Net Metering vs Net Billing: What the 2026 Shift Costs You
Net metering is the quiet arrangement that made rooftop solar pencil out for two decades. Send a kilowatt-hour to the grid at noon, pull one back after dark, and the meter treats them as equal — a dollar of solar for a dollar off your bill. Net billing breaks that even trade. It pays you a wholesale “avoided-cost” rate for what you export, frequently a nickel, while you keep buying grid electricity at the full retail price. In 2026 that swap is no longer a California curiosity. It’s the direction the whole country is drifting, and it quietly rewrites whether panels alone are enough.
What actually changed in 2025
The scale of the reshuffle is easy to underestimate. The NC Clean Energy Technology Center’s 50 States of Solar annual review counted 386 distributed-solar policy and rate changes proposed, pending, or decided across the country in 2025, with 49 states plus D.C. and Puerto Rico taking some kind of action (reported by Solar Power World ). The most telling stat: of the ten most active states — Nevada, Virginia, West Virginia, Idaho, Maine, Illinois, Colorado, Hawaii, Washington, and Massachusetts — nine proposed changes to net metering or billing. This isn’t a handful of outliers tinkering. It’s a national re-pricing of what your roof’s exports are worth, happening one utility docket at a time.
The mechanism regulators keep reaching for is the same one California adopted: replace a retail credit with a value pegged to the utility’s avoided cost — what it would have paid to generate or buy that power wholesale. That number is almost always far below retail, and it varies by the hour, punishing the midday window when rooftops flood the grid with cheap solar.
The 2025 dockets read like a map of where this is headed. Nevada Power and Sierra Pacific filed net-metering successor tariffs with state regulators. Rocky Mountain Power asked to set a new, lower export credit in Idaho. In Texas, El Paso Electric proposed shifting solar customers off a minimum bill and onto a demand charge. Illinois released the final version of its Value of Distributed Energy Resources report — the analytical groundwork utilities use to justify an avoided-cost successor. Different states, different names, same gravitational pull away from paying retail for what your roof sends back.
The dollar gap, in plain numbers
Here’s why the label matters more than it sounds. Under California’s old NEM 2.0, exports earned roughly 30¢/kWh — near the retail rate. Under NEM 3.0’s net-billing tariff, average export compensation fell to about 5–8¢/kWh on avoided-cost math, a cut of roughly 75%, even as imported power still runs 30–55¢/kWh at peak (Aurora Solar ). Idaho’s avoided-cost structure pays as little as ~4¢/kWh. The retail price you buy at barely moved; the price you sell at collapsed.
Put that on a typical home’s exports and the bite is obvious:
| Export credit regime | Value per exported kWh | Annual credit on 4,000 kWh exported* |
|---|---|---|
| Full-retail net metering (CA NEM 2.0 era) | ~30¢ | ~$1,200 |
| Net billing / avoided cost (CA NEM 3.0 ) | ~5–8¢ | ~$200–$320 |
| Low avoided-cost (e.g., Idaho) | ~4¢ | ~$160 |
*Illustrative example using 4,000 kWh of annual grid exports; per-kWh figures from California CPUC avoided-cost / utility filings, not a quote for any specific home.
That’s an $800–$1,000-a-year swing on the same panels, same roof, same sunshine — decided entirely by which tariff your utility runs. No amount of extra sun closes that gap.
A worked bill example: the same house under each policy
To see the difference land on an actual monthly bill, take a house that uses 900 kWh in a month while its panels produce 700 kWh, and assume the typical pattern where only about 40% of solar production — 280 kWh — is consumed the moment it’s generated . The other 420 kWh flows to the grid. Price grid power at 30¢ and net-billing exports at 6¢, the round numbers from the table above.
Under full-retail net metering, exports and imports cancel roughly 1-for-1: the house imports 620 kWh, exports 420, and pays for the net 200 kWh — a bill of about $60.
Under net billing, the two flows are priced separately. The same 620 imported kWh cost $186 at retail, while the 420 exported kWh earn back only about $25 at 6¢ — a bill of roughly $161.
Same house, same roof, same month: $60 against $161. Measured against the ~$270 that house would pay with no solar at all, net metering saves about $210 a month and net billing about $109 — the tariff alone cuts the monthly savings nearly in half. (This is illustrative arithmetic, not a quote: real tariffs add fixed charges, and California’s version prices exports hour by hour.)
Net metering vs. net billing: pros and cons
Both terms have precise definitions in the glossary — net metering and net billing — but for a buyer the practical differences come down to six rows:
| Net metering | Net billing | |
|---|---|---|
| Export credit | Full retail rate, roughly 1-for-1 | Avoided-cost rate, often 4–8¢/kWh |
| Bill mechanics | Exports cancel imports | Exports priced far below imports |
| Best sizing strategy | Size generously — the grid acts as your battery | Size to daytime use; store the surplus |
| Home battery | Optional | Often what keeps the payback intact |
| Where it stands in 2026 | Still common, but shrinking | The direction most successor tariffs take |
| Main risk | Policy can change — check grandfathering terms | Low export value from day one |
Why the battery math flipped
Under full-retail net metering, the grid was your battery. You banked summer surplus and spent it in winter at par, so there was little reason to buy storage. Net billing kills that logic. When you export at a nickel and re-import at 30¢, every kilowatt-hour you sell and rebuy loses you a quarter. The rational response is to stop selling cheap and start storing — keep your midday production on-site in a home battery and discharge it into the evening peak , avoiding expensive grid power instead of donating solar at wholesale.
The gap does the arguing for you. If you import at 30¢ and export at 6¢, then every kilowatt-hour you keep on-site instead of selling is worth about 24¢ to you — several times what the utility would have credited it. Multiply that across a home’s daily midday surplus and the value of shifting even part of it into the evening is what turns a marginal net-billing payback into a solid one.
That’s exactly what the market did. After every major net-metering-to-net-billing transition, standalone solar sales dropped and installers pivoted to solar-plus-storage as the default pitch. It’s not a coincidence or a hard sell — under net billing, a battery is often the piece that keeps the payback intact rather than an upsell. The tradeoff is upfront cost: storage adds meaningfully to the system price, so the question becomes whether your export rate is low enough, and your evening rates high enough, to justify it. Which battery, and whether to own it at all, are their own decisions — the Powerwall vs. Enphase vs. FranklinWH comparison covers the hardware, and the battery TPO vs. buy calculator prices owning against a third-party arrangement.
What it means if you’re shopping in 2026
Three practical takeaways, depending on where you sit:
- If your state still has full-retail net metering: that’s a genuine, and possibly expiring, advantage. Interconnecting sooner may lock you into the current tariff if your state grandfathers existing customers — confirm the length of any legacy window before it narrows.
- If your state has already switched to net billing: don’t judge solar on the old export math. Size the system to your own daytime use, and price a battery alongside it. Run your real bill and rate through the solar savings calculator to see whether storage pays in your case.
- If your state is mid-debate: watch your utility’s docket. A successor tariff can move export credit by 20¢/kWh, which dwarfs almost every other variable in the decision.
The bigger point: with the 30% federal residential tax credit gone after 2025 , export policy is now one of the largest levers left on your payback. A homeowner in California buying under NEM 3.0 is playing a different game than one in a full-retail state, even if their systems are identical on paper. For a live demonstration of the stakes, see how Connecticut’s switch to net billing left it with the slowest payback among the expensive-power states — same hardware, different tariff, twice the wait.
Net metering isn’t vanishing overnight — many states still credit exports generously, and some legislatures pushed back on cuts in 2025. But the trend line is unmistakable, and it rewards homeowners who understand the difference between what they sell power for and what they buy it back for. That single spread, not your roof’s sun hours, is what net billing changes — and what it costs you if you ignore it.
New to export credits? This post covers what changes when a state moves from net metering to net billing. If you want the underlying mechanism first — what an export credit is and how it reaches your bill — start with net metering explained .
Frequently asked questions
Is net billing the same as net metering?
No. Net metering credits the power you send to the grid at the same retail rate you pay to buy it — roughly 1-for-1. Net billing credits your exports at a lower wholesale ‘avoided-cost’ rate, often a few cents per kWh, while you still buy grid power at full retail. The gap between those two numbers is what shrinks your savings.
Which states have already moved to net billing?
California is the headline case — its NEM 3.0 net-billing tariff took effect in April 2023. Nevada, Arkansas, and Idaho have moved toward avoided-cost or net-billing structures too, and per the NC Clean Energy Technology Center, nine of the ten most active states on solar policy in 2025 proposed changes to net metering or billing. The direction of travel is clearly away from full-retail credit.
Does a net-billing switch make solar not worth it?
Not usually — it changes how you get the value. Under net billing, exporting at a nickel while paying 30¢ to import means the smart move is to use your own solar on-site instead of selling it cheap. A battery stores midday production for the evening, so you avoid buying expensive grid power. Solar still pays; the payback just leans on self-consumption and storage.
If my state still has net metering, will I keep it?
Often yes, at least for a while. Many states grandfather existing solar customers onto their current tariff for a set number of years when they adopt a successor policy — which is exactly why interconnecting before a switch matters. But grandfathering terms vary by state and utility, so confirm the length of any legacy period before you sign.
Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.