What Is Net Metering?

Information verified correct on December 9th, 2016

net-metering (1)Benefit from net metering by connecting your home’s solar power system to the grid.

The use of solar power is on the rise causing more and more people to find out about the intricacies of net metering.

When you decide to install a solar power generation system in your home, you’ll have to decide between opting for a standalone off-the-grid system or one that connects to the grid. Net metering enters the picture only if you get a system that connects to the grid, because it involves supplying excess power to the grid. Another option in providing power to the grid is through gross metering.

What is net metering?

Net metering refers to a billing system where owners of solar energy systems get credits by providing surplus power to the grid. A net meter works in tracking the exchange of energy between a solar energy system and the grid. If your solar energy system produces less than the required energy, your home gets the deficit energy through the grid and the meter runs forward. When the solar energy system produces more than required energy, the surplus goes to the grid, and in this case the meter runs backwards, giving the system’s owner credits for the units supplied.

When opting for net metering, you should ensure that your meter runs on an interval system. This way the system can collect and send energy to the grid every 30 minutes, as opposed to at the end of the day – and can lead to savings in the long run.

Typically, no more than 20% to 40% of a home’s solar energy system output makes it to the grid, and this exported energy meets the electricity requirements of others in the vicinity.

What about gross metering?

A gross meter measures the import and export of power separately. In this case you provide all the energy your solar energy system produces to the grid, while using power from the grid at the same time. At the end of the month, while you pay for the power you use, you receive compensation for the power you pump into the grid.

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Which one’s better?

Policies regarding providing power to the grid, vary from one state to another. New South Wales and the Australian Capital Territory offer more lucrative prices to those who opt in for the gross feed in tariff rate. On the other hand, if you live in Victoria, Queensland, or South Australia and have nominal requirements for power, you can benefit by going the net feed in tariff rate way. Bear in mind that switching from net metering to gross metering, or the other way around, is not particularly easy, and you might have to spend some money to accomplish this.

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How can I make money through net metering?

Using solar power not only enables you to reduce how much you pay towards electricity bills, when you supply power to the grid you can expect to receive monetary benefits in return. Though not all schemes are equally lucrative and feed in tariffs can vary from one local energy authority to the next.

You can expect your electricity provider to pay around 20 cents per kWh, and while this might not seem like much it can add up to a significant sum over time.

Taking care of tasks that involve excessive use of electricity during the day is a good idea, because you can use your own solar power for free when the sun is shining bright. By doing this, you can save about 30 cents per kWh.

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How much can I save?

Just how much money you can save or make depends on multiple factors which include the following:

  • The site, size, and quality of your solar power system
  • Prevalent weather conditions
  • Pattern of your electricity usage
  • The feed in tariff you stand to receive
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Why is the feed-in tariff lower than what I pay?

Power companies have to bear substantial costs to generate, transport and sell electricity. They also have to bear additional costs when they take power from an individual user and pass it on to others. These costs can include network costs they have to bear when electricity travels over any distance; retails costs incurred marketing, billing, and providing customer support; and costs incurred because of complying with environmental schemes.

Harnessing the Sun for power is certainly a good idea, and the fact that you can look forward to monetary benefits by supplying power to the grid through net metering is a definite plus.

Shahedul Islam

Shahedul is the publishing assistant for finder.com.au. He's Internet savvy and loves to learn new things about finance and technology. He spends most of his time learning about the wonderful world of the internet.

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