What is net metering and how does it work?

What is net metering and how does it work?

Net metering is the most common arrangement and works by selling any surplus power generated by your solar panels to the utility operator in exchange for credits, which offset any electricity you may need to use from the grid. The credit is applied at the retail rate, which means the rate that you pay for electricity.

net metering


If you’re interested in setting up solar panels at your home, you’ve likely run into a number of new concepts when it comes to how utilities handle the electricity you’ll generate. Perhaps you’ve run into the term “net metering” otherwise known as “net energy metering” or NEM, a concept unique to commercial and residential areas that generate their own electricity. With solar panels, you can generate enough energy to provide electricity to your home and, sometimes, more than you can use or store. When that happens, you can sell that excess electricity to the utility company to distribute elsewhere along the power grid. That process is known as net metering.

Types of net metering

Net metering includes 3 different types, which include the following:

Remote Net Metering

It is system farms and non-residential customers use to gather credit and reduce electric bills. Those customers with wind, solar, or other electric generating equipment at one designated location utilize the excess electricity generated to gather credit. This allows energy system owners with excess net metering credits to offset their other electric accounts.

Most of the customers of solar panels use this type of net metering. By using this, in addition to supplying electricity to your home and storing energy in batteries, you can use their excess energy as a source of income for the future.

Virtual  Net  Metering(VNM)

It is a system that distributes energy credits for those subscribed to a community solar project, such as a solar farm. VNM is a way for consumers to enjoy the benefits of using solar without going to the trouble of installing panels on their roofs. For those subscribed to community solar, utilizing energy from an off-site solar garden or solar farm, they would most likely qualify for energy credits through VNM. In this scenario, consumers receive credits based on the number of solar panels they share on the community solar installation.

Net Metering

Aggregate Net Metering (ANM)

It is a modified version of net metering. It allows a single customer to offset electrical uses from several different meters on his/her property by using a single renewable energy generating system. For example, using one renewable energy system to power multiple units of an apartment/condo.

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