Net metering is a system that allows homeowners with solar panels to send the excess energy they produce back to the grid in exchange for credits. These credits can then be used to offset the electricity they consume from the grid when their panels aren't generating enough power, like at night or on cloudy days. It's been a key incentive for many to adopt solar energy, as it helps reduce electricity bills and shortens the payback period of solar installations.
But as we step into 2024, many people are asking: is net metering still as beneficial as it used to be? With changes in policies, evolving energy costs, and new solar technologies, it's worth taking a closer look at whether this program still makes sense for solar homeowners today.
Is Net Metering Worth It in 2024?
In 2024, net metering can still be a worthwhile option, but its value largely depends on where you live and your energy needs. Some states have maintained generous net metering policies, allowing homeowners to get almost full retail credit for the excess energy they send back to the grid. In these areas, the financial benefits of net metering remain strong, making it a great way to reduce electricity costs and maximize the return on a solar investment.
However, not all states offer the same incentives anymore. Some have reduced the rates they credit, while others are shifting towards alternative programs like time-of-use rates or net billing. These changes mean that net metering may not be as lucrative in every location.
For homeowners with high energy consumption or who live in states with favorable policies, net metering can still offer substantial savings. It's especially valuable for those who produce more energy than they consume during peak sunlight hours. But for those in areas where net metering rates have been lowered, other options, like solar batteries or energy storage, might be more beneficial. (If you are interested in home energy storage batteries, you can check out our home energy storage series)
Why Are Some People Against Net Metering?
There has been growing opposition to net metering, especially from utility companies, due to concerns about revenue loss and cost shifting.
Revenue Loss and Cost Shifting
Utility companies argue that the revenue they lose from net metering is often compensated by increasing rates for customers who don’t have solar panels. This leads to what's called “cost shifting,” where non-solar customers bear the brunt of maintaining the grid, while solar customers benefit from reduced or even eliminated electricity bills.
For example, a study by the National Renewable Energy Laboratory (NREL) found that in states with high solar adoption, utilities could experience revenue losses, which might push them to raise prices for other customers. Additionally, the Edison Electric Institute (EEI) has voiced concerns that net metering shifts the burden of infrastructure costs to non-solar users, who still depend on the grid for reliable electricity.
Fairness Issues
The fairness argument ties into the concern about cost shifting. Opponents of net metering believe it creates an imbalance, where those without solar panels are essentially subsidizing those who have them. As utilities raise prices to cover their losses, it disproportionately affects lower-income households, who are less likely to afford solar panels but still face rising electricity bills.
Data from the Lawrence Berkeley National Laboratory indicates that in states with more aggressive solar adoption, non-solar customers have seen electricity rates increase by about 2-5%, though this varies depending on the specific region and policies in place. For non-solar users, especially those on tight budgets, these increases can feel unfair, reinforcing the opposition to net metering programs.
Which Is Better: Net Metering or Net Billing?
Net metering and net billing both allow solar homeowners to earn credits for the excess energy they produce, but the key difference lies in how these credits are valued.
Net Metering Advantages
With net metering, you receive credits at the full retail rate of electricity for the energy you send back to the grid. This means you are effectively compensated at the same rate you pay for electricity when you use it. For homeowners in states that still offer full retail net metering, this can be highly beneficial as it maximizes savings by lowering electricity bills and reducing the payback period for solar systems.
Net Billing Advantages
Net billing, on the other hand, compensates you for your excess energy at a rate that’s usually lower than the retail price, closer to the wholesale price of electricity. While this might sound less attractive, net billing is often designed to be more sustainable long-term for utilities and non-solar customers. Some programs even offer time-of-use rates, where you can receive higher credits during peak demand hours, making it more flexible depending on your energy usage habits.
Which Should You Choose?
For those who live in states that still offer full retail net metering, it's typically the better option as it provides higher financial returns. However, if you're in an area where net billing is the norm or the only option, it can still offer solid benefits, especially when paired with solar batteries or energy storage systems to make the most of peak rates. You can check out our article: Net Metering vs Solar Battery Storage for more information.
