Net Metering vs Net Billing

Written by U.S.SolarEnergy

As the world turns towards renewable energy sources like solar and wind, the concepts of net metering and net billing have become hot topics of discussion. These two methods of measuring and billing electricity consumption and production are revolutionizing the energy sector, providing consumers with new ways to save money and reduce their carbon footprint. But what is net metering and net billing, and how do they differ? Let’s take a closer look at these two innovative approaches and explore the states that are leading the way in renewable energy policies.

Net Metering:

Net metering is a billing arrangement where excess energy generated by a solar panel system is sent back to the grid, and the homeowner or business owner is credited for that electricity. Essentially, net metering allows consumers to earn credits for any surplus electricity they generate from their solar panels and send back to the grid, which they can then use to offset their future electricity bills. The credits are applied to the consumer’s account, which can be carried forward from month-to-month. Net metering is usually offered by utilities that have state mandates, regulations or laws that require them to do so. It is currently available in more than 40 states across the US, including Massachusetts and New York. The specific terms and conditions of net metering programs can vary by state and by utility, but in general, they provide a financial incentive for homeowners and businesses to invest in renewable energy.

Net Billing:

Net billing is a similar concept to net metering, but it works in a slightly different way. Instead of earning credits for any excess energy produced, consumers are paid a fixed rate for every kilowatt-hour (kWh) of excess energy they produce. Unlike net metering, the excess electricity produced is sold back to the utility at a wholesale price, rather than being credited at the retail rate. Net billing is offered in some states that don’t have net metering programs or have limited net metering programs. Examples of states that have net billing include Arizona and California.

Main Difference:

The main difference between net metering and net billing is in how the excess energy is credited or paid for. In net metering, the consumer is credited at the retail rate, which is the same rate that they would pay for electricity if they were to consume it from the grid. In net billing, the consumer is paid at a wholesale rate, which is generally lower than the retail rate. Another difference is in the way that excess energy is handled. In net metering, the excess energy is sent back to the grid and is available for use by other customers. In net billing, the excess energy is sold back to the utility and is generally not available for use by other customers.

Both net metering and net billing can be beneficial to homeowners and businesses that have invested in renewable energy. The choice of which program to choose depends on the specific requirements and regulations of the state and utility. In general, net metering is considered to be the more consumer-friendly option, as it provides a higher credit rate for excess energy, while net billing is more beneficial for utilities, as it allows them to purchase excess energy at a lower rate. Net metering and net billing are two methods for measuring and billing electricity consumption and production, especially for solar energy. Net metering credits excess energy at the retail rate, while net billing pays for excess energy at a wholesale rate and is offered in states that don’t have or have limited net metering programs. Both options can be beneficial for consumers, the specific choice depends on state regulations and individual needs.