There can be confusion surrounding the meaning of net metering and how it affects solar panel owners. Here’s all the clarification you need about how net metering works, who benefits from it, and more.
What is Net Metering?
Net metering is simply an arrangement that pays solar panel owners for the electricity they generate but don’t consume. The unconsumed electricity goes to the power grid where other consumers can access it.
In short, if your solar panels generate more electricity than you need, it doesn’t go to waste. However, the exact terms on how net metering works vary from state to state. Some states don’t allow net metering at all.
How Net Metering Works
Some say solar power can make your electric meter run backward. When it happens, it is not a mistake
– just net metering at work.
How does it do that?
If you live in a state like New Mexico, where sunshine is abundant, your solar system will generate more electricity than you can consume in a day. Net metering rewards you with credit for that excess electricity. That credit cause your meter to run backward until you use the excess electricity.
Since a solar system will generate power in strong sunlight, you can use the excess on days you need more electricity. You could also use the excess during days with minimal sunshine.
Depending on when you need the excess, other consumers will have access to it via the power grid to serve their immediate needs.
Why is Net Metering Important?
Net metering is what makes going solar attractive and financially viable for many people. But it’s not available in every state and states that don’t have it tend to have the highest solar costs.
Net metering makes solar economical by ensuring owners benefit from their solar installation even when they aren’t at home. It does this by building up credit that owners can use to access electricity during days their solar installation can’t provide enough power.
People who don’t own solar panels also benefit from the arrangement by accessing the excess electricity from the power grid at lower rates.
Without net metering, consumers who don’t own solar panels will have no choice but to purchase power wholesale, paying higher grid prices. Net metering is crucial to keeping electricity affordable for everyone.
Does Your State Practice Net Metering?
Most states have some type of net metering policy in place. For example, Texas doesn’t have an official net metering policy. But because of its deregulated energy market, some of its electricity retailers stay competitive by offering a similar scheme to net metering.
Of all the states that offer net metering, only 38 have a net metering policy that’s truly progressive. Some of the more progressive states include Arizona, Illinois, California, Florida, Oregon, Utah, Massachusetts, Vermont, and of course, New Mexico.
Since New Mexico has over 300 days of strong sunshine, the state leverages the natural resource to provide cheaper and cleaner electricity to its residents. One of the state’s best net metering policies is that solar panel owners can keep credit from excess electricity generation indefinitely.
What are the Benefits of Net Metering?
Currently, the price for solar is more economical than paying utility companies for power. The affordability is possible because of net metering as well as the tax credit and rebates for solar installation. Without net metering, there are no guarantees that solar will remain more cost-effective than getting power from the grid.
Whilst net metering saves solar panel owners hundreds of dollars in utility bills every year, power companies and non-solar panel owners also benefit.
Power companies that use the grid to distribute power get to save money on generating electricity. It’s done by collecting the excess electricity from solar panel owners and redistributing it to other customers.
Since all the necessary infrastructure is already in place; utility companies can avoid the cost of buying land and building more infrastructure to increase their power output. Plus, as mentioned earlier, net metering keeps electricity rates affordable for non-solar owners.
But most importantly, net metering promotes switching to solar energy, which is environmentally friendly compared to fossil fuel power generation.
For more on net metering in New Mexico and how Affordable Solar can provide you with cost-effective solar power, contact us today.