Net metering might be the single most important factor in your solar savings that nobody explains clearly. Here's what it actually means and why the details matter.
Net metering is a billing arrangement where your utility credits you for excess solar electricity you send back to the grid. When your panels produce more than you're using (typically midday), that extra power flows to the grid and you earn a credit. At night or on cloudy days, you draw power from the grid as normal, offset by those credits.
Under full retail net metering, every kWh you send to the grid is credited at the same rate you'd pay to buy it. This maximizes your solar savings — effectively, the grid acts as a free "battery" for your excess production.
Some utilities credit excess solar power at a lower "avoided cost" or wholesale rate rather than the full retail rate — sometimes 50-75% of what you'd pay to buy power. This significantly reduces your effective savings compared to full retail net metering, even with the same system size and usage.
Newer policies in some states (notably California's NEM 3.0) have moved toward "net billing," which credits exported power based on its value at the time of export — often much lower during sunny midday hours when everyone's panels are producing. This has made battery storage more valuable in these markets, since storing your own power for evening use can be worth more than exporting it.
Two identical solar systems can have very different real-world savings depending on your utility's net metering policy. Before signing a contract, ask your installer specifically: "What is my utility's net metering policy, and what rate will I be credited for exported power?" Don't assume full retail credit — verify it.
Contact your utility directly or check their website for "net metering" or "net energy metering (NEM)" policy documents. Your state's public utility commission website is also a reliable source for current rules in your area.
Our bill reduction calculator lets you adjust for your specific net metering rate.
Calculate My Bill Reduction →