Net metering allows customers to send surplus electricity generated from renewable energy sources to the distribution grid for a credit to be used toward energy costs. It’s basically a way of trading electricity supplied by you against the electricity consumed by you.
Once you’re connected to the distribution system, your local distribution company continues to read your meter as per usual. They then subtract the value of electricity supplied by you to the grid from whatever value you take from the grid. This will be reflected on your bill as the net difference between these amounts. If you happen to supply more energy than you take from the grid over your billing cycle, you will collect a credit to use toward your future utility bills. This credit can be used for up to 12 months.
In order to be eligible for net metering one must meet the following criteria:
You must generate electricity primarily for personal use
All electricity generated must be exclusively from a renewable energy source
The capacity of the system cannot exceed more than 500 kW