One of solar energy's most powerful financial benefits is net metering—a billing arrangement that lets you sell excess electricity back to the grid. Understanding how net metering works is essential to maximizing your solar investment returns. Let's dive deep into this valuable program and how you can take full advantage of it.
What Is Net Metering?
Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. When your solar panels produce more electricity than your home uses, the excess flows to the grid, and your meter literally runs backward.
How It Works
Think of net metering like a savings account for electricity:
- During the day: Your solar panels often produce more electricity than you need. The excess goes to the grid, earning credits on your account.
- At night: When your panels aren't producing, you draw electricity from the grid, using your accumulated credits.
- Monthly bill: You only pay for your "net" electricity use—what you consumed minus what you produced.
A Day in the Life of Net Metering
Here's how a typical day might look for a solar homeowner:
- 6 AM - 8 AM: Morning routine uses electricity; panels just starting to produce. You draw from the grid.
- 8 AM - 4 PM: Peak solar production. Panels produce far more than your empty home needs. Excess flows to grid, credits accumulate.
- 4 PM - 10 PM: Family returns home; lights, cooking, entertainment. You use grid power, drawing down your credits.
- 10 PM - 6 AM: Minimal electricity use overnight. Small grid draw.
At month's end, if your total production equals your total consumption, your electricity bill is essentially zero (minus small fixed charges).
Types of Net Metering Programs
Net metering programs vary by state and utility. Here are the main types:
Full Retail Net Metering
The most valuable form—you receive full retail rate credit for every kWh you send to the grid. If you pay 18¢/kWh, you receive 18¢ credit for excess production.
States with strong retail net metering: California (transitioning), New Jersey, Massachusetts, New York, and many others.
Net Billing (Reduced Rate)
Some states credit excess production at a lower rate than retail—often the "avoided cost" or wholesale rate. You might pay 18¢/kWh but receive only 8-10¢ credit for exports.
Time-of-Use Net Metering
Credits vary based on when you export electricity. Afternoon exports during peak demand may earn higher credits than midday exports.
Virtual Net Metering
Allows credits from one solar installation to be applied to multiple meters—useful for community solar projects or properties with multiple buildings.
Maximizing Your Net Metering Benefits
Smart strategies can significantly increase your net metering returns:
Size Your System Correctly
Work with your installer to size your system based on your annual electricity consumption. A system producing 100-110% of your usage typically provides maximum benefit.
Understand Your Rate Structure
If you're on time-of-use rates, you may earn more by exporting during expensive peak periods. Batteries can help shift your exports to high-value times.
Shift High-Energy Tasks
Run dishwashers, washing machines, and electric vehicle charging during peak solar production to use more power directly rather than exporting at potentially reduced rates.
Monitor Your Production
Most solar systems include monitoring apps showing real-time production and consumption. Use this data to optimize your energy habits.
Net Metering and Your Electricity Bill
Understanding how net metering appears on your bill helps you track your savings:
Billing Components
- Energy charges: Net kWh consumed × rate (this is what net metering reduces)
- Fixed charges: Monthly customer charges (typically $10-20, not affected by net metering)
- Demand charges: For commercial customers, based on peak usage
- Taxes and fees: Various regulatory charges
Sample Net Metering Bill
Before solar:
- Energy consumed: 1,000 kWh × $0.18 = $180
- Fixed charges: $15
- Total: $195
After solar with net metering:
- Energy consumed from grid: 300 kWh
- Energy exported to grid: 250 kWh
- Net consumption: 50 kWh × $0.18 = $9
- Fixed charges: $15
- Total: $24
Annual True-Up
Many utilities use annual "true-up" billing. Your credits accumulate throughout the year, and you settle up once annually. This smooths seasonal variations—summer overproduction credits offset winter under-production.
The Future of Net Metering
Net metering policies are evolving. Here's what you should know:
Policy Changes
Some states are modifying net metering programs, often reducing export credit rates for new solar customers. California's NEM 3.0 and similar programs in other states have shifted toward lower export values.
Grandfather Provisions
Existing solar customers are typically "grandfathered" under their original net metering terms for 10-25 years. Installing solar now often locks in current favorable rates.
Battery Integration
As export credits decrease, batteries become more valuable. Storing excess solar for personal use rather than exporting at low rates improves economics under newer net metering structures.
Net Metering by State
Net metering availability and terms vary significantly by state:
Strong Net Metering States
- New Jersey: Full retail rate, no caps
- Massachusetts: Full retail rate, strong policies
- New York: VDER program with location-based credits
- Maryland: Full retail rate
Transitioning States
- California: NEM 3.0 with reduced export rates
- Arizona: Export credit rate varies by utility
- Nevada: Reduced from retail rate
States Without Mandatory Net Metering
Some states leave net metering to utility discretion. Check your specific utility's policies.
Questions About Net Metering
What happens to excess credits at year-end?
Policies vary. Some utilities pay you for excess credits (often at wholesale rate), while others reset credits to zero. Know your utility's policy.
Can I produce more than I use?
Most utilities cap system size at 100-110% of your consumption. Oversized systems may face reduced export compensation.
Does net metering work with batteries?
Yes, though batteries typically reduce your exports (by storing power for personal use) rather than increase credits.
What if I move?
Net metering credits usually don't transfer to new owners. Consider this in system sizing if you might sell soon.
Take Advantage of Net Metering Today
Net metering significantly improves solar economics, turning your roof into a mini power plant that earns credits every sunny day. With some states reducing net metering benefits for future installations, now is an excellent time to lock in favorable terms.
At Synergic, we help customers understand their local net metering options and design systems that maximize returns under current and future policies. Learn about our residential and commercial programs.
Get your custom quote or contact us for a free assessment including net metering analysis for your specific utility. Let's make sure you capture every benefit available!