Net Metering

Net metering is an electricity policy for grid-connected electricity consumers who produce their own electricity, in which electricity flowing back into the grid spins the meter backwards, allowing the customer/producer to effectively bank electricity for later use, or, in the case of balanced metering, be compensated for the net energy it provides to the the electrical utility. Under most net metering policies currently available, the micro energy consumer/producer receives retail credit for the electricity they produce, but are not compensated for any surplus energy they produce.

Net metering policies can be ranked on a scale of how favorably they treat the micro consumer/producer, based on:

• If and how long energy credits can be banked
• How much the credits are worth
• Whether the credits can be converted to cash

Clearly, net metering policies that place more value the energy flowing back up the grid from the utilitys' customers encourage the greening of urban areas by making the installation of solar panels more attractive, for example.

In the US, as part of the Energy Policy Act of 2005, under Sec. 1251, all public electric utilities are now required to make available, upon request, net metering to their customers.

This regulation mandates only the most bare-bones and inequitable form of net metering wherein the utility is allowed to decide on the details of how it credits energy produced by the small energy consumer/producer.

Existing net metering policies, despite allowing the utilities to pocket surplus energy from their clients, is typically viewed as highly favorable to "consumer", since the client's generated energy offset the electricity they would otherwise have to buy at retail rates. ²