Net metering allows customers with solar panels or other distributed generation to send excess electricity back to the grid and receive a credit on their utility bill. When solar panels produce more than the home uses, the excess flows to the grid and the meter effectively runs backward. Credits offset electricity drawn from the grid at other times. Net metering policies vary significantly by state — some offer full retail rate credits while others use lower wholesale rates or have caps on system size.
Net Metering
A billing arrangement where solar panel owners receive credit for excess electricity they send back to the grid.
Related Terms
Solar Energy
Electricity generated from sunlight using photovoltaic panels or concentrated solar power systems.
Electricity Rate
The price charged per kilowatt-hour of electricity, varying by customer class (residential, commercial, industrial).
Renewable Portfolio Standard (RPS)
A state policy requiring utilities to source a specified percentage of electricity from renewable sources.