Have you been looking into the best solar energy options in Colorado and encountered the term Net Metering? Net metering, sometimes referred to as NEM, is a rate program for utilities in which your power company purchases excess solar energy your system produces.

The utility company has to pay the full retail price for the electricity your system generates. So if your solar system produces more power than your home needs, the extra energy is sent back to the grid and your electric company pays you for it.

This is just one of the many reasons why having solar panels on your property is such a great idea. With Colorado being one of the country’s sunniest states, we have a good net metering policy that can benefit you.

How Does Net Metering Work?

Net metering gives you money for giving back solar electricity to the grid. This generated energy will offset any electricity you draw from the power company in the future. That provides you with the total value of all the solar energy your solar array produces. If the solar system on your property is correctly sized, it could eliminate the cost of all of the electricity you use monthly.

In the middle of the day when the sun is shining at its strongest, solar panels generate the most energy. But often, during this period of time, not much energy is being used in a home. For instance, during weekdays, when you and your family are away at work and school, the lights will be turned off and the temperature set to a different temperature than when everyone is home. At this time, your solar panels most likely are creating more electricity than your home needs. That’s when the excess energy is sent back to the grid. This is the moment when net metering goes into effect.

The net metered system sends the excess back to the grid. This creates a credit for the total retail amount of electricity back to the utility and you benefit from that credit on your account.

What happens to your electricity when the sun goes down?

Many homeowners have concerns that they’ll be in the dark when the sunsets and their solar panels are not producing energy. But there’s absolutely no need to worry, Colorado! During the evening when your system isn’t collecting solar energy, you can draw power from the grid again. The best part is, you’ll never notice the switch. There’s nothing you need to do or adjust.

At the end of your monthly billing cycle, the power company nets the amount of electricity you sent back to the grid against how much you’ve used to figure out your final electric bill. This is where the name net metering comes from.

Can I carry my net metering credits over from month to month?

It depends on the power company, but most net metering programs allow the credits to carry over from month to month. If your system has generated more electricity than your household has used this month, the excess credits can be carried over to offset the electricity drawn from the grid next month. The best scenario would be for you to build up excess credits in the summer and bank these credits to be used during the darker months of winter.
We know some homeowners and businesses that enjoy receiving a refund check from their energy provider at the end of the year, for the excess energy they’ve produced. Isn’t that a nice idea – to be the recipient of the check from an energy provider, rather than be the sender?

What are the Benefits of Net Metering?

Savings on Utility Bills

The greatest benefit of net metering for homeowners who have solar systems is the savings on their utility bills. By utilizing net metering, solar-powered customers can save thousands of dollars over the lifetime of the solar system on the property. Solar systems are designed to offset your energy costs in each billing cycle. But on the downside, there may be some fixed charges on any electric bill that cannot be avoided.

Shorter Payback Periods

Some areas offer net metering that will have a shorter payback period than areas that don’t. This is due to solar power homeowners saving more on their energy bills and recouping their investment costs at a faster rate.

Net metering may not be the only aspect of the system that will impact a solar payback period. It could be due to the size of the solar panel system, solar incentives and rebates in the community, the amount of electricity used, and the cost of the installation.

Reduction of pressure on the grid

Having a solar array on your house can provide a large benefit to customers and their utility companies. Solar energy helps reduce the amount of stress on the grid distribution system. Homeowners with solar power aren’t drawing as much energy from the grid because they are generating their own power instead. This creates a network of homes that are using less power drawn directly from the grid.

When solar-powered homes utilize net metering and send excess energy back to the grid, this creates more energy for non-solar homes to meet their daily energy demands. This reduces even more stress on the utility’s power sources. This works exceptionally well in states where heat waves are more common and the utilities struggle to meet the energy demands of the communities they serve. That means that you’re not only helping to diminish your family’s reliance on greenhouse gas-producing energy sources from fossil fuels. You’re also helping your community reduce its dependence as well.

Go Solar Now While Net Metering is Still Available for the Best Savings

Discussions are happening across the country on how to develop and evolve current energy programs. Net metering may create a more accurate measurement of the amount of solar energy flowing back into the grid. Rate structures may charge more for energy being used at different times of the day, and where on the grid the excess energy is being generated. There are also talks about credits being set at wholesale, rather than retail rates.

If you’re already benefiting from net metering for your solar system, it’s likely you’ll probably not be impacted by any legislative reductions in your current program. But if you’d like to take advantage of the current positive net metering policies, then don’t delay converting to solar power for your home.

If you’d like to learn more, reach out to the solar professionals at Steel City Solar. Our award-winning team will be happy to answer any of your questions about going solar, net metering, and saving on your energy bills. Reduce your carbon footprint and convert your home into a clean energy household. You can give us a call at 719-569-5166 or visit our website today!