What is Net Metering and Why Should you Care?

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What is Net Metering and Why Should you Care?

When you go solar, you can often benefit financially by sending excess energy from your panels back to the local electric grid. However the compensation varies by state or city, and even down to the 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. 

Over forty states and territories in America have policies in place to protect net metering, a way for solar owners to receive credit, and Texas is not one of them. With a rapidly changing environment, this policy is often up for debate at the state level. 

Net metering is impactful to solar owners because it saves money and makes money! This policy impacts the overall investment of your solar system and it helps to determine your 25-year savings by going solar estimate. Keeping the 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 and is filtered back into the grid and the solar owner receives credit for this exchange of power. Solar owners are only billed for their “net” energy usage – the difference between energy produced and energy consumed from the home or business owner and are usually given the full dollar value – or 1:1 – of the difference.

The production and consumption often waiver throughout the year and even by the hour. This chart from ILSR shows us the time of day that solar panels are producing energy, and when the average home has the highest consumption. Balancing consumption and production helps the consumer get fair credit when they are giving to the grid during low consumption hours.

What is the difference between net metering and a buyback program?

A buyback program is similar to net metering due to what it boils down to: crediting solar owners for overproduction– but there are key differences. According to Nearby Engineers, “Depending on local regulations and how your electricity provider decides to manage surplus solar power, there are three possibilities:

  1. Net metering, where you get the full value of each kilowatt-hour as credit.
  2. Solar buyback, where the electricity provider uses different prices for kilowatt-hours consumed and solar generation sent to the grid.
  3. 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.

What are the benefits/ROI of net metering?

Net metering is not the only way to see a return on investment in solar, but it is one that holds value for the long term when your home overproduces. Your panels are already offsetting electricity costs by not pulling from the grid during peak hours and those extra dollars a month by your overproduction adds up over time. Panels typically overproduce during the day and when the excess filters into the grid, the solar owner gets either a drastically reduced or zeroed out electric bill, or cash back. These factors make it attractive to a solar owner to transition to alternative energy.

The difference between a regulated and deregulated market

Texas has been a mostly deregulated market since 1999. This means that residents have a choice among retail electricity providers (REP) to supply the electricity they will need from the grid. The deregulation drove an increase in Retail Electricity Providers (REP) that became a driving competitive force in the utility industry.

How do I enroll in a buyback program in Texas?

If you live within a competitive electricity market in Texas, you will need to switch your electricity plan in order to get credit on your bill for the solar energy your system generates. Here are the resources we recommend to help you choose the right provider and plan: 

You can switch to a buyback plan after receiving permission to operate (PTO) from your utility. You will need to provide your PTO letter to the REP you select and ask to enroll in their buyback plan. If you have questions about recommended providers or would like assistance making the switch, please contact your Energy Consultant.

What can I do to protect my investment in solar?

Solar United Neighbors started this petition to save fair credit for Texas solar owners. When you sign the pledge, you are supporting a community of people in deregulated markets who are fighting to receive appropriate credit for the electricity they are giving back to the grid. Without having legislation that protects net metering or a buyback program, more electricity companies could end their programs that protect fair credit in the future- leaving a solar owner with no recourse 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. At night when your panels aren’t producing, your home pulls electricity from your Powerwall instead of the grid and keeps you powered from your own system.


The benefit of going solar with Freedom Solar is that our team of experts have years of experience in each market we serve. Our team will help you estimate the financial benefits of going solar in your city, and help you navigate enrolling in a buyback program from your electricity provider, where applicable. Contact us today.

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Willie Nelson for Freedom Solar

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