Net Metering for Solar panels -- How It Works

One of the most intriguing aspects of solar PV systems these days is the opportunity to take advantage of the FITs – the Feed-in Tariff scheme provided by the government. FITs provides an additional benefit for people who install certain types of solar panels on their property and tie them to the grid. Essentially, the government will pay you to generate your own electricity, and pay you a little extra if your solar panels generate enough electricity that you feed some back to the power grid.

Net metering is the way that your electric supplier keeps track of the amount of electricity your solar panels generate. The company that installs your solar panels will also install a meter that measures the amount of electricity that your solar panels generate. In the future, the meter will also measure the exact amount of electricity that your system feeds back to the grid, though that capability is in its infant stages at this time. It still helps to understand how net metering and the FITs work together to help you generate income as well as electricity from your solar panels.

First Things First – Your Solar PV System

The exact amount of your FITs is determined by the capacity of your solar PV system and by the amount the government is offering per kilowatt hour (kWh) at the time your solar system is registered. In order to qualify, your solar energy system must meet certain requirements, which most residential solar PV systems will easily meet. Once your system is registered, the government guarantees you that the price they’ll pay you per kilowatt hour for the next 25 years. Considering that the payback time for most solar systems is 7 to 12 years, you could ostensibly expect to realize two to three times in income as you spent to install your system.

The Importance of Net Metering

For the time being, most utility companies will use estimates to decide on the amount you’re owed for the electricity generated by your solar panels. Essentially, when your home uses electricity from the solar PV system, your meter will “run backwards.” When you’re drawing energy from the grid, it will measure your electricity use as usual. Any excess energy generated will be fed into the grid, and you’ll receive the base FITs as well as a small premium of a few pence for each kilowatt hour for that energy as well.

Where the Excess Energy Comes From

Your solar panels will generate electricity during the day. On most days, your solar panels are likely to generate more electricity than you can use immediately. On systems with a battery backup, the excess energy would be stored in a battery for use during the night or when you need additional electricity. Since only grid-tied systems qualify for the FITs, that’s not an option for most people. In that case, any electricity that you don’t use as it’s generated will be fed into the grid and become part of the “energy pool” from which everyone draws their electricity.

That’s a greatly simplified explanation of how net metering will work with your solar panels to generate income for you. For more information on installing solar panels on your property, contact a local solar installation company and schedule a consultation.