Solar rooftop systems have now started sprouting up in all parts of the country. Economies of scale and government incentives have seen price of solar ownership plummet and adoption increase exponentially. Solar systems help you reduce your electricity bill by 90% and payback for their investment in less than 5 years- making them a great investment. But how exactly does this bill reduction happen? The answer to that question is a government policy called net metering.
In an on-grid solar system, your normal meter is replaced by a meter called bi-directional meter, commonly known as net meter. This meter is capable of recording current flow in both forward and reverse direction.
The functioning of this system is best understood with the example of a 1 kW solar system. A 1 kW system typically produces 120 units of electricity per month on an average. Suppose your electricity consumption in that month is only 100 units. In this case you will consume 100 units from solar and the excess 20 units will flow in reverse through the net meter and get exported to the grid. The meter will record a reading of 20 ‘exported units’.
Your unit consumption charges for this month will be zero. But that’s not all- the 20 units exported by you are kept in your account for future use under the net metering policy.
Suppose the next month, you again generate 120 units, but your consumption is 140 units. In this case you will consumer 120 units from solar and ‘import’ the 20 units deficit from the grid. However, this 20 units deficit will get offset against the 20 units you exported the previous month, making your unit consumption charges this month also zero!
This is a highly simplified example and the import & export of energy take place every single day and every single second in-fact. For instance, you might export power during the day but you import from the grid daily at night when your solar system is not generating power. The meter keeps a track of both import and export readings. At the end of the month, you are billed on net units consumed i.e. import-export. We design systems in a manner such that import and export are nearly equal, thus reducing your electricity bill by up to 90%+.
In summary, net metering allows you to first consume your generated power yourself and export the surplus and make up for any shortfall by importing power from the grid. At the end of the month you are billed for net units consumed, thus slashing your electricity bill dramatically.
Some states follow a variation of this policy. Instead of directly offsetting imported and exported units, they pay consumers for the exported units. Exported units are not carried forward to the next month in such cases.
Reach out to Earth 47 team to understand net metering policies in your state and see how solar can help you slash your electricity bills today.