Net Metering is simply a policy that enables electricity customers to connect their own on-site
generation system to the utility grid and receive credits on their electricity bills for their own
renewable energy generation in excess of their electricity consumption that is exported to the
electricity distribution network. The term net metering refers to the fact that the meter can measure
the flow of electricity in two directions and it is also known as power banking since the consumers
can “bank” the power they generate within the utility system by feeding the grid when excess power
is produced and consume power from the grid at a later time when their production falls below
consumption. This form of energy exchange is especially useful for intermittent renewable energy
technologies such as solar and wind.
In most utilities’ net metering systems, if the customer generates more electrical energy than
he/she uses from the utility electrical system he/she will not be paid for that energy, but the
customer receives only a kWh credit, which is applied to future bills. Whether the customer gets
paid for that excess energy fed into the system depends on the net metering rules in the jurisdiction.
While many different renewable energy sources may be eligible for net metering credits, solar
rooftop installations are the most common and popular type of renewable energy source promoted
with net metering. Many states have passed net metering laws and policies which allows utilities to
offer net metering programs voluntarily or as a result of regulatory decisions.
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