Net metering, explained

The problem it solves

A solar array produces most of its power in the middle of the day. A household uses most of its power in the morning and the evening. Without a mechanism to bridge that gap, you would export cheap midday power for nothing and buy expensive evening power at full price.

Net metering is that mechanism: your meter records energy flowing both ways, and your utility credits the surplus.

The three arrangements you will encounter

• Full retail net metering. Every exported kilowatt-hour offsets one imported kilowatt-hour at the same price. Simple, generous, and the arrangement most older solar economics were built on. It is being narrowed in state after state.
• Net billing (avoided cost / export rate). Imports are billed at retail; exports are credited at a lower, separately defined rate. The gap between the two is often substantial. This is now the common direction of travel.
• Time-of-use overlays. Both the price you pay and the credit you earn vary by hour. Under these, when you export matters as much as how much — and afternoon and evening production becomes disproportionately valuable.

Those are the categories; the names are local. California moved to net billing under NEM 3.0 and export credits now swing by the hour. Florida and New Jersey still credit at full retail for the major utilities. New York prices each exported kilowatt-hour through a value stack rather than a single rate, and Nevada credits a fixed percentage of retail that steps down as the programme fills. Texas has no statewide rule at all — your retailer's buyback plan is the whole answer. The state pages cover the rest.

Why the rules keep tightening

The utility argument is that full retail credit lets solar households avoid contributing to fixed grid costs that everyone relies on, shifting those costs to non-solar customers. The counter-argument is that distributed solar provides real value — avoided generation, avoided transmission losses, deferred infrastructure — that a simple avoided-cost rate undercounts.

Whatever you make of that, the practical consequence for you is the same: check the current rules for your utility, not the rules your neighbour got five years ago. Existing customers are frequently grandfathered under old terms for a defined period, which is why a neighbour's experience can be a poor guide.

How to find your own terms

1. Your utility’s tariff pageLook for "net metering", "net energy metering", "net billing" or "interconnection". The tariff document governs — the marketing page summarises.
2. Your state public utility commissionPublishes current rules and any pending changes. Pending is worth knowing about before you sign a 20-year loan.
3. DSIREdsireusa.org tracks net metering policy state by state alongside incentives.
4. Ask your installer for the specific tariff nameNot "you get credited for extra power" — the actual schedule name, so you can read it yourself.

The five questions that decide your payback

• What rate are exports credited at, versus what you pay to import?
• Do credits roll over month to month — and what happens to a surplus at year end? (Some utilities pay it out; some zero it.)
• Is there a monthly fixed charge, minimum bill or solar-specific fee?
• Am I required to move to a time-of-use rate when I go solar?
• If terms change later, am I grandfathered — and for how long?

What a weak export rate changes

When exports are credited near retail, a battery is mostly about backup power. When exports are credited well below retail, the arithmetic shifts: every kilowatt-hour you store and use yourself instead of exporting is worth the difference between the two rates.

That is why battery attachment rates climb in states that move away from full retail crediting. Whether it works for you is a separate calculation — see is a solar battery worth it?

It also changes sizing. Under a poor export rate, an array sized to roughly match daytime self-consumption can outperform a larger one sized to your annual total. More on that in how many panels you need.