bill again!”: While solar net metering can greatly reduce your energy bills, it’s unlikely that your solar panels will produce enough excess energy to completely eliminate your energy costs.
    2. “Net metering is available everywhere.”: Net metering policies and availability vary by state and utility company. Be sure to research your local utility company’s net metering program before investing in a solar energy system.

    Net Metering Policies by State

    Here’s a brief overview of net metering policies by state, grouped by their general approach to net metering:

    States with Full Net Metering Policies

    These states have net metering policies that generally allow customers to receive full retail credit for the excess energy they send back to the grid. In some of these states, there may be fees associated with net metering, such as interconnection fees or monthly charges. It’s important to research the specific policies and fees for your local utility.

    • Arizona (some utilities have alternative compensation structures)
    • California (with a few modifications)
    • Colorado
    • Connecticut
    • Delaware
    • Hawaii (with some limitations)
    • Indiana
    • Louisiana
    • Maryland
    • Massachusetts
    • Michigan
    • Minnesota
    • Nevada
    • New Hampshire
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Rhode Island
    • Vermont
    • Washington
    • West Virginia

    States with Alternative Compensation Systems

    These states have implemented alternative compensation systems for excess solar energy, which may include lower compensation rates than full retail net metering. Each state’s alternative compensation system may have different rules and fees, so it’s crucial to research the specifics for your area:

    • Arkansas
    • Georgia
    • Idaho
    • Illinois
    • Iowa
    • Kansas
    • Kentucky
    • Maine
    • Mississippi
    • Missouri
    • Montana
    • Nebraska
    • North Carolina
    • North Dakota
    • Oklahoma
    • South Carolina
    • South Dakota
    • Tennessee
    • Texas
    • Utah
    • Virginia
    • Wisconsin
    • Wyoming

    States with Limited or No Net Metering Policies

    These states have limited net metering policies or no net metering policies in place:

    • Alabama
    • Alaska
    • Florida

    In these states, you may not receive full retail credit or any credit for the excess solar energy you generate, and there may be additional fees or restrictions.

    Remember that regulations can change, and the information provided here may become outdated. Always contact your local utility or solar provider for the most accurate and up-to-date information on net metering policies in your area.

    Net Metering by State Table

    Here’s a table summarizing net metering policies by state. Please note that the information provided may become outdated as regulations change, so always contact your local utility or solar provider for the most accurate and up-to-date information.

    StateNet Metering PolicyNotes and Fees
    AlabamaLimited/No Net Metering
    AlaskaLimited/No Net Metering
    ArizonaFull Net MeteringSome utilities have alternative compensation structures
    ArkansasAlternative Compensation
    CaliforniaFull Net MeteringSome modifications
    ColoradoFull Net Metering
    ConnecticutFull Net Metering
    DelawareFull Net Metering
    FloridaLimited/No Net Metering
    GeorgiaAlternative Compensation
    HawaiiFull Net MeteringSome limitations
    IdahoAlternative Compensation
    IllinoisAlternative Compensation
    IndianaFull Net Metering
    IowaAlternative Compensation
    KansasAlternative Compensation
    KentuckyAlternative Compensation
    LouisianaFull Net Metering
    MaineAlternative Compensation
    MarylandFull Net Metering
    MassachusettsFull Net Metering
    MichiganFull Net Metering
    MinnesotaFull Net Metering
    MississippiAlternative Compensation
    MissouriAlternative Compensation
    MontanaAlternative Compensation
    NebraskaAlternative Compensation
    NevadaFull Net Metering
    New HampshireFull Net Metering
    New JerseyFull Net Metering
    New MexicoFull Net Metering
    New YorkFull Net Metering
    North CarolinaAlternative Compensation
    North DakotaAlternative Compensation
    OhioFull Net Metering
    OklahomaAlternative Compensation
    OregonFull Net Metering
    PennsylvaniaFull Net Metering
    Rhode IslandFull Net Metering
    South CarolinaAlternative Compensation
    South DakotaAlternative Compensation
    TennesseeAlternative Compensation
    TexasAlternative Compensation
    UtahAlternative Compensation
    VermontFull Net Metering
    VirginiaAlternative Compensation
    WashingtonFull Net Metering
    West VirginiaFull Net Metering
    WisconsinAlternative Compensation
    WyomingAlternative Compensation

    Keep in mind that fees and specific rules may vary within each state and utility. Always consult your local utility or solar provider for the most accurate information.


    Solar net metering is an attractive option for homeowners and small business owners looking to save money on their energy bills and reduce their carbon footprint. By understanding how net metering works and the steps required to participate, you can make an informed decision about whether solar energy is the right choice for your home or business. If you’re interested in learning more about solar energy and net metering, check out these additional resources:



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