Definition: Net Metering is a utility billing mechanism that tracks the amount of energy a residential solar home is feeding back onto the grid versus how much energy the home is using overall. The solar energy production is tracked through a net meter and credited to the homeowner’s account.
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Why does it matter?
When your solar panels are producing energy on a sunny day, they are likely creating more energy than your home can consume at the time. That excess energy has to go somewhere, so it flows back out onto the utility grid. Your utility company will track – dollar for dollar – watt for watt – how much energy you are putting back onto their system. The utility company will credit that extra energy to you and apply it to your energy usage in the evening when your home uses the most power.
If at the end of the month, you have a Net Meter credit, then it will roll over into the next month. The long days of summer usually create credits that stay on your account until you use them up in the shorter days of winter. If at the end of the year, you still have a Net Meter credit, your utility will cash you out or roll the credits into the next year.