Before you install rooftop solar panels on your home, you should learn about net energy metering, how it works, and whether you are eligible.
Geez, OK. If you say so… but why?
Glad you asked! With net energy metering (sometimes called NEM), you have the opportunity to sell the extra electricity your solar panels produce back to the energy grid. That way, when you get your monthly electric bill, you’ll only be charged for your net energy use — your total energy usage minus the electricity you sold to the electric grid.
Depending on the size of your solar energy system and your home energy usage, you could zero-out your electricity bill for the entire year! Imagine that: no electricity bill. And because Chariot offers net metering, we’re experts in the subject. So, let us tell you more about the details of this energy agreement, as it will be crucial to getting the biggest return on investment for your home solar panels.
What is Net Metering?
In the simplest terms, net metering is a unique form of billing in which solar panel owners receive credits on their electric bill for the excess electricity their solar panels produce and add to the grid.1
How Does Net Energy Metering Work?
Now that you have a basic understanding of net metering, let us explain how it works:
- On sunny days, most rooftop solar systems generate more energy than the home needs since people are at work or school.
- When this happens, your electricity meter runs in reverse because the solar panels are generating more electricity than your home is using.
- Since the excess energy generated by your solar panels needs to go somewhere, unless you have a battery system to absorb the energy it’s added to the local electric grid, which then powers neighboring homes and businesses with your clean energy.
- When your panels don’t produce enough solar power to meet your energy usage, your meter runs regularly, meaning it will draw power from the electric grid like it did before you installed solar panels. Therefore, this is not an “off the grid” situation.
- Throughout the month, your home’s electricity meter monitors your total electricity usage for the month plus how much electricity your solar panels generate and add to the grid.
- At the end of your billing cycle, you’re only responsible for the net energy consumption. This represents your total energy usage minus the energy you added to the electric grid and minus the electricity you used from your panels.
- If your solar energy generation is more than what your home used in the billing cycle, your electric provider won’t charge you for that month and will credit your next month’s bill.
Net Metering is Technically an Electricity Plan
Because you still need to tap into the grid during times when your solar panels aren’t producing electricity (i.e. at night or on cloudy days), you still need to have an electricity plan. Net metering is a special type of plan offered by only a few REPs. NEM eligibility varies widely and depends on several factors, including state legislation, regulations, and policies. Chariot Energy happens to be one of the few REPs in Texas that offer net metering as an energy plan!
What About Energy Storage? Couldn’t I Just Store This Extra Electricity?
Unfortunately, because energy storage technology is still in its early stages, battery storage is very expensive, inefficient, and costly. Perhaps the most advanced renewable energy storage device on the market today, Tesla’s Powerwall costs around $6,500 for one solar storage unit — and they recommend that the average residential home install two.
This is why most rooftop solar owners currently opt for a net metering setup. Still, we’re optimistic that solar storage will become more affordable 10 years from now. Just look at how rapidly the costs for solar panels have dropped in the previous 10 years!
Does My State Have Net Metering Rules?
Whether you already have solar panels installed on your roof or you’re looking into buying solar panels for your home, you should first check if your state offers net metering and whether there are any policies in place around them. This could make all the difference in how quickly you pay yourself back for investing in rooftop solar for your home.
Currently, 38 states have mandatory net metering rules in place, and two states — Texas and Idaho — have voluntarily adopted net metering programs. This means only some utilities in Texas have policies in place.
Who is Eligible for Net Metering in Texas?
Speaking of the Lone Star State, this is where Chariot offers NEM plans. We can’t speak to other states, but in Texas, you are eligible for net metering if:
- You are in a deregulated area of Texas (you can pick your electric company);
- You have an interconnection agreement with your utility company (the four utilities in Texas are CenterPoint Energy, AEP Texas, Oncor Electric Delivery and Texas-New Mexico Power); AND
- You have a smart electricity meter installed by your utility.
Benefits of Net Metering
From saving money to easing the demand on your local electric grid, there are several benefits to net metering:
- Saves You Hundreds in Electricity Costs. Literally! Net metering empowers you to fully take advantage of your solar panels, saving you hundreds, if not thousands, in energy costs each year.
- Further Promotes Renewable Energy Adoption. Net metering gives you an opportunity to create your own clean energy for your home — and for your neighbors. It provides your home and your surrounding community with emissions-free energy.
- Reduces Strain on Power Grid. Net metering allows solar panel owners to help electricity generators manage their electricity loads. By sending power to their local community, solar panel owners also help prevent loss in long-distance electricity transmission and distribution.1
We hope this article provides some helpful context for your decision. If you’re interested in learning more about solar panels, check out our solar panels for home article, which extensively examines the process of choosing, buying, and installing residential solar panels.