Net Metering: A Brief Explanation for Homeowners

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Net Metering

When you install solar panels on your home, in effect, you become your own “electric facility.” That’s because during the sun-intensive months, the panels powering your home will return any excess electricity back into the grid of your local power company.

In other words, the panels you’ve installed become like an environmentally-friendly, mini power plant, using your excess electricity to power homes, buildings and factories that need the local utility to generate all their power. Because of net metering, your electric bill every month will vary.  In the summer, you will likely see a credit on your account.  In the winter, your system will still be producing but not at its high peak summer levels. In general, your electric bill will only include the cost of the electricity you used above what your solar panels produced that month.

It is important to understand net metering because it is a key factor in helping you determine your return on investment of your solar panel system.

One Caveat

When you are connected to the power grid, and the power in your area goes down due to a storm or high winds, so too does your power. So, while there are great benefits to being able to sell your excess electricity back to your electric company, unless you choose to also install large solar batteries, you too will lose power if the grid goes down. Depending on where you live and how often the grid typically goes down, solar batteries are an option to consider.

Depending on the size of the system you install, you will likely qualify for Net Energy Metering, or NEM. The panels we use fit the capacity requirement for NEM. All investor-owned utilities in Minnesota provide NEM for residential customers, as do many energy co-ops.

As a residential customer of your local power company, during much of the year it’s likely that each morning you and your family are awake and using electricity before the sun is up: The furnace or air conditioning gets cranked up; lights are turned on; people take showers so the water heater is running, and maybe wet towels go in the dryer; the stove, coffee maker, toaster and blender are in use.

Your home uses electricity from the grid because the sun isn’t yet strong enough to enable your solar panels to immediately produce the power you’re consuming. The good news is that your power consumption is not calculated by the hour, but by the day and the month. You will only be billed each month for the electricity you used in addition to what your solar system produced.

Under NEM, when your monthly statement arrives in winter months, it will show how much electricity you had to purchase from the electric company reflecting the electricity you used in excess of the solar energy you were producing. During the summer, when your monthly bill arrives, you will generally see how your system produced more electricity than your family needed and that a certain amount of your production was sold back to the electric company resulting in a credit on your account.

The way NEM works for commercial and industrial buildings is different from residential. We cover this in another blog, Net Metering for Commercial Buildings and Businesses.

Net Metering requires you to enter into an “interconnect agreement” with your utility company, thereby turning your home into a small electric production facility. At Cedar Creek Energy we take care of all discussions with your electric company so all you must do is review and sign the contract.

If you’re considering a solar installation at your home, please call us with your questions at 1-800-834-3378 or complete the e-form on our website. We’ll be happy to answer all your questions and to provide you with any other information you might require to make your decision to go solar.

Cedar Creek Energy is proudly serving individuals and organizations based in Minneapolis, St. Paul, Bloomington, Brooklyn Park, St. Cloud, Rochester, and Blaine, Greater Minnesota and Western Wisconsin with their solar energy requirements. To learn more, contact our team at 763-432-5261.