What Is Net Metering and How Does It Work for New Mexico Solar Owners
Net metering is one of the most important concepts in residential solar, and it's also one of the most frequently misunderstood. Homeowners sometimes expect solar to eliminate their electricity bill entirely, or to earn them money by selling power to the grid. The reality is more nuanced, and understanding how net metering actually works helps set realistic expectations before you invest.
The Basic Concept
A solar panel system generates electricity when the sun shines. Most of the time, what your panels produce doesn't perfectly match what your home is consuming at that moment. During midday on a sunny day, your panels may be producing more than your home is using. At night, or on heavily overcast days, they may produce nothing while your home continues drawing power.
Net metering is the billing mechanism that handles this mismatch. When your system produces more than you're using, the excess flows back onto the utility grid. The utility tracks this export and credits your account for it. When you need to draw from the grid — at night, during high consumption periods, in winter — those credits offset what you owe.
At the end of each billing period, you're billed (or credited) based on the net of what you exported versus what you imported. If you exported more than you used, you end up with a credit balance. If you used more than you exported, you pay the net amount.
What Changes About Your Bill
Homeowners with solar don't stop getting electricity bills — they get different electricity bills. The bill still comes monthly. It still reflects your utility account. But the kWh column shows a net figure rather than just a consumption figure, and ideally it's a much smaller number than before.
The goal of solar sizing isn't to produce exactly the same as you consume every hour — that's physically impossible. The goal is to produce roughly as much as you consume over the course of a year, accounting for seasonal variation. Summer months produce more than winter months; that summer surplus offsets the winter shortfall through net metering credits.
How Credits Roll Over
The specific rules about how net metering credits roll over — whether they carry month-to-month indefinitely, expire annually, or get compensated differently after a period — are set by your utility's approved tariff and New Mexico Public Regulation Commission rules.
New Mexico has generally had favorable net metering policies for residential solar, but the specific terms have evolved over time and vary between utilities. PNM, El Paso Electric, and the rural co-ops that serve parts of New Mexico have different specific terms.
Before making any investment decision, confirm directly with your utility:
- What is your current net metering rate — is the credit for exported power the same as the rate you pay for power you consume, or a different rate?
- How long do unused credits roll over?
- Is there a system size cap above which net metering terms change?
- Has the net metering policy changed recently, and when is the next regulatory review?
What Happens During Outages
Net metering is a billing mechanism, not a backup power mechanism. A standard grid-tied solar system with net metering shuts off when the utility grid goes down — it doesn't keep your home powered during an outage. This is a safety requirement, not a design flaw.
If backup power during outages is important to you, a battery system paired with your solar changes this. But battery storage and net metering are separate topics — having one doesn't automatically include the other.
The Interconnection Connection
Net metering requires interconnection — your solar system formally connected to and approved by the utility. Without an approved interconnection, the utility can't track your exports or provide the billing credits. Your solar installer handles the interconnection application process, but understanding that it's a required step (and that it takes time) helps with timeline planning.
Questions to Ask Your Solar Installer
- Which utility territory am I in, and what are the specific net metering terms for that utility?
- How did you size the system relative to my usage and the net metering rules?
- How long does the interconnection and net metering agreement process typically take?
- What do I do if my electricity bill looks wrong after the system is installed?
Ready to Explore Solar?
If you want to understand how net metering would work for your home given your utility and usage, request a solar service quote and we'll walk through the specifics.