Feed-in Costs and Net-Metering: Here’s How It Works!

The terms feed-in fees, feed-in costs, and net-metering are often used interchangeably, but they actually refer to different concepts. Here’s what they really mean:

For years, solar panel owners have been able to benefit from net-metering. The electricity generated by a solar panel system that isn’t immediately used by household appliances is fed back into the electricity grid. Under the current rules (valid until 2027), the energy you feed into the grid can still be fully offset against the energy you consume. This is called netting.

Netting = Offsetting

You can offset the energy you supply to the grid against the energy you use during periods of low solar production (like winter). This is calculated over a 12-month period. For example, if you consume 3,000 kWh annually and feed 2,800 kWh back into the grid, you only pay for 200 kWh.

Feed-in Compensation for Solar Panels

If you generate more energy than you consume over a year, you receive compensation for the surplus energy—this is known as the feed-in compensation. For each extra kilowatt hour (kWh), your energy supplier pays a fee. This rate varies between providers, so be sure to check your energy contract.

An Overloaded Grid = Feed-in Costs

Now, about feed-in costs. These are costs associated with the electricity that isn’t used directly in your home and is instead sent back to the grid. Since most households only consume about 30% of their solar power directly, a large amount is fed into the grid—especially on sunny days. This overloads the grid and creates high costs for energy providers. As a result, feed-in charges may apply to all energy sent back into the grid, whether you have a fixed or variable contract.

These charges are only calculated on the electricity you feed back. Depending on your provider, you may be charged a fee per kWh per day, or a fixed monthly amount. The more solar energy you use directly, the quicker you’ll recover your investment in solar panels.

Want to increase your direct consumption? You can!

Still a Profitable Investment

Despite feed-in costs, solar panels remain a financially smart choice. Thanks to net-metering, the return on your solar system still far outweighs the feed-in charges.