What is net metering?

Net metering (also known as net energy metering or NEM) is a solar incentive that allows you to store energy in the electric grid. When your solar panels produce more electricity than you need, that energy is sent to the grid in exchange for credits. Then, at night or other times when your solar panels are underproducing, you pull energy from the grid and use these credits to offset the costs of that energy.

With the right size solar energy system, you can produce enough electricity to match your home’s electricity use for the entire year. However, the amount of electricity your solar panels produce will vary throughout the year. Net metering helps you account for these differences by crediting you for the excess electricity your panels produce so you can use it later.

While net metering is not the only way that utilities compensate homeowners for going solar, it is by far the most common: as of 2016, 41 states and Washington D.C. have mandatory net metering rules, and two more have utilities that permit the practice. To find out the policies in your state, use the Database of State Incentives for Renewables and Efficiency (DSIRE®), which tracks net metering and other policies.