Net metering is the system that utilities use to credit solar energy system owners for the electricity produced by their solar panels. With net metering, you only pay for the electricity that you use beyond what your solar panels can generate. Net metering policies differ from state to state – from Massachusetts to California to Hawaii – so make sure to do your homework ahead of time.

Net metering allows utility customers to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume; net metering allows them to export that power to the grid and reduce their future electric bills. California public agencies and schools will save $2.5 billion in electricity costs over the next 30 years using net metering.

Unfortunately, some utilities perceive net metering policies as lost revenue opportunities. In fact, net metering policies create a smoother demand curve for electricity and allow utilities to better manage their peak electricity loads. By encouraging generation near the point of consumption, net metering also reduces the strain on distribution systems and prevents losses in long-distance electricity transmission and distribution.