What Is Net Metering? (And Why It Makes or Breaks Solar)

Net metering is the billing arrangement that decides how much you get paid for the solar energy your panels send back to the grid. It’s one of the biggest factors in whether solar pays off — and it’s often overlooked.

How it works

Your panels don’t always produce exactly what you use. Midday you often make more than you need; at night you make none. Net metering lets you:

• Export your excess daytime production to the grid and earn a credit.
• Pull power from the grid at night, paying with those credits first.

At the end of the billing period you pay only the net — hence the name.

Why it matters so much

The value of your export credit changes everything:

• Full retail net metering: every exported kWh is worth the same as one you buy. This is the best case and makes solar very attractive.
• Reduced/avoided-cost rates: exports are credited at a lower wholesale rate. Your savings drop, and a home battery becomes more valuable so you can use your own power instead of exporting it cheaply.
• No export credit: you only save on power you use in real time. Sizing and batteries matter a lot here.

What to check for your utility

1. Does your utility offer net metering, and at what rate?
2. Is there a monthly grid/connection fee that offsets some savings?
3. How are credits handled — rolled over monthly, or do they expire?
4. Rate structure: time-of-use rates can make exports more or less valuable by time of day.

How this affects sizing

Under full net metering, sizing to offset ~100% of your annual use usually makes sense. Under poor export rates, slightly undersizing or adding storage often gives a better return. Our Solar Panel Size Calculator helps you find a starting system size.

Bottom line

Before you sign anything, find out your utility’s exact net metering policy — it can swing your payback by years. Then estimate your numbers with the Solar Savings Calculator.

Educational information only. Confirm current net metering rules with your utility.