Net Metering

Net metering is an accounting concept used by electric utility companies to allow their customers who have grid-tied alternative energy systems to reduce their electric bill. When the customer's solar, wind or other systems are producing power which is being fed to the grid, their use of power from the grid is offset by an equal amount. If their systems are producing more power than they are consuming, their electric meter will turn backward. On average, most grid-tied RE producers will still use more energy than they generate; sometimes their meter may run backward, other times it may just be slowed. In net metering, the utility company only charges for the net energy used as indicated by the meter*.

Net metering does not account for a net excess of energy produced. For example, if in one month under a net metering plan, you produced 100 kW-hours of electricity and used 400 kW-hours, you would pay the utility for 300 kW-hours used. If you produced 400 kW-hours and used 100 kW-hours, you would pay for 0 kW-hours used and be paid nothing for the excess 300 kW-hours produced; you just gave it away.

Many states in the U.S.A. have laws requiring utility companies to support net metering. Some also either encourage or require utilities to pay for any net excess produced at "avoided cost," which is usually around half of what their customers are charged.

* In many cases, the utility company will install a seperate electric meter that measures only the energy produced by their customer.