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 |
| Baltimore, MD | 1,467 | 18.3¢ | 8.8 yrs |
| Overland Park, KS | 1,592 | 14.1¢ | 10.5 yrs |
| Sioux Falls, SD | 1,507 | 12.3¢ | 13.1 yrs |
| Gatineau, QC | 1,291 | 7.9¢ | 33.3 yrs |
Frequently asked
Is net metering going away?
Not entirely, but it is being replaced in a growing number of states by net billing, which pays less for exported power. Existing customers are usually grandfathered on their original terms for a set number of years.
Do I get a cheque for excess solar?
Rarely. Most utilities roll credits forward monthly and settle any annual surplus at a low avoided-cost rate, or not at all. Solar saves money on your bill rather than generating income.
Does net metering work with a battery?
Yes, and a battery becomes more valuable as export rates fall, because storing power for your own evening use beats selling it cheaply.
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General information, updated 2026-08-22. Not financial, tax or engineering advice.