Net metering (also known as NEM)
is the foundational solar policy and incentive on which the entire residential solar industry is built. Simply put, net metering is a way of using the electric grid to store the energy produced by your solar panel system for use at a later time.
How does Net metering work?
Say you install a net-metered solar panel system. When your solar panels are producing more electricity than you are using at any point during the day, the electricity is sent back to the grid, running your electric meter in reverse. When you use more electricity than your solar panels are producing, either at night or on cloudy days, you pull electricity back from the grid, running your meter forwards. At the end of the month or year, you are billed the net of what you put onto the grid and what you took off the grid: hence “net metering”.
With a correctly sized solar energy system, you can produce enough electricity to match your home’s electricity use for the entire year. However, the amount of electricity your solar panels produce will vary throughout the year: more in sunnier summer months, less when the sun is lower in the sky, and sets earlier in the winter. Net metering helps you to account for these seasonal differences in solar production by crediting you for the excess electricity your panels produce so that you can use it at a later date.