What is Solar Net Metering or Net Billing?

When you’re considering your solar array and battery backup, one of the terms you’ll hear is “Net Billing” or “Net Metering”. They’re used interchangeably and mean the same thing: your power company buys the extra power your array generates.

Before we dive into the mechanics, let’s sketch out the flow:

Home electricity is measured in kilowatt hours (kWh). For context, a modern refrigerator draws about 700-800 kWh/year whereas something like charging your cell phone will be a just a few percent of that.

What do solar arrays do with the power generated?

Home solar arrays have three places to put the power they generate: your consumption, your batteries, and the electrical grid.

In the default mode, when the array is generating, all the power goes first to supporting your home consumption. Anything left over goes to charging the batteries. Then anything left over from that is sold back to the grid. Alternatively, you can change modes prioritizing selling back to the grid (skipping your home and batteries) or prioritize the batteries first.

Your operating mode doesn’t change how Net Billing works, just how much you use vs store vs sell. That will be key to the analysis.

So how does Net Billing work?

At first glance, “net billing” sounds simple:

(kWh bought from power company) minus (kWh sold to power company) equals (your billed kWh)

So if you buy 1 kWh and sell 1kWh, you owe them zero but if you buy 1kWh and sell 2kWh hour, they pay you!

Not so fast.. Power companies add two variables to the equation: their sale price and their purchase price. If those are equal, then we’re back to the equation above but for many companies, they’re not.

For example, my power company sells to me at retail price (11.5 cents/kWh) but they buy at wholesale price (2.9 cents/kWh). Plugging those into the equation, we get:

11.5 cents/kWh * 1 kWh - 2.9 cents/kWh * 1kWh = 8.6 cents/kWh

Or to put it another way: I have to generate and sell 4x as much power as I buy to zero out my bill.

So can solar eliminate my electric bill?

In short, if your power company supports net billing, solar will absolutely reduce your power bill but it may not eliminate it. This is where your battery stack becomes a key component. If you can store and later use a kWh instead of selling and buying back, you can shift the numbers in your favor.

Note: Make sure to check with your local provider to understand their terms and pricing before agreeing to anything.