What Is Net Metering?
Net metering or net energy metering (NEM) is a solar incentive to off-set your electrical consumption with photovoltaic (PV) production.
How Does Net Metering Work?
First, let’s break down the basics...sunlight hits your PV system. The solar panels generate electricity from direct current (DC) to alternating current (AC) through the inverter. A bidirectional meter tracks the amount of energy you are consuming and producing by spinning forward and backward.
The utility only bills you for the electricity you consumed, beyond what your PV system produced. You pay for what the meter shows you consumed. If the PV production spins the meter backwards, you will pay less. You sell back at the same rate you buy electricity from the utility company. Note: Capacity charges and PV interconnection fees can still apply.
Why Is NEM A Solar Incentive?
Reduces your future electric bills
Creates electrician, installer, and manufacturing jobs
Generate your own electricity cleanly and efficiently
Allows utilities to better manage peak electricity loads
Decreases the strain on distribution systems
Prevent losses in long-distance electricity transmission and distribution
Net Metering States:
Net metering is mandatory in 40 states, the District of Columbia, and four U.S. territories. Idaho and Texas don’t have any mandatory rules, but some utilities allow net metering. Currently, only Alabama, South Dakota, and Tennessee don’t have NEM rules. Check out more information about net metering and your state’s policies and incentives at the Database of State Incentives for Renewables & Efficiency (DSIRE).