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Net metering explained
The rules for what your utility pays you for surplus power. This decides whether solar pays off where you live — more than the panels, the installer, or the price.
The short answer: your panels make more than you use at midday and nothing at night. Net metering is the arrangement covering that surplus. Some utilities credit it at the full retail price of electricity; others pay a small fraction. The difference between those two can be more than 10×, and it changes the economics of your system completely.
Why this exists
Solar production and household demand don’t line up. Your system peaks around midday when the house is often empty. Your demand peaks in the evening when the panels are winding down.
Without a battery, surplus midday power has nowhere to go but out onto the grid. At night you draw back from the grid as normal. Net metering is simply the accounting for that exchange — and how generously it’s done is set by state regulators and your utility, not by you or your installer.
The three models
Roughly 38 states plus Washington DC have some version of this. They fall into three broad groups.
| Model | What you get for exports | What it means |
|---|---|---|
| Full retail net metering | The same rate you pay to buy power | The best case. A kilowatt-hour out cancels a kilowatt-hour in. Your meter effectively runs backward. |
| Net billing | The utility’s “avoided cost” — often a small fraction of retail | Exports are worth far less than the power you buy. Using your own power as you make it becomes much more valuable. |
| Hybrid or utility-specific | Depends on your particular utility | Two neighbors served by different utilities can face different rules. |
To put numbers on the spread: export credits range from around 30¢ per kilowatt-hour in the most generous states to roughly 5¢ under avoided-cost rules. Same panels, same sun, six times the value.
The direction of travel is away from full retail. California’s move to its current framework cut export values by roughly 75% — from about 30¢ to somewhere in the range of 5–8¢. Arizona and Utah have made similar transitions.
The reasoning offered is that retail rates include the cost of maintaining poles, wires and substations, and that crediting exports at full retail means solar owners don’t contribute to that upkeep. Whether you find that persuasive, it is the argument driving the change, and more states are likely to follow.
Grandfathering — the part with a deadline
When a state changes its rules, systems already connected are usually grandfathered onto the old terms, often for the life of the system or a fixed period like 20 years.
This is why timing occasionally matters in a way it otherwise wouldn’t. If your state has announced a change with a future date, connecting before it can be worth substantially more over twenty years than any discount an installer will offer you.
It’s also the one legitimate form of time pressure in solar sales. If someone cites a net metering deadline, that may well be real — but verify it yourself with the utility rather than taking their word.
Illinois, as an example of how local this gets
Illinois changed terms for systems connected after January 1, 2025. Newer systems earn credit against the supply and transmission portions of the bill, but not the delivery charges — so a credited kilowatt-hour is worth less than it used to be.
There’s a trap layered on top. ComEd’s rebate for solar and storage comes with a condition: taking it permanently locks you into those newer terms, and it cannot be undone. A homeowner grandfathered on better terms could take a rebate and quietly give up something worth more.
The general lesson: before accepting any utility incentive, ask what it changes about how you’re credited.
Questions to ask your utility
Not your installer — your utility. Call them, or find the interconnection page on their website. Your installer has an interest in the answer; the utility doesn’t.
- What do you credit exported solar at? Full retail, or a lower rate? What is the number?
- Do credits roll over month to month? Summer surplus covering winter shortfall is worth a great deal in northern states.
- What happens to unused credits at year end? Some carry forward indefinitely, some are paid out at a low rate, some simply expire.
- Is there a monthly fee for solar customers? Some utilities charge one.
- Am I grandfathered, and for how long?
- Are changes proposed? Pending rate cases are public.
What this changes about your system
Under full retail net metering:
- Build to cover your full annual usage. Every exported kilowatt-hour is worth the same as one you use.
- A battery is about backup power, not economics.
- Timing of use barely matters. The grid is a perfect bank.
Under net billing or avoided cost:
- Using your own power as you generate it becomes the whole game. Running the dishwasher, laundry and EV charging at midday is now worth real money.
- A battery starts making financial sense, because storing your own cheap power beats selling it at 5¢ and buying it back at 25¢.
- A slightly smaller system may return more per dollar than a large one.
This is why the same house, same quote, same panels can be a clear yes in one state and a marginal call in another.
Finding your own rules
DSIRE, run by North Carolina State University, is the most reliable free source. Search your state, then confirm against your own utility — because in hybrid states the utility is what determines your answer, not the state.
Sources
- DSIRE, Database of State Incentives for Renewables & Efficiency.
- Green Energy Calculators, Net metering rules by state, 2026.
- Energyscape Renewables, Net metering by state 2026.
- EnergySage, Illinois solar incentives.