Net Energy Metering (NEM): Definition & Meaning -
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Net Energy Metering (NEM): Definition & Meaning

Net Energy Metering Definition


Net Energy Metering (NEM) is a billing mechanism that allows owners of solar photovoltaic (PV) systems, and sometimes other renewable energy systems, to receive credit for any excess electricity they produce and feed back into the grid. Essentially, NEM tracks the difference between the electricity produced by the renewable system and the electricity consumed by the owner from the grid.

Key components of Net Energy Metering include:

Two-Way Metering: Homes and businesses equipped with NEM have bidirectional meters that can track both electricity consumption from the grid and the export of excess energy back to the grid.

Billing and Credits: When a solar PV system produces more electricity than is consumed on-site, the excess energy is fed back into the grid. This results in energy credits. Conversely, when the site consumes more energy than the system produces, especially during night-time or cloudy days, electricity is drawn from the grid. Monthly electric bills reflect the "net" energy consumption.

Roll-over Credits: In months where a consumer generates a surplus of electricity, the credits can often roll over to the next billing period. Some utilities may even offer an annual "true-up" where any remaining credit could be paid out or carried forward.

Rate Structures: The value of the energy fed back into the grid can vary. Some regions offer a one-to-one credit (same price for consumption and export), while others might have different rates based on time-of-use or other factors.

Net Energy Metering facilitates the integration of renewable energy sources into the grid, offering financial incentives and making solar and other renewable installations more economically attractive for consumers.


"With Net Energy Metering in place, homeowners with solar installations can greatly reduce or even negate their electricity bills, gaining financial benefits from their renewable energy investments."

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