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What is Net Metering?
Net metering is a utility billing arrangement that credits solar customers for the excess electricity they send to the grid. When a home or business produces more solar power than it uses, that electricity flows onto the local electric grid, and the customer receives bill credits that can be used to offset electricity they draw from the grid.
Net metering allows customers to maximize the value of their solar investment while helping supply locally generated electricity to nearby homes and businesses.
How Net Metering Works
Solar panels often produce the most electricity around midday, when many homes use relatively little power. When production exceeds on-site demand, the extra electricity is exported to the grid through a bidirectional electric meter.
The utility tracks both electricity delivered to the grid and electricity consumed from it. Excess generation earns bill credits that can be applied to future electricity use, helping reduce monthly energy costs.
Depending on state policy and utility rules, unused credits may roll over to future billing periods, be paid out after a defined time period, or expire. Policies vary by state and utility.
Why Net Metering Matters
- Lower electricity bills: Net metering helps homeowners and businesses lower their electricity bills by earning credits for excess solar generation. Those credits complement the savings customers receive from using their own solar power directly.
- Stronger, resilient electric grids: Because rooftop solar generates electricity close to where it is used, net metering can reduce transmission losses, ease congestion on local distribution systems, and help meet demand during periods of high electricity use. This benefits the entire community, regardless of whether you have solar.
- American jobs and investment: Net metering supports demand for distributed solar, helping sustain jobs for manufacturers, electricians, installers, engineers, and small businesses while encouraging billions of dollars in local, private investment.
- Benefiting the electric grid: Some utilities characterize net metering as a revenue loss, but the evidence tells a different story. Rooftop solar provides benefits that extend beyond individual customers. By generating electricity close to where it is consumed, rooftop solar can reduce strain on transmission infrastructure, lower line losses, and help meet peak electricity demand. Numerous cost-benefit studies have found that these system-wide benefits should be considered when evaluating net metering policies.
State Net Metering Policies
Net metering policies vary by state and utility. The DSIRE database (Database of State Incentives for Renewables and Efficiency) from the N.C. Clean Energy Technology Center is the most comprehensive publicly available source for state and utility net metering policies. DSIRE entries are updated regularly.
When reviewing a DSIRE entry for your state, look for these specific parameters:
- Eligible technologies and system size limits: Not all states apply net metering rules to systems above a certain capacity (often measured in kW AC or DC).
- Net crediting rate: Is excess generation credited at retail rate, avoided cost, or a custom export rate?
- NEM measurement period: Is my energy generation and consumption netted monthly, hourly, every 15 minutes, or instantaneously?
- Rollover vs. cash-out provisions: Do unused net credits roll forward monthly? Is there an annual true-up, and what rate applies to any remaining balance?
- REC ownership: In some states, solar renewable energy certificates (RECs) generated by your system belong to the utility under net metering agreements, not to you. This affects any voluntary renewable energy markets you might want to participate in.
- Meter aggregation rules: Some programs allow credits from a solar system to offset usage across multiple meters on the same property or account.
Explore your state’s policies →
Solar Access Rights
Net metering determines how customers are compensated for excess solar generation, but it does not guarantee the right to install solar.
State solar access laws and solar easements help protect homeowners and businesses from unreasonable restrictions that limit solar installations or access to sunlight.
SEIA supports strong solar access protections that expand consumer choice and reduce barriers to solar adoption.
Frequently asked questions
Net metering is a utility billing arrangement that credits solar customers for excess electricity they send to the grid. Those credits offset the cost of electricity they use from the grid when their solar system isn’t producing enough power to serve their home or business.
No. Most states have some form of net metering or net billing, but program rules vary by state and utility. Check DSIRE for your state’s current policies.
Net billing typically credits exports at a rate less than the retail rate for consumption, reducing overall savings and affecting system payback calculations.
Generally, no. Most programs provide bill credits rather than cash payments, although some utilities offer an annual cash-out for unused credits. Rules vary by state and utility.
It depends on your state’s policy and utility program. Some credits roll over month to month, while others are paid out, forfeited, or reset during an annual reconciliation period. Check DSIRE or your utility for details.
Battery storage lets you save excess solar energy for use later instead of exporting it to the grid. It provides the greatest financial benefit in states with net billing or time of use rates, while also offering backup power and increased energy resilience.
DSIRE is the most comprehensive source for state and utility net metering and net billing policies. You should also review your utility’s tariff and, where applicable, state regulatory guidance for the most current program details. SEIA’s net metering policy resources provide additional background.
Resources
Net Metering Resources
