Net metering, explained
Short answer: net metering credits the solar you send to the grid against the electricity you pull back later. The catch — those credits usually offset generation only, not delivery charges, and many utilities now credit exports at less than retail.
The basic idea
Your panels don't produce exactly when you use power. Midday you often make more than you need and export the surplus; evenings you import from the grid. Net metering reconciles the two: exported kWh earn credits that reduce what you owe for imported kWh.
Under classic 1-to-1 net metering, one exported kWh cancels one imported kWh — on the generation portion of the bill. It's the most generous version, and it's increasingly being phased out.
Net metering vs. net billing
- Net metering: exports credited at (or near) the full retail generation rate. Best case for solar owners.
- Net billing: exports credited at a lower wholesale/"avoided cost" rate. Your exported solar is worth less than the power you buy back, which weakens savings — especially without a battery to use more of your own production.
Many utilities have moved from net metering toward net billing (California's NEM 3.0 is the headline example). Which one you're on dramatically changes the value of a system that exports a lot.
The part that surprises people: delivery still applies
Even under favorable net metering, the credits typically apply to generation charges only. You still pay delivery/distribution charges on the electricity you import, plus fixed monthly fees. That's why exporting tons of solar doesn't zero your bill — see why solar doesn't zero out your bill.
Two homes with identical panels can have very different savings — purely because one is on net metering and the other on net billing.
What to check on your agreement
- Is it net metering (retail credit) or net billing (lower export rate)?
- What exactly is the export credit per kWh?
- Do credits roll over month to month, or expire?
- Are there new fixed charges or minimum bills for solar customers?
Then model it: in SunTally's Estimate mode you can set the export credit rate separately from your retail rate, so the projection reflects whichever regime you're on.
See how your net-metering terms affect payback
Set your export credit and rates, and watch the ROI change. Free, in your browser.
Run the Numbers →FAQ
What is net metering?
A billing arrangement where solar you export to the grid earns credits that offset electricity you import later. Under 1-to-1 net metering, an exported kWh cancels an imported kWh on the generation portion of your bill.
What's the difference between net metering and net billing?
Net metering credits exports at (or near) full retail generation rate; net billing credits them at a lower wholesale/avoided-cost rate, making exported solar worth less than the power you buy. Many utilities have shifted to net billing.
Does net metering eliminate my electric bill?
No — credits usually apply to generation only, not delivery charges or fixed fees, so the bill rarely hits zero.