Net metering lets your solar system send excess power back to the grid and earn credits on your electricity bill dollar-for-dollar. When you produce more than you use (sunny day), the grid buys it. When you use more than you produce (night), you use stored credits. Not all states offer net metering—check your utility.
How net metering credit system works
Your solar system generates power. During the day, it powers your home first. Excess goes to the grid; your meter spins backward, earning credits. At night or cloudy days, you draw power from the grid using those credits. Ratio: 1 kWh produced = 1 kWh credit (dollar-for-dollar in most states). Example: You produce 30 kWh on a sunny day but only use 10 kWh → 20 kWh credits. At night you use 8 kWh → 12 kWh credits remain for next month.
Net metering vs net billing
Net metering = credits given at same rate as electricity costs you. Net billing = credits given at lower rate (what utility pays you wholesale, ~5-10¢/kWh instead of 15-20¢/kWh retail). States moving to net billing (CA 2023) pay less for exported power. Check your utility's policy—net metering is better for homeowners; utilities prefer net billing.
Does net metering result in lower bills?
Yes—your bill is (electricity used − electricity produced) × rate. Example: 500 kWh used, 400 kWh produced, rate = 15¢/kWh → bill = 100 kWh × $0.15 = $15. Without solar, bill = 500 × $0.15 = $75. Net metering savings: $60. Bills vary seasonally (winter uses more, produces less; summer produces more, uses less).
Monthly true-up and annual rollover
Monthly: Credits roll forward to next month. Annual true-up (usually December–January): utility pays out remaining credits at wholesale rate (~5¢/kWh) or credits zero out (depends on state). Example: You have 50 kWh credits at year-end → utility pays $2.50 or credits disappear. Some states allow unlimited rollover; others limit to 12 months. Check your utility.
Net metering limitations and availability
Available in: 43 states + DC (check DSIRE.org). Not available: Texas, Hawaii (limited), some utilities. Even where available, net metering has limits: (1) Utility can cap program size, (2) Some utilities discriminate (charge more to solar customers), (3) Recent policy changes reduce credit rates. Always verify your specific utility's net metering policy before installing.
Frequently Asked Questions
What happens to my solar credits if I move?
Credits belong to your account with the utility, not the home. If you move, ask utility to transfer credits to new address or cash them out (usually at wholesale rate). Some utilities let you gift credits to another customer.
Can I use solar credits to pay other utility bills?
Usually no—credits apply only to electricity consumption. Some utilities allow credits for water/gas if bundled, but rare. Check your utility.
What if net metering ends in my state?
You'll shift to net billing (credits at lower rate) or gross metering (you pay retail for usage, get paid wholesale for production). Most states with net metering will maintain or transition to net billing. Your existing system still works; economics change.
Is net metering the only way solar saves money?
No—solar saves money through: (1) lower electricity bills (main driver), (2) net metering (bonus), (3) tax credits (see note below), (4) state rebates. Net metering typically adds $20-50/month in savings; tax credits can save thousands depending on your situation. Note on federal tax credits: the residential federal solar tax credit (Section 25D, IRS) has expired for homeowner-purchased systems installed after December 31, 2025, so a 2026 purchase no longer earns a federal credit. If you use a solar lease or PPA, the installer may still claim the 30% commercial credit under Section 48E (IRS) and pass savings through as a lower rate. State and utility rebates remain unaffected. This is general information, not tax advice.
Can I sell excess solar power for profit?
No—net metering is credit-based, not a revenue stream. You earn credits toward future use, not cash. Some states allow compensation at wholesale rates (5-10¢/kWh), not retail (15-20¢/kWh).