October 11, 2023
TLDR: Net metering is an important program that compensates you for the value your solar system provides the energy grid. Understanding net metering in your area is critical to making an informed solar investment decision.
Net metering is a billing arrangement with your utility company that allows you to utilize the excess electricity your solar panels generate. When your solar system produces more electricity than you consume, the surplus is fed back into the grid, and you receive credits on your electricity bill. These credits can then be used to offset the electricity you draw from the grid when your solar panels aren’t producing enough to meet your needs.
Think of net metering as a savings account for your electricity. During sunny days, your solar panels are hard at work, generating electricity that you can either use immediately or “deposit” into the electrical grid for later use. The credits you earn from depositing that excess electricity can be “withdrawn” when you need them, such as during nighttime or cloudy days.
The beauty of net metering lies in its simplicity and fairness. You’re essentially using the grid as a giant battery, storing your excess solar energy for future use. This not only maximizes the utility of your solar installation but also contributes to a more sustainable and resilient energy ecosystem. By allowing homeowners to generate their own electricity and share the surplus, net metering promotes the adoption of renewable energy, reduces the strain on the grid, and encourages energy independence.
There are many different flavors of net metering set by utilities and state utility commissions. Whether it’s annual or monthly net metering, or even a buy-all, sell-all arrangement, each comes with its own set of rules, benefits, and drawbacks.
Annual net metering allows you to roll over your excess electricity credits from month to month, typically settling the account once a year. This means that the electricity you generate in sun-abundant months can be used to offset your consumption in less sunny periods.
In monthly net metering, your electricity credits are used within the same billing cycle. Any excess electricity you generate during a month is used to offset your consumption for that specific month.
In a buy-all, sell-all arrangement, all the electricity you generate is sold back to the grid, and you buy what you need at a different rate. Essentially, your solar system and your home are metered separately.
The net metering programs across New Jersey utilities including PSE&G, JCP&L, Atlantic City Electric, and Orange & Rockland are structured as annual net metering programs, where credits for excess energy generated by solar systems are accrued and can be used to offset future bills. These credits are reconciled annually, ensuring accurate accounting of energy credits over the year.
Understanding these different net metering arrangements can empower you to make an informed decision that best suits your energy needs and financial goals. Each option has its own set of advantages and drawbacks, so it’s crucial to weigh these factors and how they can impact the financial return of a solar investment. Working with a reputable solar company like Daylight will ensure you get the best information on net metering in your area.
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