Net metering, explained
Net metering is what your utility credits you for the solar power you send back to the grid. Under classic net metering, an exported kWh is worth the same as one you buy. Under newer "net billing" rules it can be worth a quarter of that — which changes your payback more than any equipment choice you will make.
Why this matters so much
A home without a battery uses only about 35% of what its panels make, because solar peaks at midday while household demand peaks morning and evening. Roughly two thirds of your production gets exported. What that exported power is worth therefore drives most of your return — far more than panel brand, efficiency or a few hundred watts of extra capacity.
The three regimes
| Regime | What exports earn | Effect |
|---|---|---|
| Classic net metering (1:1) | Full retail rate | Best case. The grid acts as a free battery. Still the rule in much of the US. |
| Net billing | Wholesale / avoided cost, often 15–30% of retail | Payback lengthens substantially. California's NEM 3.0 is the big example. |
| Buy-all / sell-all | A fixed rate for everything you generate | Rare. You buy all your power and sell all your production separately. |
Annual true-up: the second catch
Even under 1:1 net metering, credits usually only offset power you actually buy. Produce more than you consume over a year and the surplus is typically settled at a low avoided-cost rate at your annual true-up, or simply forfeited. This is the main reason oversizing a system rarely pays — the extra panels generate power that earns pennies.
How to find out what applies to you
- Rules are set by your utility, not just your state — neighbouring utilities can differ.
- Ask any installer, in writing, which specific tariff you would be placed on.
- Ask whether that tariff is grandfathered, and for how long. Most changes protect existing customers for a set period.
- Check whether your utility uses time-of-use pricing, which changes what your production is worth by hour.
What to do if your area has poor export rates
- Size smaller. If exports earn little, a system matched to daytime usage beats a big one.
- Shift usage to daylight. Run dishwashers, laundry, pool pumps and EV charging midday. Free, and it directly raises the share you use yourself.
- Consider a battery — it stores midday surplus for evening use instead of exporting it cheaply, though it adds $8,000–15,000. Whether that pays →
See what your own roof would produce →
What this looks like in real cities
Measured rooftop data, spanning the range from fastest to slowest payback we have found:
| City | Sun hrs/yr | Rate | Payback |
|---|---|---|---|
| Honolulu, HI | 1,787 | 42.1¢ | 3.1 yrs |
| Columbia, MD | 1,505 | 18.3¢ | 8.8 yrs |
| Olathe, KS | 1,579 | 14.1¢ | 10.9 yrs |
| High Wycombe, South East | 1,003 | 26.1¢ | 12.9 yrs |
| Gatineau, QC | 1,291 | 7.9¢ | 33.3 yrs |
Frequently asked
Is net metering going away?
It is being replaced in places, not abolished everywhere. California moved to net billing under NEM 3.0, which pays far less for exported power, and other states are reviewing their rules. Where that happens, self-consumption and batteries matter much more, and payback lengthens for systems sized to export.
Do I get a cheque for excess solar?
Rarely. Most programmes roll surplus forward as bill credits rather than paying cash, and many credits expire annually. That is why oversizing a system past your own usage usually disappoints: the extra panels generate power you are credited for weakly, or not at all once your bill reaches zero.
Does net metering work with a battery?
Usually yes, though rules vary and some utilities restrict charging a battery from the grid. Where exports pay poorly, a battery lets you store midday surplus and use it in the evening at full retail value — which is exactly the situation net billing was designed to create.
Related guides
General information, updated 2026-08-22. Not financial, tax or engineering advice.