Rooftop solar panels often produce more electricity than a home uses at midday. That surplus flows to the grid. How your utility credits those exports is one of the biggest factors in whether solar pays off — and the rules have been changing in many states.
Key Takeaways
- Under traditional net metering, exported electricity is credited at or near the retail rate.
- Under net billing, exports are credited at a lower rate, often based on wholesale or avoided-cost values.
- When export credits are low, using more of your solar power at home — self-consumption — becomes more valuable.
- Batteries and shifting loads to daytime can increase self-consumption.
Net metering
With traditional net metering, your meter effectively runs backward when you export. Each kWh exported offsets a kWh you buy later, at or near the retail rate. Credits may roll over month to month, with an annual true-up.
Net metering makes the timing of production and consumption less important.
Net billing
Net billing separates imports and exports:
- You pay the retail rate for electricity you buy.
- You receive a credit for exports, typically at a lower rate.
California’s 2023 shift to a net billing tariff for many new solar customers is a prominent example. Other states and utilities have made similar changes.
Why it matters for payback
If exports earn much less than retail rates, a large system that exports most of its production may take longer to pay back. Systems sized to cover daytime consumption, or paired with batteries, may perform better economically.
Increasing self-consumption
- Run appliances during the day: dishwashers, laundry, pool pumps.
- Charge EVs during sunny hours where possible.
- Heat water with a heat pump water heater during the day.
- Pre-cool or pre-heat the home during solar hours.
- Add a battery to store surplus for evening use.
Questions for your utility
- Is net metering or net billing available for new customers?
- How are export credits calculated?
- Are there monthly fees or minimum charges for solar customers?
- When does the annual true-up happen?
- Are existing customers grandfathered under older rules?
A simple comparison
Imagine a system that exports 4,000 kWh a year.
- Under net metering at a retail rate of $0.25: credits worth about $1,000.
- Under net billing at an export rate of $0.07: credits worth about $280.
The same panels produce the same electricity, but the export value differs by more than $700 a year. Over the life of a system, that difference is substantial.
Monthly vs annual netting
Some tariffs net imports and exports over each billing period; others carry credits forward to an annual true-up. Under some net billing systems, credits are calculated in shorter intervals, so exports at midday cannot offset evening imports at full value.
Fixed charges and minimum bills
Some utilities charge solar customers grid access fees or minimum bills. These reduce savings and should be included in payback calculations.
What this means for system sizing
Under generous net metering, sizing a system to offset 100% of annual use often made financial sense. Under net billing, a system sized closer to daytime consumption may have a better return per dollar. Installers should model both options using your interval data.
Frequently Asked Questions
Can I switch from net metering to net billing? Rules vary; some utilities grandfather existing customers.
Do batteries always make sense under net billing? They can improve savings but add significant cost.
Will my export rate change over time? Tariffs can change; check the terms.
Are time-of-use rates required? Some solar tariffs require them.
The bottom line
Export compensation shapes solar economics. Learn your utility’s rules, size systems wisely and use more of your own solar power.
