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Net Metering - What is it?

What is net metering?

In most states, consumers can install small, grid-connected renewable energy systems to reduce their electricity bills using a protocol called net metering. Under net metering, electricity produced by the renewable energy system can flow into the utility grid, spinning the existing electricity meter backwards. Other than the renewable energy system, no special equipment is needed.

Even in the absence of net metering, consumers can use the electricity they produce to offset their electricity demand on an instantaneous basis. But if the consumer happens to produce any excess electricity (beyond what is needed to meet the customer's own needs at the moment), the utility purchases that excess electricity at the wholesale or "avoided cost" price, which is much lower than the retail price. Net metering simplifies this arrangement by allowing the consumer to use any excess electricity to offset electricity used at other times during the billing period.
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