Solar Panel System GuideThe Department of Energy defines net metering as an arrangement between solar owners and utilities in which owners are compensated for solar power exported to the grid. Whether your system qualifies, and how much you receive, depends on the policies of your state and electric utility. This guide walks through what net metering is and the questions to ask before you rely on it.
What Net Metering Is
Net metering ties your solar system to the wider grid. The Department of Energy states that net metering is an arrangement between solar energy system owners and utilities in which the system owners are compensated for any solar power generation that is exported to the electricity grid.
The concept dates back to the 1990s, when meters literally ran backward as excess solar flowed out. The Department of Energy notes that today's implementations vary significantly by location, so the way your utility credits exported power may look different from a neighbor's in another state.
Questions to Ask Your Utility
Net metering is not automatic, so the Department of Energy suggests researching your own service area before you count on it. The agency lists several basic questions to consider: whether the program is available in your utility district, the eligible system size, and the customer type that qualifies.
The Department of Energy also directs homeowners to check the compensation rate for exported power and the bill credit design, meaning how credits are calculated and applied to your statement. Contacting your local electric utility for these specifics is the recommended step.
How Net Metering Fits Your Savings
Net metering affects how much value your system returns because it sets the price for the power you send back. When a utility credits exports at a favorable rate, daytime overproduction offsets the grid power you draw at night.
The Department of Energy frames net metering as one of several policies that shape a solar investment, alongside your financing choice and local incentives. Because the terms depend on your utility, the agency recommends confirming the current policy in your service area rather than assuming a standard arrangement applies.