What Is Net Metering?
Net metering is a clever way to make the most of your solar power system. It allows homeowners or businesses with solar panels to feed excess electricity back into the grid and receive credits in return. These credits offset the electricity you use when your solar system isn’t producing enough power, like at night or on cloudy days.
In simple terms, your electricity meter keeps track of the energy flowing in both directions. When your system produces more electricity than you use, the surplus is sent to the grid. Later, when you draw power from the grid, those earlier credits reduce your bill. That’s why it’s called “net” metering—you only pay for the net energy you consume.
How Net Metering Works?
The process begins with your solar panels collecting sunlight and converting it into electricity through an inverter. During sunny hours, your home will use the solar energy first. If there’s extra electricity left over after your household needs are met, that energy is automatically pushed to the grid.
At night or when your energy use exceeds what your solar panels are generating, your home will pull electricity from the grid. A smart meter records both the exported and imported energy. At the end of your billing cycle, the amount of energy you sent to the grid is subtracted from the amount you used, and you’re billed for the difference.
This system provides a direct financial benefit by reducing your electricity bill, and it encourages more people to invest in renewable energy systems.
Single-Phase vs. Three-Phase Net Metering: What’s the Difference?
Net Metering in Single-Phase Homes
Single-phase systems are the standard for most residential properties. These systems involve one active wire and one neutral wire, delivering electricity in a single wave. In this setup, your solar inverter is also single-phase and connected to your home’s main switchboard.
When you generate excess power, the electricity flows from the inverter to your switchboard and into the grid. Your smart meter keeps a precise record of both exported and imported electricity. You receive credits on your bill for every kilowatt-hour (kWh) you send to the grid, and those credits offset the kWh you later draw from the grid.
In a single-phase home, net metering is straightforward and efficient usually supports up to 5 kW of solar generation (varies by local grid rules). Most homes with small to medium-sized solar systems benefit from this setup, especially if they use more energy during the day when the sun is shining.
Net Metering in Three-Phase Homes
Three-phase systems are common in larger homes, farms, or small businesses where more power is needed. These systems distribute power using three active wires, allowing for a more balanced and powerful supply of electricity.
When a three-phase solar system is installed, it usually includes a three-phase inverter, which can generate and distribute electricity across all three wires evenly. If you have a single-phase inverter in a three-phase home, it will only export electricity through one of the phases, which can limit your net metering benefits.
Here’s where net metering in a three-phase setup becomes more complex: the meter records imports and exports for each individual phase. If you’re exporting solar energy on one phase but importing energy on another, some utility providers will only credit you for the exported energy on the same phase. That means you could still be charged for electricity you use, even if you’re exporting power elsewhere.
To get the most from net metering in a three-phase home, it’s best to use a three-phase inverter and spread your solar generation across all phases evenly. This setup maximises your credits and balances your energy usage more efficiently.
Using Battery Storage with Net Metering
Adding battery storage to your solar system can significantly enhance the benefits of net metering. Instead of immediately exporting excess energy to the grid, a battery stores that power for later use. This can be especially useful in the evening when solar production drops but household energy demand often rises.
With a battery, your solar system powers your home during the day, and any extra energy goes into the battery first. Once the battery is full, the remaining energy can be exported to the grid for credits. Later, during times when your panels aren’t producing electricity, your home draws power from the battery before relying on the grid. This approach reduces your dependence on the grid even further and can help you save more on your energy bills.
Some energy plans also offer time-based pricing. Batteries can help you avoid peak rates by storing power during cheap, off-peak hours and using it when electricity costs more. This is another way batteries increase the value of your solar investment.
Pros and Cons of Net Metering
Net metering offers many benefits. The biggest advantage is cost savings. By generating your own electricity and receiving credits for what you don’t use, you can dramatically lower your power bill. It’s also a great way to promote sustainability by reducing reliance on fossil fuels.
Another benefit is the simplicity of the system. With a smart meter and a compatible inverter, everything happens automatically—you don’t need to monitor or manage the system daily.
However, there are some limitations. Not all electricity retailers offer equal credit rates for exported energy. Some may offer lower rates than what they charge for electricity you consume. In three-phase systems, credits may be limited if your usage and export are not balanced across all phases. Additionally, future policy changes could affect how net metering is applied.
Net Metering vs. Feed-in Tariffs
While both net metering and feed-in tariffs reward you for generating solar power, they work differently. Net metering gives you a credit that offsets the energy you consume. You only pay the difference between what you used and what you produced.
Feed-in tariffs, on the other hand, pay you a set price per kWh for the electricity you send to the grid, regardless of your usage. These rates are often lower than retail prices, meaning you might earn less per unit than you save through net metering. Many modern energy plans combine elements of both, depending on your location and provider.
| Net Metering | Feed-in Tariff |
|---|---|
| Credits your exported energy at retail or near-retail price | Pays a fixed (often lower) rate per exported kWh |
| Offsets your energy usage | Generates income, not credits |
| Ideal for self-consumption + grid savings | Often used when you’re exporting large volumes |
Is Net Metering Right for You?
If you own a home or business and want to reduce your electricity bill while doing something good for the environment, net metering is one of the most effective tools available. It’s particularly valuable if you use most of your energy during the day when your solar system is most productive.
For homes with higher energy needs or three-phase power, using a three-phase inverter ensures you’re getting the full benefit of your system. Adding a battery takes things a step further by letting you store and control your energy usage even more efficiently.
Before you invest, check with your electricity provider about their specific net metering policies, export limits, and credit rates. Not all plans are equal, and making an informed choice can maximise your savings.
How to Get Started with Net Metering
- Assess your electricity usage
- Install a solar system suited to your home size and connection type
- Apply for net metering through your energy provider
- Install a smart meter if you don’t already have one
- Monitor your usage through the provider app or your inverter dashboard
- Optional: Add a battery to maximise self-use and savings
Frequently Asked Questions
Do I still need electricity from the grid if I have solar?
Yes. Unless your system includes a large battery that can cover your entire energy use, you’ll still draw power from the grid at night or during cloudy weather.
Can I earn money from net metering?
You don’t exactly “earn” money, but you do reduce your bills. Some providers allow excess credits to roll over to future bills, and in rare cases, you may receive a payout if you produce far more than you consume.
Is a smart meter required for net metering?
Yes. A smart meter is essential because it measures both the energy you consume and the energy you export, allowing for accurate billing and credits.
Can I install net metering in an apartment?
It’s more challenging, but not impossible. You’ll need to work with your building manager or body corporate to explore options for shared solar systems or individual metering.
