How does Net Metering Work?

Net metering is a great option for homeowners with solar panels, as it allows them to export excess solar energy to the grid during the day and then use that energy at night. Essentially, the utility acts as a 100% efficient battery to store the excess solar energy for later use. This option is available for most of New Mexico, including PNM, El Paso Electric, and Mora San Miguel Electric Coop.

At the end of the month, the outcome depends on whether your utility has monthly true-ups or rollovers (‘banking’) and whether you are a net consumer or a net user.

The ‘banking’ option, provided by PNM, Mora San Miguel Electric Coop, and a few others, is the best option for consumers. With this option, the solar system can be sized for annual electric usage, and credits can be stored up in the summer to use for heating in the winter or stored up in the winter to use for A/C in the summer, depending on where you live.

The monthly true-up option is still good, but the account is settled each month, and there is no ‘banking’. If you are a net consumer for the month, you have to pay the difference between what you used and what the solar provided. If you are a net producer for the month, you will be paid avoided cost, about $0.02/kWh, for the excess you generated. However, this very minimal payment will not add up to much since you are paying 6 or 7 times that amount to purchase energy. Thus, designing a system large enough to meet a short seasonal peak that will overproduce most of the year is usually not worth it, so economic designs are usually less than 100% of the annual electric usage.

In summary, net metering is an excellent way to use the grid for energy storage, and homeowners should explore the options available from their utility provider to make the most of this opportunity.