Net metering refers to a billing mechanism used by utilities for solar system owners.
Since solar systems do not produce electricity when there is no sunlight, solar system owners must rely on their utility to track how much electricity their solar system produces compared to any electricity they use from the utility (the grid). So, when solar systems produce power the electric meter runs backward and electricity is moving to the grid. When homeowners use electricity from the utility, the meter runs forward and electricity is moving to the home. In the end, solar owners are billed for the difference in the solar electricity they produce and the electricity they consume from the utility. The difference is calculated over time and solar system owners are charged or credited for the net difference in production and consumption.
The big issue for homeowners is getting properly credited for their solar production. Until last April, anyone in California who installed solar received credits for their solar electricity production at nearly the same price they paid the utility for electricity (retail price). So, electricity produced and electricity consumed were valued nearly the same – e.g., use versus production was credited about one-to-one. Since April 15th, people in California get credits for their solar production at amounts closer to the, much lower, price of wholesale electricity made from a large power plant but they are still charged retail cost for electricity used. That means now production and use of electricity is not valued the same and homeowners have to pay more for using electricity than they get credited for producing electricity. No one in the solar industry thinks this value for solar production is fair or accounts for the true value of solar electricity. The main solution to this problem is for solar system owners install onsite electricity storage (batteries) so that they do not have to rely on their utility’s valuation of their solar production because they can produce, store and use their own electricity without relying on the utility to track the difference.
If you want to read more about this issue, the Energy Sage website has a good overview overview on the current net metering for solar owners called the
Net Billing Tariff (or NEM 3). Every state has different billing mechanisms for solar, which also complicates rolling out solar on a nationwide basis.
