What is the role of a net-metering agreement?

The role of a net-metering agreement is fundamentally to define the terms under which a utility compensates a customer for any excess energy generated by their solar panel system that is fed back into the grid. This agreement allows residential or commercial solar energy system owners to receive credits for the surplus energy they produce, which can offset their electricity bills.

Through net metering, when the solar energy system generates more power than the customer consumes, instead of allowing that excess power to go to waste, the energy is sent to the utility grid. In return, the customer receives credits that can be used to reduce the amount they owe for future electricity usage, thereby ensuring that they benefit from their investment in solar technology.

This agreement is crucial in promoting the use of renewable energy by making solar installations more financially attractive and facilitating a smoother transition to a more sustainable energy grid. It is this aspect of defining compensation for energy fed into the grid that makes net-metering a vital component of solar energy initiatives.