Net metering is a common rule for the electricity system in nearly every state, allowing folks who generate their own electricity to get a fair credit on their bill for what they generate. But there’s more to the concept that a single person with solar on their rooftop, from cities wanting to offset energy use across many public buildings to “community solar” projects aggregating dozens or hundreds of electric customers into owning a share of a solar array nearby.
For some background, here’s the basic principle of net metering:
Net metering is a practice that encourages consumer investment in on-site electric generators – typically small-scale, renewable energy technologies. When a customer/generator is producing and consuming electricity at the same time, the laws of physics dictate that the electricity being produced flows to where it is being used. But what about when electricity is being generated and none is being consumed? In these instances net metering allows customer/generators to spin their meter backwards, in effect paying the customer/generator the retail rate for the electricity they generate but don’t immediately consume. If a customer generates more electricity than they consume over a period of time, they are typically paid for that net excess generation (NEG) at the utility’s avoided cost, or the wholesale rate. – John Farrell
The following infographic helps provide context of the five different kinds of net metering, and how they differ.