Net metering

Net metering is a method by which a utility company compensates a homeowner or other producer for the energy fed back into the grid. Unlike a feed-in tariff (FiT), net metering requires one meter, FiT requires two.

In net metering the meter “runs backwards” when a homeowner's solar panels are producing more electricity than the property is using, sending the excess energy back through transmission lines to other energy consumers. (In contrast, implementing FiT requires two meters, one to measure consumption, the other to measure generation, which generally commands a higher price than the grid energy.)

With net metering the price the utility pays for power is inherently the same as it sells it for, although additional local rules may exist: utilities may cap the amount they will credit the homeowner for the electricity, sometimes at zero. Critics say the cap is undesirable because it encourages homeowners and businesses to only install small solar generation systems to avoid producing more electricity than the property will use and thus “giving away” electricity to the grid without payment. In contrast, FiT usually ay a fixed price for the excess energy supplied to the grid.

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