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Net-metering is a billing mechanism that credits solar energy system owners for the surplus electricity they add to the grid, over and above what they consume for themselves.
Take for example, if a residential customer has a solar rooftop, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run in reverse to provide a credit against what electricity is consumed at night or other periods where the home’s electricity use exceeds the system’s output. Customers are only billed for their “net” energy use. During the day, most solar customers produce more electricity than they consume; net metering allows them to export that power to the grid and reduce their future electric bills.
Let’s say you have a rooftop solar system. It generates 10 units (kWh) of electricity during the day, but you only consume 8 units for powering your various devices/appliances. You are left with 2 excess units. What do you do with them? You can either let them go waste, store them for future use (using a battery backup system), or feed them into the grid.
At night, without the sun powering your rooftop system, you again need electricity. You can either get that from your battery backup system (if you have one), or from the central grid, or from both of them combined.
Let’s say you fed the 2 excess units during the daytime into the grid and then consumed 2 units from the grid at night. Your day’s grid electricity balance would have been 0.