Net metering (sometimes called net energy metering) is an electricity billing arrangement that credits solar customers for the electricity they add to the electricity grid beyond the amount they consume during a particular billing period, allowing the resident to benefit at the full retail rate for all the energy produced by the solar array. Net metering allows consumers to use the electric grid as an effective battery, absorbing excess energy from the PV panels when it is available and returning it to the home when it is needed. Stated another way, net metering ensures that the resident receives credit for energy production, even if the energy is not used within the residence at the moment of production. Excess energy production flows to the grid, and an energy credit is provided. Later, when energy is used but the solar array is not producing, the credit is cashed in for energy to the house. Accounting normally occurs on a monthly and a yearly basis. Net metering can be accomplished by installing a generation meter on the output of the inverter, or by installing a power meter that can increase or decrease its reading, based on the direction of energy flow. During the summer, customers with solar panels often generate more electricity than they use and build up net metering credits. During the winter, when there is less sunshine and therefore less solar generation, customers use the credits they acquired during the summer to offset their winter electric bills. Under Cyprus net-metering rules, credits expire in April each year. When credits expire, any excess credits in the account are paid to the solar owner at a rate close to the annual average electricity wholesale rate. See your utility’s electricity tariff for a more in-depth explanation. The net-metering rules could be revised in the future. If that happens, the return you get on your solar panels might be different than you’re expecting. This is an inherent risk of investing in a net-metered solar system. Community solar is a form of virtual net metering (VNM), where the actual array is not at the site of the residence, but nonetheless, the electric bill is credited for the power produced by the solar array. Net energy metering will never reduce a household’s electric bill to zero. The customer is still responsible for the fixed customer charge and any other charge that is a fixed charge not dependent on the number of kilowatt-hours consumed.

During the summer, customers with solar panels often generate more electricity than they use and build up net metering credits. During the winter, customers use the credits they acquired during the summer to offset their winter electric bills.

Signing a Contract

Be sure that you read your entire solar contract, and that everything you’ve agreed to verbally is written in the contract before you sign it. Take your time and ask questions about anything you don’t understand. Never let anyone pressure you into signing a contract before you’re ready. Seek out legal advice if you need help. In addition to everything that’s in the bid, the contract should include:

• Warranties—The contractor should provide you with copies of the warranties. Warranties should cover equipment and workmanship, and should include warranties for any damage to the roof during installation, if applicable. Different parts of the system (like panels, inverters, and mounting equipment) may be warrantied for different amounts of time. Typically, the output performance of the panels is warrantied for 25 years. Panel performance will degrade over time, but solar panels should still be producing at least 80 percent of their original production after 25 years.
• Payment schedule—If the contractor will be paid off in full when the project is fully installed, the payment schedule may depend on construction milestones. If the contractor is involved in financing the project, the payment schedule may instead involve monthly payments over a longer period.
• Start and end dates of construction—The contract should specify when construction will begin and when it will end.
• Exact equipment to be installed—It is important to know exactly which equipment a contractor plans to provide (e.g. manufacturer name, model number). Equipment quality varies. For instance, some solar panels operate more efficiently than others, and these will probably cost more. It may be worthwhile to invest in more expensive. Be sure that you read your entire solar contract, and that everything you’ve agreed to verbally is written in the contract before you sign it.
• Itemized budget—The budget should include a detailed breakdown of equipment costs and other expenses such as installation labor and applicable permits.
• List of subcontractors—In some cases, a solar installation contractor may subcontract out portions of the solar panel installation process. It is important to know what work will be done by the contractor and what work will be subcontracted out. The contract should identify exactly who will be doing each part of the job and who is responsible for warranties related to work initially performed by subcontractors.
• Who is responsible for getting and paying for permits—Because your contractor should have experience with system permitting, it is common for your contractor to take care of this step in the solar panel installation process. Responsibility for permitting tasks should be spelled out in the contract. Make sure that the contract clearly allocates all costs associated with permitting to either you or the contractor. Among the costs that should be accounted for are any charges involved in setting up a net-metering account, including any costs for installing an additional meter.