What is Net Metering and How Does Net Metering Work?

What is Net Metering and How Does Net Metering Work?
Net metering is a simplified method of metering system that measures the difference between the electricity you buy from your local utility company that you have consumed and the excess electricity you produce using own renewable energy generator, such as a small wind turbine or a small-scale energy generating systems. It is a special metering and billing arrangement between you and your utility company.
How Does Net Metering Work?

Normally, your electric meter runs “forward” as it measures the amount of electricity that you consume in your home or business. Under net metering, your electric meter keeps track of this “net” difference as your generation system makes more electricity than you need at any given time. Net metering then allows this electricity to run “backward” through your electric meter and out into the electric grid. This causes the meter to run in reverse, which means, in some states, you will receive full retail value for the electricity you generate. Generating excess electricity puts electricity back into the electric grid. Basically, you will spin your existing home or business electricity meter backwards, effectively banking the electricity until it is needed by the utility company’s customers. Without net metering the excess production is sold to the utility at a much lower price. In some states, the customer may choose to install an additional meter to separately measure the output of your generating system. The electricity you generate will be subtracted from the electricity you consume.
Under existing federal law (PURPA, Section 210) utility customers can use the electricity they generate with a wind turbine to supply their own lights and appliances, offsetting electricity they would otherwise have to purchase from the utility at the retail price. When you produce any excess electricity, beyond what is needed to meet your own needs, the utility purchases that excess electricity at the wholesale or ‘avoided cost’ price, which is much lower than the retail price. Net metering simplifies this arrangement by allowing you to use any excess electricity to offset your electricity used at other times during the billing period. You are billed only for the net energy consumed during the billing period.
You first step is to contact your local utility company. They can provide you with the details about the technical requirements, the approval process, and how to obtain your net-metering agreement.
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