Net metering, explained — and why your exports may pay less than you think
Updated June 30, 2026 · 8 min read · Independent, no sales pitch
Your solar panels and your electricity use are rarely in sync. Panels peak at midday; households peak in the morning and evening. So at noon you’re usually sending surplus power to the grid, and after dark you’re pulling it back. Net metering is the accounting rule that decides what those exported kilowatt-hours are worth — and it quietly determines a huge slice of your payback. Two homes with identical systems can be years apart on break-even purely because of how their utility credits exports.
Site model export factors · your utility's actual tariff decides the real number
Full retail net metering: the gold standard
Under true net metering, your meter effectively runs backwards. Export a kilowatt-hour at noon and you bank a credit worth one kilowatt-hour at the full retail rate — the same price you’d pay to buy it back that evening. The grid acts like a perfect, free battery. In states with full retail net metering, sizing a system to cover 100% of your annual usage makes clean financial sense, because every kWh is worth the same whether you use it on-site or send it out and reclaim it later.
Most full-retail programs still settle up over a year. You build credits in sunny months and draw them down in winter; many utilities “true up” once a year and pay little or nothing for a net annual surplus — which is the main reason oversizing well beyond your usage rarely pays.
Partial and below-retail credit: the new normal
As rooftop solar scaled, utilities argued that crediting exports at full retail overpays solar owners for grid costs they still rely on. Many states have shifted to crediting exports at less than retail — sometimes the wholesale “avoided cost” of generation, a few cents per kWh. The headline example is California’s NEM 3.0 (the Net Billing Tariff), which slashed export credit by roughly 75% versus the old scheme. Arizona, and a growing list of others, sit somewhere on this spectrum.
The practical effect: power you use as it’s made is still worth full retail, but power you export is worth much less. That single change flips the optimal strategy. Instead of exporting freely and reclaiming later, you want to consume your own solar — running the dishwasher, pre-cooling the house, charging the car at midday — and increasingly, to store the surplus in a home battery and use it at night rather than sell it cheap and buy it back dear.
Limited or no net metering
In some states there’s no statewide mandate at all, and what you get for exports is whatever your specific utility offers — which can be poor. Here, the economics depend heavily on self-consumption, and it’s essential to confirm the buyback terms in writing before sizing a system. A quote that assumes generous export credit you won’t actually receive is a quote built on sand.
How to find out what you’ll get
Net-metering rules are set at the state level and then implemented utility by utility, so the only reliable source is your own utility’s current solar tariff. Two questions cut through it: What do you credit me per kWh I export? and Do unused credits roll over, expire, or get cashed out — and at what rate? The answers tell you whether to size for self-consumption, whether a battery belongs in the plan, and how close to retail your exports really are.
Where it shows up in your estimate
On each state page we flag the export regime as full, partial, or limited, with a short note on what’s specific to that state — and the calculator prices it in. It assumes a typical no-battery home uses about 40% of its solar as it’s made (always worth full retail) and exports the rest at your state’s export tier, so a below-retail state shows honestly longer payback than a full-retail one. If your utility pays well under retail, lean toward a smaller system matched to what you use during daylight, or model a battery. Start from your state’s solar payback figure and tune it to your real export rate.