Solar Net Metering Guide - How it Works and What You Need to Know

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Net metering is a common buzz word in the solar industry that very few consumers actually understand.

In short, net metering is the credit your utility company gives you for the solar power you don't immediately use at your own house/property. 

How It Works

Your system generates most of its power in the middle of the day, generally in a 4-6 hour window (10am-4pm). This is often more in the summer and less in the winter. 

But most people's energy needs don't fall exclusively in this time window. Therefor, they need a way to store the energy they are generating for a later point in the day/night. 

The grid (power company) offers a simple and affordable solution for this "storage" problem, called Net Metering. In almost all cases, net metering is a better option than battery storage. 

The power your solar generates will be used immediately by your homes power demand, but any excess will be routed back to the grid for the power companies to sell to other people.

Often, these power companies will then give you a credit. This credit can be a fixed price per kWh OR it can be a 1 for 1 credit where for every kWh sent to the grid, they allow you to use later (just like a battery but without efficiency loss). 

Issues with Net Metering

Utility companies are often required to hit certain renewable quotas, making the net metering program a win win. In some cases, these utility companies will even incentivize you to install solar, giving you a kickback/incentive off the purchase price to do so. 

On the flip side though, in notorious states like Arizona, some utility companies are less willing to offer fair net metering terms, essentially giving you a fraction of the value back compared to what you pay at night. 

You essentially sell your excess power back to the utility company at wholesale prices, and then pay retail rates when you need it back. 

This is rarely a deal breaker. For most areas with low net metering credits, the ROI is still upwards of 15%. Solar will often bring you down into the lowest pricing tier, making the retail rate you pay significantly lower than the retail rate you previously paid. Also, batteries can help spread out the time of use for the power you are generating. 

Design With Net Metering in Mind

It is important to know your local utility companies net metering policy. This can impact the value of your system over the long run. Even the worst utility companies don't stop solar from being a fantastic investment, but it could influence your total system design. 

For example, it's pretty generally accepted that south facing panel roof placement is the best for maximizing efficiency. However, those with harsh net metering terms may want to opt to maximize their system in a west facing direction, so that when the majority of their power is generated in the late afternoon when they are home from work using their evening power. 

At Project Solar, our expert designers know how to work with you to design and optimize your system. This service is included, even in our "DIY" package. 


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