Understanding Your Utility Bill: How Net Metering Works for Businesses

When you decide to install a solar panel system on your commercial property, you are effectively turning your building into a miniature power plant. During the bright, sunny parts of the day, you will often generate more electricity than your business is using at that exact moment.

So, what happens to all that valuable, excess power? Does it just go to waste?

This is where a crucial policy called Net Energy Metering (NEM), or simply Net Metering, comes into play. Net Metering is the billing mechanism that allows you to send your excess solar energy back to the utility grid and receive a credit for it on your electricity bill. It’s the system that ensures you get full financial value for every single kilowatt-hour your solar panels produce.

Understanding how it works is key to understanding the true financial return of your solar investment.

The Two-Way Street: Your New Relationship with the Grid

Before solar, your relationship with the utility grid was a one-way street: electricity flowed from the grid to your building, and you paid for every bit of it.

After installing solar, your property gets a new “bi-directional” meter. This smart meter can measure power flowing in both directions:

1. Power you PULL from the grid (at night, or on cloudy days).
2. Power you PUSH to the grid (when your solar panels are generating more than you need).

Net Metering is the accounting system that tracks this two-way flow.

How Net Metering Works: A Simple Analogy

Imagine your utility bill is like a running tab at a store.

• On a sunny afternoon, your business is running, but your solar panels are generating a surplus of 50 kilowatt-hours (kWh) of electricity. You “sell” this surplus back to the grid. The utility company gives you a credit for 50 kWh on your tab.
• That evening, after the sun has gone down, your business needs to pull 70 kWh from the grid to run overnight lighting and equipment. You “buy” this energy from the utility. This gets added to your tab.
• At the end of the billing period, the utility “nets out” the totals. You used 70 kWh from the grid but you sent 50 kWh to the grid. Therefore, you only have to pay for the net difference of 20 kWh (70 – 50 = 20).

Without Net Metering, the 50 kWh you sent to the grid would have been given away for free. With Net Metering, it becomes a valuable credit that directly reduces your final bill.

Key Things for Businesses to Know About Net Metering in 2025

While the concept is simple, the specific rules can vary significantly depending on your state and utility company. Here are a few key factors to be aware of:

• Credit Value (1-to-1 vs. Avoided Cost): In the best-case scenario (“1-to-1 Net Metering”), each kWh you export to the grid is credited at the full retail rate—the same price you would have paid for it. However, many states are moving to “Avoided Cost” or other models where the credit for exported energy is lower than the retail rate. A professional solar installer will know the exact policy in your area and factor it into your ROI calculation.
• Monthly Rollover Credits: What if you generate more power in a month than you use (common in sunny, low-usage months like April or May)? With most Net Metering policies, those excess credits will automatically roll over to the next month, helping to offset your bills in lower-production months like December.
• Demand Charges: This is a critical point for commercial customers. Many business utility bills include “demand charges,” which are fees based on the single highest peak of power you pull from the grid during a month, regardless of your total consumption. While solar can help reduce demand charges by lowering your daytime peak, it doesn’t eliminate them. Understanding how your solar production aligns with your peak demand is a key part of a professional site assessment.

Why Net Metering is So Important

Net Metering is the policy that makes solar financially viable for most businesses. It allows you to use the grid as a giant, 100% efficient battery. You can “store” the value of your excess daytime solar production and “withdraw” it at night.

It ensures that your solar array is working for you financially every single moment the sun is shining, maximizing your savings and dramatically shortening the payback period of your investment. When evaluating a solar proposal, make sure it clearly explains the specific Net Metering rules for your utility and how they’ve been used to calculate your projected savings.