What Is Net Metering, and Why Should You Care?
July 29, 2022
When you go solar, you can often benefit financially by sending excess energy from your panels back to the local electric grid. However, the benefits you get vary by state, city or even utility provider. We’ve outlined key information you should know about net metering and how to empower your community if you decide to go solar now or in the future in a deregulated market.
More than 40 U.S. states and territories have policies in place to protect net metering — a way for solar owners to receive credit. Texas isn’t one of them. With a rapidly changing environment, this policy is often up for debate at the state level.
Net metering is important to solar owners because it saves money and makes money! This policy affects your solar system’s overall investment and helps determine your 25-year solar savings estimate. Overall, keeping the net metering policy encourages more people to adopt alternative energy.
How does net metering work?
Net metering is when your solar panels produce more electricity than what your home uses. That electricity goes back into the grid, and the solar owner receives credit for this exchange of power.
Utilities bill solar owners for only their “net” energy usage — the difference between the energy produced and the energy consumed. And utilities usually give solar owners the full dollar value — or 1:1 — of the difference.
Source: Institute for Local Self-Reliance
The production and consumption often waiver throughout the year and even by the hour. This chart from the Institute for Local Self-Reliance (ILSR) shows the times of day that solar panels produce energy and when the average home has the highest consumption. Balancing consumption and production helps customers get fair credit when they give to the grid during low consumption hours.
What’s the difference between net metering and a buyback program?
A buyback program is similar to net metering because they boil down to the same thing: crediting solar owners for overproduction. But there are key differences. Nearby Engineers explains the matter this way:
“Depending on local regulations and how your electricity provider decides to manage surplus solar power, there are three possibilities:
- Net metering, where you get the full value of each kilowatt-hour as credit.
- Solar buyback, where the electricity provider uses different prices for kilowatt-hours consumed and solar generation sent to the grid.
- In states without a net metering or solar buyback policy, you may get no credit at all, unless your electricity provider offers the benefit voluntarily.”
A buyback program allows energy providers to compete over solar customers to get the best crediting.
Note: The images above show how to read your utility bill to decide which program best suits your electricity needs.
What are the benefits and ROI of net metering?
Net metering isn’t the only way to see ROI in solar, but it definitely holds value in the long term when your home overproduces. Your panels already offset electricity costs by not pulling from the grid during peak hours, and those extra monthly dollars per your overproduction add up over time.
Panels typically overproduce during the day. When the excess filters to the grid, solar owners get a massively reduced or zeroed-out electric bill or cash back. These factors make transitioning to alternative energy attractive to solar owners and potential solar owners.
The difference between a regulated and deregulated market
Texas has been a mostly deregulated market since 1999. This means residents can choose among retail electricity providers (REP) to supply the electricity they’ll need from the grid. Deregulation drove an increase in REP that became a driving competitive force in the utility industry.
How do I enroll in a buyback program in Texas?
If you live in a competitive electricity market in Texas, you’ll need to switch your electricity plan to get credit on your bill for the solar energy your system generates. We recommend these resources to help you choose the right provider and plan:
You can switch to a buyback plan after your utility gives you permission to operate (PTO). You’ll need to give your chosen REP your PTO letter and ask to enroll in its buyback plan. If you have questions about recommended providers or would like help making the switch, please contact your energy consultant.
What can I do to protect my solar investment?
Solar United Neighbors started this petition to save fair credit for Texas solar owners. When you sign the pledge, you support people in deregulated markets who are fighting to get appropriate credit for the electricity they give to the grid.
Without laws that protect net metering or buyback programs, more electricity companies could end programs that protect fair credit in the future. And that will leave solar owners with no option to protect their investment.
Adding a Tesla Powerwall to your solar system is another way to protect your investment in solar. Instead of your excess power filtering back into the grid, it goes into your personal backup battery.
When your panels aren’t producing at night, your home pulls electricity from the Powerwall instead of the grid. As a result, you remain powered from your own system.
Join the Good Fight With Freedom Solar
Going solar has benefits for you and for the environment. At Freedom Solar, our team has years of experience and expertise in each market we serve. We’ll help you estimate the financial benefits of going solar in your city and navigate enrolling in a buyback program (where applicable).