Solar panels on roof

Net metering: What is it and how does it work?

As we aim for a cleaner, greener future, switching to solar energy has fast become a lifeline for Australians, especially as rising power prices tear holes in household budgets. With so many jumping on board the solar revolution, it’s easy to be swept up in all the lingo without truly understanding the ins and outs of a solar system.

Net metering is one area that deserves some attention, as this approach can impact how much bill-payers can save on their energy costs. In this article, we’ll explore what solar net metering is, how it works, and why it can be beneficial for homeowners.

What is net metering?

In simple terms, net metering is a billing approach that allows property owners to receive credits for any excess energy they produce and feed back into the grid. These credits, known as solar feed-in tariffs, are provided by the electricity retailer, which can be used to offset the cost of energy that homeowners need to purchase from the grid.

When a solar panel system is installed, you’ll want to make sure you’re getting paid for the energy you export. This is where a ‘net meter’ will measure the amount of solar energy your household or business exports, as well as the amount of electricity you import from the grid.

How does solar net metering work?

In Australia, solar net metering is regulated differently depending on which state or territory you live in. However, the overall concept remains the same. When the homeowner generates more electricity than they need, it flows back to the grid and is measured by a bi-directional electricity meter (not to be confused with a smart meter).

The excess electricity is credited against future electricity use. Most energy retailers offer a feed-in tariff, which is a fixed price paid to homeowners for each kilowatt hour (kWh) of excess electricity that is exported to the grid. 

Other types of net metering in Australia

Aside from what net metering offers those with solar panels installed, there are other types available.

  • Virtual net metering:
    This is a common process designed primarily for those who do not have a personal solar panel system installed on their property. This system enables households to subscribe to a shared solar panel site, allowing them to receive energy supply without the requirement of owning solar panels. The electricity generated goes back into the power grid, and the customer gets credit to their electricity bill. This option allows you to participate in the solar revolution, even if you are unable to install the solar panel system on your property.
  • Aggregate net metering:
    This approach works differently from virtual net metering, as it is primarily good for apartment buildings. The tenants will subscribe to a shared solar panel site in the same way that they would in virtual net metering, but the energy produced would go to all the tenants in the property before going back to the power grid. This option is excellent for those who cannot install solar panel systems on their property, but have the option of sharing solar energy with other tenants in their building.
  • Remote net metering:
    This type of system is primarily for commercial customers, including farmers, companies, and organisations. Remote net metering allows distant solar panel systems to generate electricity that they cannot use. Instead of wasting this energy, it is sent through the power grid to aid in the reduction of energy bills. This approach has become very popular for businesses, as it can significantly reduce their electricity bills.

 

Solar panels installed on rooftop

 

What is gross metering?

There are two ways to measure solar power in Australia – net metering and gross net metering. Essentially, gross metering means that all the electricity your solar panels generate is fed back into the power grid. This is in contrast to net metering, where you only receive credit for the excess energy produced after you’ve used what you need. With gross metering, you earn a fixed rate for every kWh your panels produce, regardless of whether you use it or not.

While this may seem like a great deal, it’s important to consider your energy usage patterns and whether gross metering will actually benefit you in the long run. Talk to your solar installer about whether gross or net metering is the best option for your specific circumstances.

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Net metering and electricity bill savings

It’s no secret that Aussie power prices have been consistently rising, which is where net metering can help bill-payers cut costs. By generating your own electricity during the day and selling any excess to the grid, you can offset the cost of the energy you use at night. With net metering, you don’t have to worry about wasting the excess energy your panels produce as you’ll gain a credit on your bills.

Again, no two situations are the same so it’s worth consulting a licensed solar installer about your options. Regulations and policies vary depending on where you live, which is why it’s best to discuss your personal situation with a professional.

Solar Energy Plans

Some energy providers will offer specific electricity plans to customers with solar panels that come with a higher feed-in tariff than other market offers. Below are some of the solar energy plans available in New South Wales, Victoria, Queensland and South Australia.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Is net metering worth it?

All in all, solar net metering offers a lot of great benefits to Australian consumers who are looking for cost savings and energy independence. In particular, the fact that you can produce your own power with solar panels without having your excess energy go unrewarded is incredibly appealing.

If you’re weighing up whether solar net metering is worth it, it’s no surprise – we all want to save money on our electricity bills and help the environment. The good news is, there are some significant pros to solar net metering in Australia.

By sending excess electricity generated by your solar panels back to the grid, you can earn credits on your bill from your energy provider. Plus, you’ll be doing your part to reduce your carbon footprint, which is never a bad thing.

However, it’s important to consider the cons too: such as the upfront investment required to install solar panels and the fact that net metering policies can vary between states and territories.

So, is it worth it? Ultimately, the answer will depend on your individual circumstances, but with the potential for long-term savings and positive environmental impact, it’s definitely worth investigating further.

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Jared Mullane
Energy Contributor
Jared Mullane was a content producer and editor at Canstar Blue for three years until 2022, most recently as Energy Editor. He holds a Bachelor of Journalism from Griffith University.

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