What is Net Metering for Solar?

By Robert Turner
Updated on August 23, 2024
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by Adobestock/rbkelle

What is net metering? Learn how the battle over solar-power reimbursement is shaping the future of energy independence in each state due to state law and utility regulations.

Home solar power has experienced exponential growth over the past 15 years, thanks to homeowners who have taken advantage of falling hardware and installation costs, coupled with government incentives. As far as trends go in the energy sector, it’s difficult to overstate photovoltaic solar’s powerhouse growth. To fully appreciate this point, it’s useful to talk some numbers.

In 2010, solar panels cost an average $8.70 per watt and were about 15 percent efficient. Because the U.S. Energy Information Administration estimates the average American household uses 10,700 kilowatt-hours of electricity per year, a homeowner in 2010 would’ve paid more than $60,000 to purchase a system sized to completely cover their electricity needs. Today, solar panels cost about $3 per watt and are between 19 and 22 percent efficient – meaning you could go solar now for roughly one-third the cost (plus access a bevy of government rebates and tax incentives to lower costs further).

The new economics for going solar has compelled 4 million homeowners across the U.S. to invest in a solar system. For many, their choice is buoyed by a wonky but critical energy rule known as “net metering.”

What is Net Metering?

Net metering allows for any solar producer connected to the grid – including any homeowner with a few panels on their roof – to be paid for the electricity they send back to the grid. Under the classic version of net metering, homeowners receive monthly credits on their utility bills for each watt of electricity their system produces in excess of what their household used. Solar homes can effectively offset their entire bill and be paid for their net-negative usage.

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