What Is Net Metering?
Net metering is a billing arrangement where your utility credits you for excess solar electricity you send to the grid. Think of the grid as a giant battery: when your panels produce more than you need (midday), excess power flows to the grid and you earn credits. When you need more than your panels produce (nighttime), you draw from the grid and those credits offset the cost.
Calculate your net metering credits.
Open Net Metering Calculator →How Credits Work
Under full retail net metering, every kWh you export earns a credit equal to the full retail electricity rate. So if you pay $0.14/kWh, every kWh you export is worth $0.14 off your next bill. At the end of the month, you only pay for the net difference between what you consumed and what you produced.
What About Excess Credits?
If you produce more than you use in a month, credits typically roll over to the next month. At the end of the year (the true-up period), policies vary: some utilities pay you for excess credits at a reduced wholesale rate ($0.02-0.05/kWh), some forfeit unused credits, and some roll them over indefinitely. Check your utility's specific policy.
Net Metering Is Changing
Several states have moved away from full retail net metering. California's NEM 3.0 (2023) reduced export credits significantly, making batteries more important for maximizing savings. Other states are considering similar changes. If you are planning solar, check your state's current net metering policy, as it significantly affects your return on investment.
Tips to Maximize Net Metering
- Size your system to offset 100-110%% of annual usage (slight oversizing accounts for degradation)
- Shift heavy electricity use (laundry, dishwasher, EV charging) to midday when panels produce the most
- If your utility has time-of-use rates, a battery lets you store midday production and use it during expensive evening peak hours
- Monitor your production and consumption monthly to ensure your system performs as expected
Net metering is the single most important policy for residential solar economics. Where it exists at full retail rates, solar payback is fast (5-8 years). Where it has been reduced, batteries become important to capture the value of excess production. Always check your state and utility policy before sizing your system.