Solar Power and Net Metering

Grid-tied solar power system (with net metering) diagram

Net metering, or also known as net energy metering (NEM), is another big reason why the solar panels are a good investment for your home or business.

Net metering is possible when your home maintains a connection to the grid even after you install solar panels, and of course, when the net metering is available in your area. The grid-connected (grid-tied) solar power system with net metering consists of solar panels, a grid-tied solar inverter that converts DC (direct current) to AC (alternating current), and net meter. DC generated from your solar panels is converted into AC, which is the type of current that is used by the electrical appliances in your home.

Let's explain simply what is net metering and how it works.

When your solar panels produce excess power, it goes to the grid. The utility company compensates you for the excess grid supply with credits added to your electric bill. For the time, when your solar panels produce less power than your household is needed, you can draw electricity from the grid. A net meter (bi-directional meter) is installed to register both the excess solar energy that you export to the grid and the energy that you consume from the grid. This ensures that consumers are only charged for their “net” energy use (energy consumed minus energy sent to the grid). 

Monthly net metering allows consumers to use solar power generated during the day at night. Similarly, during the spring and summer, when the sun is shining, and your solar panels are producing more electricity than you need, that extra energy goes to the grid. Then in the winter, when the days are shorter, you can draw on those energy credits to help offset some of your energy needs.

The grid acts as an energy storage system for your excess power and saves it for later use. The grid connection ensures that you still have power regardless of daily or seasonal variations in solar panels production levels.

So, with grid-tied solar power system and net metering billing mechanism, you save money besides that you help the environment and reduce your carbon footprints.

Net metering originated in the United States, where solar panels and small wind turbines were connected to the electrical grid, and consumers wanted to be able to use the electricity generated at a different time or date from when it was generated. In 1979 an apartment complex and a solar test house in Massachusetts were the first two projects to use net metering. Minnesota is commonly cited as passing the first net metering law, in 1983, and allowed anyone generating less than 40 kWh to either roll over any credit to the next month, or be paid for the excess. 

Keep in mind, however, that net metering policies can vary significantly by country and by state or province. It is not available everywhere in the U.S., which means that there is a need for other nighttime power supply options such as solar battery storage.

Net metering was slow to be adopted in Europe, especially in the United Kingdom, because of confusion over how to address the value-added tax (VAT). Only one utility company in Great Britain offers net metering. In Canada, some provinces have net metering programs.