Net Metering is a method of billing used by some utilities. Solar Production in excess of your immediate needs is exported to the utility. The utility measures the outflow and credits them against your inflows of electricity. You pay only on the “net” inflow.
For most Grid-Tied Solar PV, the solar energy is converted and fed into the existing AC electric system. This is done without regard to how much power is needed at any given time. The excess flows “Out” into the electric lines. The energy is available to be used by others.
Net metering is a simplified method of compensation for these out flows. Your electric bill is calculated at the “net” difference between what you consume and what you produce. You use 2000 kWh per month. The solar array produces 1500 kWh. You pay for 500 kWh. Simple, huh?
Except, the price you pay your utility really comes from two different pieces: Energy and transportation. In electric bills in most of Texas, you see both retail electric energy charge and the energy transportation charge. Remember, there are costs in maintaining the electric lines, PLUS the cost of maintaining the power plants you use when the sun isn’t shining.
When I “make my own” energy, I am reducing the energy I buy from the utility. When the sun isn’t shining, or not enough, I buy power from the utility. But if I make too much, I have to do something with it. I sell it to the utility. But this energy I sell has to be transported to other users. The utility transports the power.
Most grid tied users see the utility as a “storage” system. They “store” power and then use it later. But it isn’t really stored. When power is pushed onto the grid, a power plant somewhere has to reduce output to compensate. But the power plant can’t shut-down because it has to be available to provide power in case more power is needed. For example, when a cloud goes by.
When solar makes up a tiny percentage of the network, it doesn’t affect the overall economics of the power system. It may in the end be cheaper for the utility to bill “net meter”. But as the percentage of installed solar goes up, the “loss” by the utility goes up with it. It must compensate by raising the price of electricity. Your neighbors without solar pay.
It really is fair to compensate a solar producer only for the electric generation portion of the power. As renewables become more wide-spread, net metering will be reduced and eventually abandoned. Hawaii, California and Germany are abandoning net metering. Massachusetts, like many states, reached the limit of net metering.
Mi-Grid stores your excess renewable energy for your own use later. You truly are “NET” with the meter, since you do not sell power to the utility, you save it for yourself to use when you need it.