Net metering
Net metering is a billing arrangement that lets owners of solar (or other renewable) systems send excess electricity they generate back to the grid and receive a credit at the same retail rate they would pay for electricity they consume.
How Net Metering Works
- A solar‑plus‑storage system first powers the home or business. Any electricity the system produces in excess of the on‑site demand is automatically sent to the utility grid.
- The utility measures the amount exported and the amount imported each billing cycle. The net difference is settled on the bill: if you exported more than you used, you get a credit; if you imported more, you pay the usual rate.
- Credits are usually applied at the retail electricity price (e.g., ₪0.60 kWh⁻¹ in Israel), not at a lower wholesale rate, which makes the arrangement very valuable for the producer.
Why It Matters
- Lower electricity bills – homeowners can offset most of their consumption with self‑generated power, paying only for the net amount they draw from the grid.
- Incentivizes solar adoption – the financial return is clearer and quicker, encouraging more installations.
- Grid benefits – distributed generation reduces peak‑load stress and can improve overall system resilience.
- Environmental impact – more solar on the roof means less fossil‑fuel generation and lower CO₂ emissions.
Concrete Example (Israel)
Imagine a 5 kW rooftop PV system in Tel Aviv that produces about 600 kWh of electricity in a typical month. The household consumes 400 kWh. The surplus 200 kWh is fed into the grid and credited at the retail rate of ₪0.60 kWh⁻¹. On the next bill the owner receives a credit of ₪120, which directly reduces the amount owed for the 200 kWh they still need from the grid. If the same household had no solar system, the cost for those 600 kWh would be roughly ₪360.
Relevance to Israel
- The Israeli Electricity Authority allows net‑metered installations up to 10 kW for residential customers and up to 30 kW for small businesses.
- Credits are settled monthly, and any surplus at the end of the year can be rolled over to the next year, but unused credits expire after 12 months.
- Because the credit equals the retail price, net metering is one of the most effective policies driving Israel’s rapid solar‑PV growth, which reached 1.5 GW of installed capacity by 2025.
Impact on Solar Adoption
Net metering turns a solar array from a pure cost‑center into a revenue‑generating asset. The predictable, bill‑level savings make financing easier, allowing more homeowners to obtain loans or lease agreements. Over time, the cumulative effect lowers the national average electricity demand, supports renewable‑energy targets, and helps Israel meet its goal of 30 % renewable electricity by 2030.