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As concerns about climate change continue to rise, more and more homeowners are looking to solar energy as a way to reduce their carbon footprint and lower their electricity bills. One of the key policies that enables homeowners to benefit from rooftop solar is net metering. However, many people are still unfamiliar with how net metering works. In this blog post, we will explain what net metering is, how it impacts your electricity bills, and the overall benefits it provides.
To begin, net metering refers to a billing mechanism for solar energy systems. With net metering, homeowners can install rooftop solar panels that are connected to both their home's electrical system and the public power grid. A special bi-directional meter, known as a net meter, is used to track the flow of electricity between the home and grid. This meter records the amount of solar energy generated by the panels that is either used immediately by the home or sent back to the grid.
Let us understand this concept by taking an example:
Let us assume the electricity cost per unit is Rs 5/-.
Consumer | Export Unit | Import Unit | Difference | Bill |
A | 100 | 150 | 50 | 250 |
B | 150 | 150 | 0 | 0 |
C | 250 | 100 | 150(Credit) | 0 |
*Note that the consumer has to pay for any fixed charges decided by their DISCOM.
During periods when the solar panels are generating more electricity than the home is using, the excess energy flows back to the power lines and is essentially "sold" back to the utility. Then when solar energy generation drops at night or on cloudy days and the home requires more electricity than is being produced, it draws power from the grid as normal to make up the difference.
The net meter keeps track of the total amount of energy used and the credits accumulated from excess energy exported to the grid. At the end of the billing cycle, the utility compares the energy used to the energy produced. If more energy was drawn from the grid, the homeowner has to pay for the net energy used. However, if more energy was generated, any excess energy credits go towards offsetting use on future bills.
So, in summary, with net metering in place any excess solar generation lowers homeowners' electricity bills by providing credits. It allows solar households to effectively use the grid as a giant and expensive "battery" to store extra renewable energy. This makes rooftop solar much more financially viable and helps increase adoption rates among residents.
Is net metering (On-Grid) better than going off-grid?
Well, it depends on your needs. The on-grid system is recommended in Urban areas where power cutoffs are very rare whereas the off-grid system is recommended in rural areas where there are frequent electricity cutoffs. Also, off-grid system requires constant maintenance but on grid system doesn’t require any maintenance.
Some of the key benefits of net metering include:
Lower electricity bills - By offsetting energy drawn from the grid, net metering directly lowers the amount homeowners have to pay each month. Over time, those with adequately sized solar systems may pay little to nothing at all.
Revenue from excess generation - Any excess credits accumulated beyond what is needed to offset bills can be used to earn revenue from the utility. Depending on state policies, this may be paid out directly or rolled over indefinitely.
Affordability of solar - Net metering helps speed up the payback period for solar installations by allowing credits to lower bills. Combined with upfront incentives, it makes investing in panels an affordable option for many more families.
Reduced infrastructure costs - As distributed solar adoption rises due to net metering, less conventional generation and transmission capacity has to be built by utilities. This saves money on major power plant and grid upgrade projects.
Environmental benefits - Large-scale renewable deployment spurred by net metering meaningfully cut emissions from fossil fuel power generation. This improves public health and mitigates climate change impacts.
However, like all policies, net metering does have some limitations. For example:
Reduced Tariffs - While net metering allows solar customers to sell excess electricity back to the grid at the full retail rate, some utilities have implemented reduced tariffs where they only credit solar exports at a lower wholesale rate instead of the higher retail price. This reduces the financial incentive for homeowners to invest in solar since they won't receive full value for the power they generate.
Billing arrangement
Customers should remember that once the solar net meter is installed, the solar bill is generated in the second billing cycle from the date of installation of the net meter. For example, if your billing cycle is from 1st of every month and your net meter was installed on the 15th of that month. Then, you will be billed for the first 15 days (no net meter reading) on the first bill after net meter installation. Your second bill will be a solar bill.
In Maharashtra, the lineman from MSEDCL installs the net meter for your system. During this process, the lineman captures the last reading before net meter installation. This reading is submitted to the section officer, who then transfers your meter connection to the solar division for billing. If the section officer fails to do so, you would still receive the bill according to the previous tariff structure (without net meter). In such cases, you should raise a compliant to convert your bill to a solar bill.
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