- Net metering credits exports at or near the full retail rate, usually netted over a month or year.
- Net billing and export tariffs credit exports at a separate, usually lower, rate.
- California's 2023 move from net metering to net billing cut typical export values by roughly three-quarters, according to most analyses.
- The lower your export rate, the more it pays to use your own solar on site, through timing, smart controls or a battery.
The two flows that matter
Every solar home has two separate streams of energy:
- Self-consumed solar: power your home uses as it is generated. It never reaches the meter, so it saves you your full retail rate, including any per-kWh delivery charges.
- Exported solar: surplus power that flows to the grid. Its value depends entirely on your utility's compensation rules.
The share of output you self-consume varies widely with system size, battery storage and when people are home. A household out all day with a large system exports more; a home office with daytime cooling exports less.
The main compensation types
| Scheme | How exports are valued | Where you see it |
|---|---|---|
| Net metering (NEM) | At the retail rate; the meter effectively runs backward, with netting monthly or annually | Many US states and several Canadian provinces |
| Net billing | At a separate export rate, often based on the utility's avoided cost, which can vary by hour | California and a growing number of US states |
| Feed-in or export tariff | At a fixed or time-varying price per kWh exported, set by the retailer or regulator | Australia, many retailers in Europe |
| Smart Export Guarantee (SEG) | Large suppliers must offer a payment for exports; the rate is set by each supplier | Great Britain |
| No compensation | Exports earn nothing, or exports are restricted | Some utilities and grid-constrained areas |
Netting periods
Under net metering, timing matters. With monthly netting, surplus in one month offsets imports in the same month and any leftover rolls forward. With annual netting, summer surplus can cover winter bills, with a "true-up" at the end of the year. Excess beyond your annual use is often paid at a much lower rate or forfeited, which is why oversizing rarely pays.
Net billing in practice
Under net billing, imports and exports are tracked separately. You pay the full rate for every kWh you import and earn the export rate for every kWh you send out. When California's three large investor-owned utilities moved new solar customers to net billing in April 2023, export credits were set from an avoided-cost model with hundreds of different hourly values across the year. Exports in late afternoon and evening in summer can be worth much more than exports at midday.
Worked example: one system, three sets of rules
A home uses 9,000 kWh a year and pays 20 cents per kWh. Its solar produces 10,000 kWh a year. It uses 55% of that directly and exports the rest.
- Self-consumed: 10,000 × 55% = 5,500 kWh, saving 5,500 × $0.20 = $1,100
- Exported: 4,500 kWh
- Still imported from the grid: 9,000 − 5,500 = 3,500 kWh
| Rule set | Value of 4,500 kWh exported | Total annual value |
|---|---|---|
| Annual net metering (retail credit for exports up to the 3,500 kWh imported; 1,000 kWh annual excess paid at 4¢) | 3,500 × $0.20 + 1,000 × $0.04 = $740 | $1,840 |
| Net billing at an average 7¢ export rate | 4,500 × $0.07 = $315 | $1,415 |
| Low export tariff at 3¢ | 4,500 × $0.03 = $135 | $1,235 |
Even generous net metering does not pay full retail for annual excess, so this system is slightly oversized for net metering. Under net billing, the same system is worth about 23% less, and the export side drops by more than half. Plug your own rates into our solar savings calculator to see the effect.
Charges solar cannot offset
Check your tariff for charges that apply no matter how much solar you produce:
- Fixed monthly customer or connection charges.
- Minimum bills, which set a floor on what you pay.
- Non-bypassable charges, per-kWh fees on all imports that some utilities exclude from export credits.
- Grid access or capacity charges specific to solar customers in some areas.
These reduce the share of your bill solar can touch and are worth confirming before you size a system.
How to get more value under low export rates
- Shift flexible loads to midday. Run the dishwasher, laundry, pool pump and water heater when the sun is up.
- Charge an EV from solar if the car is home during the day. See our EV home charging guide.
- Pre-cool or pre-heat with a heat pump in the afternoon to reduce evening imports.
- Consider a battery if the gap between your import and export rates is large. Our home battery guide shows the arithmetic.
- Choose the right rate plan. Many solar customers are required or encouraged to take time-of-use rates, which can reward afternoon exports and penalize evening imports.
Grandfathering and future changes
Export rules change. Many utilities let existing customers keep their original terms for a set number of years after a rule change, often called grandfathering or legacy treatment. The length varies. When you evaluate solar, assume rules may become less generous during the system's life, and check whether your interconnection date affects the rules you get.
Finding your local rules
Your utility's website and rate schedules are the definitive source. Search for "net metering," "net billing," "distributed generation" or "export" along with your utility's name. In Great Britain, the Energy Saving Trust publishes impartial guidance on the Smart Export Guarantee. For US federal, state and utility incentives that can affect payback, see our incentives page.
Frequently asked questions
What is the difference between net metering and net billing?
Net metering credits exported power at or near the retail rate you pay for imports. Net billing credits exports at a separate, usually lower, rate while you pay full price for everything you import.
Do I get paid for extra solar power at the end of the year?
Sometimes. Many net metering programs pay annual excess at a low wholesale or avoided-cost rate, and some forfeit it. Sizing your system close to your annual use avoids wasting surplus.
Is solar still worth it under net billing?
It can be, but the case depends more on self-consumption. Right-sizing the system, shifting loads into sunny hours and, where rate gaps are large, adding a battery can restore much of the value.
Can my utility change my net metering terms after I install solar?
Rules can change, but many regulators protect existing customers for a period. Check your utility's legacy or grandfathering provisions before you sign a contract.
Run your own numbers
Plug your bill, prices and climate into our free solar savings calculator — every assumption is editable.
This guide is general information, not financial, tax or engineering advice. Prices and incentives change — confirm with qualified local professionals and official program sources. See our methodology and disclosures.