Net metering is a billing rule that credits you for the extra solar power your panels send to the grid. You spend those credits when your panels aren’t making enough, so you pay only for the “net” power you use. Under full net metering, each kilowatt-hour (kWh) you export is worth as much as one you buy.
That one-for-one credit is what makes solar pay off faster. For a typical U.S. home system, payback takes about 12.6 years when exports earn the full retail price and about 25.7 years when they earn a quarter of it (EcoGen worth-it guide). In 2026, 19 states plus Washington, D.C. and Puerto Rico still credit monthly excess exports at full retail at their main utilities (EcoGen export rules by state). Elsewhere, utilities pay less through net billing or newer tariffs. The rule your utility uses is the number that decides your savings.
How net metering works
Solar panels make the most power at midday, when most homes use little. At night they make none. Net metering lets the grid act like a bank for that timing gap.
- Your home uses solar power first. Power your panels make while the lights, fridge or AC are running never touches the meter.
- Extra power flows to the grid. A two-way meter, often called a net meter, counts the kWh going out. The utility usually installs or reprograms it after your system passes inspection.
- You earn a credit. Under full net metering, each exported kWh cancels one kWh you would buy later.
- You draw on the credit. At night, on cloudy days and in winter, you pull power from the grid and the credits pay for it.
- Leftover credit rolls forward. Most utilities carry it from month to month and settle it once a year at the true-up.
Line on the bill | kWh | What it means |
|---|---|---|
Bought from the grid | 500 | Night, early morning and cloudy hours |
Sent to the grid | 700 | Midday power the home didn’t use |
Net | −200 | You pay no energy charge this month and bank 200 kWh for winter |
Two things stay on the bill even in a month like this: the fixed monthly customer charge and any minimum bill. Net metering credits only cancel charges per kWh. Some utilities also limit the credit to part of the per-kWh price. For example, new ComEd home customers in Illinois since January 1, 2025 get credit against the supply part of the bill only (ComEd FAQ, via EcoGen incentives guide).
The true-up: what happens to leftover credit
Most net metering plans run on a 12-month cycle. At the end of it, the utility “trues up” your account. If you used more than you exported, you pay the balance. If credit is left over, the utility either pays you for it or wipes it out, and the payment is almost always far below the retail price.
- California: leftover credit at the large utilities is paid “net surplus compensation,” which the state regulator puts at about 2 to 3 cents per kWh (CPUC).
- Full-retail states: in 13 of the 21 places that still credit exports at full retail, credit left at the true-up is paid at the utility’s avoided cost or lost (EcoGen export rules). See how it works in New Jersey and in Pennsylvania, where the year closes on May 31.
This is why a good installer sizes a system to your yearly use, not to your whole roof. Power you never use comes back to you as a credit that pays only a few cents. The true-up month also matters. A year that closes right after summer can cash out your summer surplus at the low rate before winter gets to use it. A year that closes in late spring, as Pennsylvania’s does on May 31, can also cash out the spring surplus at the low rate, so a system sized to your use matters there too.
Net metering vs. net billing vs. buy-all, sell-all
“Net metering” is often used for any plan that pays for solar exports. The plans work very differently.
Full net metering
Exports earn the retail price, one kWh for one kWh. Credits roll forward and settle at the yearly true-up.
Net billing
You still use your own solar power first. Exports earn a lower rate, often based on what the utility would pay a power plant (its “avoided cost”). The rate is set per kWh, so the credit is in dollars, not kWh.
Successor tariffs
New rules that replace net metering for new customers. They often add time-of-use pricing, where power costs more in the evening. California’s Net Billing Tariff is the best-known one.
Buy-all, sell-all
All of your solar output is credited at a set rate, and you buy all of your power at the normal price. Austin Energy works this way, with a “Value of Solar” credit of 12.89 cents per kWh since October 1, 2026 (Austin Energy).
California’s Net Billing Tariff
Homes that applied to connect solar on or after April 15, 2023 in PG&E, SCE and SDG&E territory are on the Net Billing Tariff, which the utilities call the “Solar Billing Plan” (CPUC). Exports earn credits set by the CPUC’s Avoided Cost Calculator, so their value changes with the time of day and the season. The CPUC says those credits are usually below the retail rate but can rise above it on late summer evenings. Customers must use an electrification time-of-use rate and pay their bill monthly. The first owner of a system connected under the Net Billing Tariff keeps it for nine years. Homes that joined the older NEM 2.0 plan can stay on it for 20 years from the date they connected. A state appeals court upheld the Net Billing Tariff on March 9, 2026 (Court of Appeal opinion), and in June 2026 the California Supreme Court declined to review that ruling, so the tariff stands (pv magazine USA).
Under net billing, the CPUC notes that a battery helps: you can store midday power and use or export it in the high-value evening hours.
A feed-in tariff, the fifth model, pays a fixed contract price for every kWh you produce. It is common in Europe and rare for U.S. homes today.
One home, four bills: what net metering saves
Here is the same typical home under each plan. It uses 11,326 kWh a year, and its 7.95 kW system makes the same 11,326 kWh (EcoGen Solar Cost Index, September 2026). The home uses 40% of its solar power as it is made and exports the other 60%, so it still buys 6,796 kWh from the grid at night and in winter. Power costs 18.2 cents per kWh, the 2026 U.S. home average forecast by the EIA (October 2026). The low export rate, 4.55 cents, is a quarter of that price: an example, not any utility’s rate.
-
No solar
- Power bought
- 11,326 kWh × 18.2¢ = $2,061
- Export credit
- None
- Energy charges for the year
- $2,061
Starting point
-
Full net metering
- Power bought
- 6,796 kWh × 18.2¢ = $1,237
- Export credit
- 6,796 kWh × 18.2¢ = −$1,237
- Energy charges for the year
- $0
Saves $2,061 a year
-
Net billing at a quarter of the price
- Power bought
- 6,796 kWh × 18.2¢ = $1,237
- Export credit
- 6,796 kWh × 4.55¢ = −$309
- Energy charges for the year
- $928
Saves $1,134 a year
-
Buy-all, sell-all at the same low rate
- Power bought
- 11,326 kWh × 18.2¢ = $2,061
- Solar credit
- 11,326 kWh × 4.55¢ = −$515
- Energy charges for the year
- $1,546
Saves $515 a year
Same panels, same sun, same home. Full net metering saves the home $2,061 a year. Net billing at a quarter of the price saves $1,134, about 45% less. A buy-all plan at that low rate saves only $515, because even the power the home uses itself is valued at the export rate. A buy-all plan is only as good as its credit rate, which is why Austin Energy’s 12.89 cents matters so much there.
That gap is what moves payback. After about $239 a year for upkeep, the system’s $22,976 cash price is paid back in about 12.6 years with full net metering and about 25.7 years with the low export rate. The full model, with rising prices over 25 years, is in our guide to whether solar panels are worth it.
These are energy charges only. Fixed monthly charges stay on the bill in every case. The federal 30% homeowner tax credit doesn’t apply to systems whose installation is completed after December 31, 2025 (IRS), so the export rule now does more of the work in a 2026 solar deal.
Which states still have full net metering in 2026?
No federal rule sets solar export credits. Each state and its utility regulator decides, and big utilities, co-ops and city utilities in the same state can differ. EcoGen’s database of state export rules (utility tariffs and state rules, sources retrieved June 2026 and corrected in September 2026 checks) sorts the main utilities’ rule for new customers like this:
Rule | Count | Examples |
|---|---|---|
Full retail net metering | 19 states + D.C. + Puerto Rico | Florida, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia |
Monthly excess below retail | 7 | Kansas, Missouri, Ohio, Rhode Island |
Successor tariff | 6 | California, Hawaii, Illinois, Nevada |
Net billing | 11 | Arizona, Georgia, Indiana, Michigan, Utah |
Varies by utility or retailer | 4 | North Carolina, North Dakota, Texas, Wisconsin |
No net metering | 3 | Alabama, South Dakota, Tennessee |
Find your state in the full list of export rules by state, then open your state’s guide from solar by state.
These rules keep changing. In the second quarter of 2026 alone, 45 states plus D.C. and Puerto Rico took 284 actions on policy and rates for distributed solar (rooftop and community solar), and changes to how solar is paid were the most common kind (53 actions), according to the NC Clean Energy Technology Center (50 States of Solar, Q2 2026). Rule changes usually apply to new customers. Many states let existing customers keep their plan for a set number of years, so the date your system is approved to connect can matter.
What to ask your utility and installer
Every solar quote assumes an export rule. Make sure it is the right one before you compare savings.
- What is the tariff called? Ask for the name of the net metering or export tariff for new home systems, and read it on the utility’s website.
- What is one exported kWh worth? The full retail price, part of it (for example supply only), or a fixed or hourly export rate?
- When is the true-up, and what pays for leftover credit? Ask for the rate in cents per kWh, or whether the credit expires.
- Which charges stay? Fixed monthly charges, minimum bills and any charge for solar customers.
- Do I have to switch rate plans? Many utilities require a time-of-use rate for new solar customers.
- How long is my plan locked in? Ask how many years the current rules apply to you if they change later.
- What does connecting cost? Ask about interconnection or application fees and any meter charge.
- What did the quote assume? Ask the installer for the share of power you will use at home, the export rate used and the tariff name. If a quote can’t name them, it can’t back up its savings number.
For more questions, see our questions to ask a solar installer.
Get solar quotes that use your utility's real export rule
Net metering questions
What is net metering in simple terms?
Your meter counts power both ways. When your panels make more than your home uses, the extra goes to the grid and you get a credit. When they make less, you use grid power and the credit pays for it. You pay for the difference, the “net.”
Can you cash out net metering credits?
Usually only once a year, at the true-up, and at a low rate. California’s large utilities pay about 2 to 3 cents per kWh for leftover credit. Some utilities pay their avoided cost, and some let unused credit expire. Month to month, credits only lower your bill.
Why is my electric bill still high with solar and net metering?
Common reasons: fixed monthly charges that solar can’t cancel, more use than the system was sized for (a new EV or heat pump), a time-of-use rate where evening power costs more, an export rate below retail, or a system that is making less than expected. Check your monitoring app against the installer’s production estimate.
How do I check if I have net metering?
Look at your bill for a net metering, NEM or export line, and for kWh “received” or “delivered to the grid.” Your bill or online account should also show your rate plan and a credit balance. If you can’t find it, ask the utility which export tariff your account is on.
How much does net metering cost to sign up for?
The plan itself is usually free, but connecting a system can carry a one-time fee. At California’s big utilities the interconnection fee for systems under 1 MW is $145 at PG&E, $94 at SCE and $132 at SDG&E, according to the CPUC. Your installer normally files the application and arranges the meter.
Do leased solar panels get net metering?
Usually yes. The credits go on your utility bill, even when a solar company owns the panels under a lease or power purchase agreement (PPA, a contract to buy the power the panels make). You then pay the solar company under the contract. Check that the savings in the offer use your utility’s real export rule.
Is net metering worth it?
Full net metering is the best deal a solar owner can get, because every exported kWh is worth as much as one you buy. In our national example it cuts payback from about 25.7 years to about 12.6 years. If your utility pays less, solar can still work, but you need a high share of daytime use, a lower price or a battery.
What are the disadvantages of net metering?
For homeowners, the main ones are that rules can change for new customers, leftover credit at the true-up pays little, fixed charges stay, and a required time-of-use rate can lower the value of your exports. Utilities argue that full retail credit shifts costs to customers without solar, which is why many states are cutting it.
Do I need a battery with net metering?
Not with full net metering, because the grid stores your extra power at full value. Under net billing or time-of-use rates, a battery can raise savings by storing midday power for the evening, when it is worth more. A battery also keeps some power on in an outage, which grid-tied panels alone don’t do.
Sources
- California Public Utilities Commission, Net Energy Metering and Net Billing (NBT since April 15, 2023; nine-year NBT and 20-year NEM 2.0 legacy periods; net surplus compensation; interconnection fees).
- California Court of Appeal, First District, Center for Biological Diversity, Inc. v. Public Utilities Commission, No. A167721 (opinion on remand filed March 9, 2026), and pv magazine USA, “California Supreme Court declines to hear rooftop solar billing case” (June 10, 2026).
- EcoGen Solar Database, state export-credit rules for new customers (sources retrieved June 2026, September 2026 checks), shown on our solar incentives guide; includes the ComEd net metering FAQ.
- NC Clean Energy Technology Center, The 50 States of Solar: Q2 2026 Quarterly Report, Executive Summary (July 2026).
- U.S. Energy Information Administration, Short-Term Energy Outlook, October 2026 (residential price 18.2 cents per kWh, 2026).
- EcoGen Solar Cost Index, September 2026 (7.95 kW, $22,976 cash; methodology), and the payback example in our worth-it guide.
- Austin Energy, solar for your home, and City of Austin Electric Tariff FY 2026-2027, Value-of-Solar Rider (12.89 cents per kWh from October 1, 2026).
- IRS, FAQs on Public Law 119-21, Residential Clean Energy Credit.
- Read how we work in our editorial standards and how we make money.
