Net metering is how people benefit from excess solar panel energy output. While solar panels already offer homeowners and business owners the opportunity to save on energy costs, net metering creates another avenue for savings. As solar panels become a more popular option for generating electricity, people can use the benefits of net metering to further their usage. In this article, we’ll answer “What is net metering?” along with how net metering programs work in Ontario, and how solar energy users benefit from it.
Net Metering Explained
Net metering has less to do with solar panels’ function and more to do with financial savings. It’s a billing mechanism that allows solar panel users to receive credits for the excess energy their systems produce and send back to the grid.
Net metering systems are designed to reduce energy costs by balancing electricity usage with solar energy production. When your solar panels generate more power than you use, the excess energy is sent back to the grid, earning you a credit. This credit offsets the cost of energy drawn from the grid during times when your solar system isn’t producing enough electricity, such as at night or on cloudy days.
It’s an efficient system where no energy—or money—goes to waste. Solar energy’s purpose aligns perfectly with sustainability principles, and net metering plays a vital role in promoting this by encouraging the adoption of renewable energy sources.
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How Does Net Metering Work?
Net metering takes excess energy from your solar panels, returns it to the utility grid and distribution system, and reimburses you with credits to carry over to the next month or save for when they’re needed. Let’s take a look.
1. Electricity is Generated
A solar panel system generates electricity. This energy powers homes or commercial projects, providing an efficient and reliable solution. Sometimes, not all the energy produced is used and becomes an excess.
2. Excess Electricity is Transferred
Excess generation flows back into the distribution grid. It’s recorded and calculated via a bi-directional metre to determine credits you’ll receive.
3. Credits are Rewarded
After the energy you generate and use is measured, you will receive an energy credit for surplus energy in the following billing cycle. For example, if a set of solar panels produces 10 kWh of energy, and the user uses only 4 kWh in that cycle, the other 6 kWh will return to the electricity grid and a credit equal to that amount will be added to the following billing cycle.
This credit can help users cover the increased costs of taking from the grid if their renewable energy generator isn’t producing sufficient electricity to prevent power outage problems. If the user uses all 10 kWh, there will be no net metering credits.
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Net Metering Versus Net Billing
Often wrongly interchanged, net metering and net billing are two ways residential and commercial customers can be compensated for excess energy production. Net metering compensates users at the same rate as when they purchase energy from the generating facility grid.
If they initially purchased 10 kWh and didn’t use it all, they get the full amount back for the kWh they didn’t use. These excess energy credits can then be exchanged for an equal amount of kWh when needed, banked for future use, rolled over to the next month, or exchanged for a cash payment for unused credit.
Net billing returns a lower rate to users. Instead of the energy being recycled and credits being banked, unused energy is sold for less than what it costs to purchase. Instead of receiving a credit to use in another month or when needed, net billing offers solar energy users a dollar value for excess energy.
How Does Net Metering Work in Ontario?
Programs for net metering solar power systems vary depending on the province or territory. To be eligible in Ontario, your generating system must only provide energy for personal use. It can be through any clean or renewable resource, such as solar, wind, water, and bio-energy.
To set up a renewable energy system, you’ll need to meet safety and inspection requirements, plus get environmental approvals and permits. It’s as simple as applying and setting up a net metering agreement with your local distribution company to connect to the grid.
For Ontario net metering, an electricity retailer requires two agreements:
- Power Purchase Agreement (PPA): The PPA allows the purchase of electricity generated by the energy system.
- Associated Equipment Agreement (AEA): The AEA covers the renewable energy system.
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Why Choose Net Metering for Solar Panels?
Have solar panels? Or are you planning to install them soon? Take your energy savings to the next level with net metering. Maximize efficiency and unlock even more benefits:
- Lower carbon footprint: Solar net metering reduces reliance on non-renewable energy sources, leading to lower carbon footprints and greenhouse gas emissions.
- Access to cleaner energy: It also simplifies access to energy—excess is returned to the grid in exchange for credits, which residential and commercial customers can use in case of insufficient electricity.
- Contribution to the community: Excess solar power returned to the grid contributes to clean energy for community-based projects.
- Lower energy bills: Net metering results in lower energy bills, as excess energy generated offsets energy consumption. Use your credits when you need more electricity to get it for less.
- Insulation against rising electricity costs: Make finances more sustainable by resisting rising electricity costs and generating your own energy.
- Increase property value: Enjoy higher value on your home when you install generating systems that make your property more eco-friendly and cost-efficient.
Simplifying Net Metering with mySolar
Net metering is crucial in making solar systems more economically viable. With mySolar, Canadians get expert guidance through the process, ensuring maximum savings and seamless setup.
As Ontario’s reliable solar power system provider, we offer tailored services, from an initial free custom solar report to seamless system installation. At mySolar, we make solar energy accessible, effective, and affordable.
Take advantage of our end-to-end services to make transitioning to solar energy easier. Get your free custom solar report with mySolar today.