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What is Net Metering?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 06 July 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Net metering is a system available in some parts of the world to encourage consumers of electricity to invest in alternative methods of energy generation such as wind turbines and solar panels, while still using commercial utilities. Customers who take advantage of net metering have a normal electricity meter which runs backward when they are generating more power than they need, essentially generating an instant refund. The excess power that they generate enters the general utility grid, allowing them to pass on their alternatively collected energy to other consumers.

In the United States, over 30 states allow net metering, and others are considering measures to encourage the practice. In Europe, net metering is widespread, thanks to initiatives undertaken by the European Union. Net metering is viewed by many alternative energy advocates as an easy, productive, and useful program which helps power utilities and consumers alike. Utilities get more alternative power produced using clean methods, and consumers get cheaper utility bills. Net metering also streamlines the integration of household based energy generation with the electrical grid, making the whole process much more efficient.

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In most cases, a household can use net metering with a conventional utility meter, which is already designed to run in both directions. In some instances, a special meter may need to be installed. Either way, a utility customer who installs an alternative method of energy generation should get in touch with his or her utility to talk to them about net metering. If the utility supports net metering, consumers can watch the meter run backward when they are generating energy in excess of their needs. When the household requires more electricity than it can supply for itself, the meter will run normally while the house takes electricity from the conventional power grid.

Net metering is an easy way for households to receive fair market price for the energy that they are generating. Other metering programs which allow houses to feed power into the grid if they are generating an excess pay a fraction of retail cost for this excess power, which does not offset the costs of installing an alternative energy generation system in the first place. It also involves a lot of accounting paperwork, because the customer is issued a bill for the power used, and a rebate check for the power fed into the grid. Net metering returns the retail cost of the electricity generated against the outstanding bill, and in some cases may actually create a rebate check, if the household is frugal with their power and using a highly efficient generating system.

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