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How to Explain Net Metering to Potential Solar Customers

June 9, 2022

One of the leading reasons that people decide to go solar is because they want to lower their utility bills. This can be achieved by installing enough solar panels to meet the energy consumption of the people living in the home. Another way that a cheaper electricity bill can be achieved is through a unique billing concept called net metering.

This article will explain what you need to know about net metering so you can help interested solar customers understand how they can enjoy more benefits from their solar panels.

What is Net Metering?

Net metering (also known as net energy metering or NEM) is a utility incentive that credits homeowners for the extra electricity their solar system generates and adds to the electric grid. These credits can then be used to offset the cost of electricity that the homeowner pulls from the grid when their home's electricity needs exceed what their solar panels generate.

How to Explain Net Metering to Homeowners

While we provided an accurate description, it’s also a bit abstract. Let’s break it down into everyday language:

  • The solar panels on your roof generate electricity when the sun is out.
  • Your home uses that electricity as it’s created.
  • Any time that your solar panels generate more electricity than your home uses, that excess electricity gets sent to the utility grid.
  • Any time your home uses more electricity than your solar panels generate, your home draws electricity from the utility grid.
  • At the end of a billing cycle, if your solar panel system produced more electricity than your home took from the utility grid, the utility company then credits your homeowner’s electricity account for the amount of electricity added.
  • At the end of the next billing cycle, if your home used more electricity than its solar panels generated, net metering credits can roll over and reduce the amount you owe.

Typically, a home will generate net metering credits in the summer, especially in areas with high peak sun hours. Homeowners can then may use those credits in the winter months when there is less sunshine for generating solar energy.

Other Important Information About Net Metering

By combining days with increased sunlight and lower energy usage, it’s easy to see how net metering can be used to help a homeowner lower their utility bills. They can literally get credit for generating more electricity than their home uses.

However, there are a few potential drawbacks to net metering, depending upon where someone lives.

  • Unavailability: Not every utility company offers net metering to its customers. You don’t need to talk up the potential of net metering to a homeowner who can’t use it.
  • Poor Pricing: While a majority of utility companies do offer a 1:1 buy-back rate (homeowners get an equal amount of net metering credit for all of the electricity they send to the utility grid), some simply don't.
  • Usability: No matter how many net metering credits a homeowner may earn, they cannot use them to pay certain fees on their electric bill, including base charges and distribution charges.

Learn more about these required fees on our customer blog about electricity bills and solar panels.

You should always know the net metering policy for the utility companies in the areas where you work so that you can better educate the homeowner. However, you should never make any sort of promise or guarantee about net energy metering to homeowners when discussing how it could work for them. You should encourage each homeowner to contact their local utility company to understand how NEM will work for them.

Key Takeaways

Net Metering is an amazing incentive from utilities that compensates homeowners for going solar. It can allow homeowners to maximize all the electricity their solar panels generate.

However, not every utility company offers a net billing program, and the terms of the program can differ by location. Keep yourself up-to-date on net metering guidelines in your area so you can help people make an informed decision about solar panels.

Are you already a Palmetto sales member? You should enroll in our “Intro to Utility Bills and Net Metering” course today. If you aren’t a Palmetto sales member and you want to become one, you should sign up now.

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