Imagine a future where your electricity meter runs backward, and you save money instead of dreading your bill. Net metering, a game-changing legislation, lets solar panel owners earn credits for excess energy.

Solar adoption is rising; therefore, utilities and regulators are changing how much solar owners can save. Some states offer full retail credits; others use time-based rates or lower pay. What does this mean for you? Will solar be worthwhile in the future?

This article will explain net metering, discuss policy changes, and show you how to maximize solar savings to make your clean energy investment pay off.

What is Net Metering?

Net metering lets solar panel owners send excess electricity to the grid for energy credits.  When households use the grid at night or on overcast days, these credits cut their energy costs.

Net metering guarantees solar owners are adequately compensated for their community energy. Without this technique, utilities might buy discounted solar energy and charge full retail rates for grid electricity.

Net Metering and Solar Savings

Net metering reduces solar payback times, which are the time it takes to recoup the cost of a solar system. Solar is more affordable because owners can obtain credits for extra power they produce.

However, there isn’t a federal rule for net metering, so each state and energy company makes its own rules. Because of this lack of consistency, different net metering methods change how much homeowners can save.

Let us look at the different types of net metering rules.

Different Net Metering Policies

Retail Rate Net Metering: The Gold Standard

Customers with retail rate net metering pay the same amount for sending extra energy to the grid as they do for using power from the grid.

• If their system produces more energy than they use, homeowners can claim credits on their next bill.

• Some utilities let you roll over credits forever, while others have a 12-month limit. If you still have credits you haven’t used after that time, you may get them back at a lower rate.

• Solar is a good investment because this plan gives the best return on investment.

Time-of-Use (TOU) Net Metering: A Flexible Method

Times of use (TOU) rates change how much energy costs in states with them.

• Energy costs less during off peak hours, like midday and late at night.

• During peak hours, like in the evening, the price increases when more people use energy.

For people with solar panels who use TOU net metering:

• When you create extra energy during off-peak hours, you get less credit for it.

• Sending extra energy to the grid during peak hours gets more money.

• To save the most money, homeowners can store solar power in batteries to use during expensive peak hours.

In states like California, all new solar users must be on TOU net metering, which shows how the grid’s demand changes in real-time.

Net Billing: A Less Favorable Model

Net billing, as opposed to retail rate net metering, pays homes less than the retail price for extra solar energy.

• Example: A homeowner pays 15¢ per kilowatt hour (kWh) for electricity from the power grid but only gets 7¢ per kWh for solar energy that they don’t use.

• For this reason, people must depend more on using their energy instead of sending it to the grid.

States switching to net billing say that retail rate net metering unfairly rewards solar users at the cost of customers who don’t use solar.

Avoided Cost Net Metering: The Utility-Friendly Model

In this plan, electric companies pay people who use solar panels based on how much it costs them to make their electricity instead of buying it from people who own their homes.

• Usually, pay is based on the wholesale price of energy, which is much less than the retail price.

• Some companies calculate the “value of solar,” considering the benefits to the grid when determining how much to pay.

Solar investments become less appealing with this plan because they take longer to pay for themselves and save less money.

The Future of Net Metering: What to Expect

As more people use solar energy, utilities and state regulators are rethinking how to balance incentives for solar energy with grid reliability and fairness for all users. Some key trends are:

• We are switching from retail net metering to TOU net metering to ensure energy reimbursement aligns with grid demand.

• As more utilities switch to net billing models, solar users will get less money from their panels.

• Increasing benefits for battery storage will let people store their extra solar energy instead of selling it for less money.

• Possible changes to government policies that would make things more uniform between states.

Power your future with Dowd Solar Group – where every ray of sunshine saves you more money.

How to Maximize Your Solar Savings

Since net metering constantly changes, homeowners need a plan to maximize their savings. How to do it:

• Understand State Policy: Before you install solar, find out what the net metering rules are in your state and how your utility company handles extra energy.

• Consider battery storage: If you store extra power, you can use your solar energy during busy hours instead of selling it at a lower rate.

• Optimise Energy Use: Do things that use a lot of energy, like cleaning and dishes, in the middle of the day, when solar panels work their best.

• Update on Policy Changes: As net metering rules change, knowing about them can help you change how you use energy or set up your system.

Conclusion

Net metering has been a key part of saving money on solar energy, but as more people use solar, rules are changing to keep up with the market. Net metering at the retail rate is still the best option for homeowners, but TOU rates and net billing are becoming more popular. To ensure your solar investment pays off, you must know how your state and energy company handle net metering.

Dowd Solar Group helps you get the most out of every watt of energy you use, thus saving you more money.