Net metering is the process of selling extra power generated by solar panels to energy companies. If you live in a sunny area like Florida and you have enough solar panels that your solar system produces more energy than your home needs, net metering may be an option for you. It can be a great way to offset energy costs and help your solar panels pay for themselves more quickly.
How Does Net Metering Work?
Even if you have solar panels installed, your home will typically still be connected to the electrical grid. This is so that you can draw power from the grid at night or on cloudy days. This connection also means that whenever your solar panels produce more energy than you need to power your home, you can sell them to your utility company. Typically, the utility company will purchase the excess energy in the form of credits for future electricity usage rather than paying you in cash.
Why Is it Called Net Metering?
Net metering got its name because homeowners who participate earn credits towards future electricity bills when they sell excess solar energy to a utility company. Their electricity bills would then be the net difference between what was originally owed and the credits that they earned.
What Types of Net Metering Are There?
There are three different types of net metering:
- Net metering
- Net billing
- Buy all/sell all
Which type is best for you depends on your energy needs and how much energy your solar panels produce. You may earn more money back from either net metering or net billing because the energy in those arrangements is sold at retail prices. With the buy-all/sell-all model, energy is sold to utility companies at a wholesale price.
Net metering is the most common type of net metering, which is why it’s the umbrella term for all three types of net metering. This is the type that involves selling excess solar energy to a utility company in exchange for credits toward future electricity bills. Many homeowners with solar power choose this arrangement because it only involves one electricity meter and saves them money on any future electricity needs.
If you have unused credits, your utility company may pay you for them at the end of the year.
Net billing is very similar to net metering, but it’s more common on a commercial basis rather than with residential homeowners. With net billing, you can sell the excess solar energy to an electrical company, but in exchange for money, rather than credits. This option may suit homeowners who always exceed their energy needs and don’t have to purchase any from the grid.
Buy All/Sell All
With the buy all/sell all model, you don’t use any of the energy produced by your solar panels directly. Instead, you sell all of the solar energy to the utility company. Then, you would purchase all of the energy you needed to power your home from the utility company, paying the difference between what you sold and the costs of what you need. This model of net metering requires two different meters to measure what energy is produced and what is consumed.
Which Type of Net Metering Is Best?
The most common type of net metering involves selling energy to utility companies for credits. This is because, for many homeowners, solar panels are a supplement rather than their only energy source. Unless you have batteries to store excess energy produced during the day to fall back on, you’ll likely need to purchase energy from the grid at night or on cloudy days. This is where having credits with the utility company from can help.
Plus, if you earn credits but don’t use them all, your utility company will most likely buy them from you at the end of the year.
Batteries vs. Net Metering
Solar batteries can be a great idea if you’re intending to stay off the grid entirely. However, net metering can function similarly, banking power from sunny days for later use at night on cloudy days. The difference is that the energy is stored with the utility company instead of in batteries that you have to purchase and maintain yourself.
Does Your Home Have to Be Connected to the Grid for Net Metering?
Your home must be connected to the grid for net metering. This is because a connection to the grid is the only way for the excess energy to get from your solar panels to the electric company. Some solar inverters can automatically disconnect your home from the grid in the event of a power outage. This would allow you to take advantage of net metering while also being able to use solar energy if the power from the grid goes down. However, if you’d like your home to be completely disconnected from the grid, net metering won’t be an option and it’s a good idea to look into using batteries to store your excess solar energy.
Which Central Florida Utility Companies Offer Net Metering?
Net metering has been an option for homeowners in Florida since 2008. If you live in Central Florida, several utility companies offer net metering arrangements. These include: