Going solar can save homeowners money on their electricity bills by producing and using their own energy. Homeowners can see the largest amount of solar savings in states that offer net metering, where electricity utilities give customers a credit on their electricity bills for the excess solar energy they send to the grid. Net metering policies can play a big role in many different aspects of a homeowner’s solar system. Learn more about net metering policies, how net metering works, and the benefits of net metering in the article below.

An Introduction to Net Metering

Most solar systems located on homes and businesses are grid-tied, meaning that your solar system and your home’s electricity are connected to the electricity grid. As your solar system produces electricity, that electricity is first sent to your home to power appliances, keep the lights running, and more.

Any energy that is being produced and is not immediately used within your home is sent back to the grid since solar panels are not able to store that extra electricity. For the excess electricity not used immediately in the home, some states have net metering policies, where the utility pays homeowners for the solar electricity they send back to the grid.

In most utilities, solar energy payments from net metering are added to the homeowner’s electricity bill in the form of a bill credit. A homeowner receives a credit for the energy they send to the grid during the day, and those credits are applied to the homeowner’s utility bill for the electricity used at night or when the solar panels are not producing electricity.

Net metering policies can vary greatly from state to state, where credits can range from a 1:1 ratio to a percentage of the electricity sent to the grid, while other utilities provide no payment for this electricity.

Benefits of Net Metering

There are many benefits of net metering that can be beneficial not only to homeowners but to the entire community as well, including:

1. Increased Homeowner Electricity Bill Savings

Going solar can save homeowners money on their electricity bills ranging from $26,000 - $34,000 in states with a high cost of electricity and around $10,000 in savings for states with lower costs of electricity. With net metering, homeowners can save even more on their electricity bills, since approximately 20-40% of the electricity solar panels produce is sent back to the grid. Being compensated for that electricity can greatly impact the amount of money homeowners can save on their electricity bills.

2. Year-Round Benefits of Net Metering

Your solar panels will produce the most electricity during the summer months when the sun is out for the longest amount of time. Many utilities offer net metering that allows credits to roll over each month within a year timeframe or indefinitely. Therefore, bill credits from the summer months when your solar panels are producing the largest amount of solar energy can be applied to winter months where solar electricity generation is lower. 

3. Supports Solar Growth

Net metering greatly supports solar growth, as it provides solar owners with increased solar savings on the electricity they send back to the grid. This is helpful for the community, as solar panels that replace coal or gas-burning power plants can have positive impacts on the local environment and improve air quality. 

4. Reduced Pressure on the Grid

The U.S. Energy Information Administration found that the peak year-round energy usage takes place during the summer months, particularly in the afternoon hours, to power air conditioning in businesses, offices, and homes. The solar energy that is sent to the grid can help reduce energy demands on the grid, since the excess solar energy from homeowners helps balance the highest electricity peak loads on summer days. This helps reduce pressures on the grid to expand power plants that would only be used for a small period of time during peak energy hours.

A Solution for Areas Without Net Metering Policies

Solar owners in states with strong net metering policies will see the highest solar savings compared to states with net metering policies that only pay a percentage of the solar export credit or no credit at all. For states that don’t have strong net metering policies, or where utilities do not pay homeowners for the excess energy sent to the grid, solar + storage is a great solution. 

With a solar + storage option, any solar energy that is not used immediately to power the home is sent to the home’s solar storage batteries. These batteries can store excess energy produced during the day to be used at night when the solar panels are not producing electricity. Solar + storage can make going solar more economical because homeowners are able to utilize their solar energy throughout the day, rather than only when the solar panels are producing energy.

Why Net Metering is Important for Solar Growth

Approximately 20-40% of the energy that solar panels produce is sent back to the grid. In states with strong net metering policies, homeowners will receive a credit for this electricity.

In states without strong net metering policies, homeowners are not being compensated for the excess energy their solar panels produce. This can greatly affect the cost savings for homeowners going solar and in some cases increase the payback time of going solar by several years or more. Net metering policies help make going solar more economical, which greatly increases solar adoption and growth nationwide.

Where Net Metering is Available

Net metering is not available in all states and some states do not regulate net metering at a state level, rather it is managed to the utility level. As of 2020, 34 states plus Washington D.C. and four territories have some form of net metering policies available. Six additional states do not currently offer net metering but offer other compensation outside of net metering. Five states do not currently have net metering laws and net metering policies and decisions are taken into account at the utility level.

Although more than half of the states have net metering policies, each net metering policy can be unique. Net metering policies can vary greatly, from being compensated for the full retail cost of the solar exported, receiving an amount less than the full retail cost, or not being compensated for any electricity that they send back to the grid. Solar policies can change and utilities have different policies as well. Your local solar installer should be able to provide you with the most up-to-date net metering policies for your area.