Net metering is a billing system that credits consumers for selling excess power generated to the grid. Energy providers and grid utilities offer net metering programs as regulatory decisions or voluntarily. Under net metering, households with solar generators(solar panels) sometimes generate more power than they consume during the day. This system allows them to send the excess energy generated to the grid. During this process, the household or consumer gains credits for supplying power to the grid.
However, solar panels cannot generate sufficient electricity for the consumer at night and during rainy or cloudy days when solar irradiation is low. In this scenario, when the energy use exceeds solar panel production, the energy consumer receives electricity from the grid. This billing system is usually captured with a net meter that reads forward and backwards. It reads backwards when you send power to the grid, saving credits and forward when you use power from the grid. This billing system is called net metering because the amount you are billed is a sum of your savings and consumption.
In countries utilising net metering, consumers are billed monthly or annually. Based on this billing structure, the consumers can roll over excess credits or get lesser tariffs based on the extra credits accumulated. The adoption of net metering allowed for a distributed generation, and some of the benefits include:
- This decentralised generation system reduces the demand for centralised plants and strains on the grid. It protects the grid and helps utilities manage peak load times.
- There is reduced loss as electricity is not transmitted over long distances in the system as energy is consumed almost at the point of generation.
- It helps consumers save on electricity by offsetting their energy consumption by supplying power to the grid.
- It drives investment in renewable energy to contribute to the grid and save on electricity bills.
- It also creates job opportunities as there is an increased need for manufacturers, electricians and installers of these renewable energy technologies.
The major setback with the net metering system is that the generating consumers shift the service cost to those without distributed generation. This demographic is primarily low-income earners who cannot afford to own rooftop systems and end up paying more for energy.