What Is Net Metering? How Export Credits Work in 2026

By SolarCostData Data Desk · Reviewed September 2026 · Corrections log

How does net metering work?

Your solar panels don’t produce power evenly with your usage — they overproduce midday and underproduce at night. Net metering is how that mismatch gets settled: excess power you export earns a credit, and you draw those credits down when you pull from the grid.

The value of each exported kWh is what varies — and it’s where most of your solar savings live now that the federal credit is gone.

The three flavors (from best to worst for you)

Net metering by state: how the terms actually differ

Around 41 states plus DC have some form of net-metering law on the books, but that headline number hides how much the terms differ. True 1:1 retail credit is now the exception rather than the norm. A few markers across the spectrum:

Same country, wildly different deals — which is why the national label tells you almost nothing until you find your own utility’s number, and why “net metering laws by state” is really a per-utility question you settle on DSIRE, not a map.

The distance between the first two rows of that table is easier to see than to describe. Below, a single kilowatt-hour is priced both ways against a California retail rate of 34.7¢/kWh — first under full-retail credit, where export and import cancel out, then under net billing, where the export side collapses to about 6.5¢ and the difference simply disappears.

What it means for how you build

• Full-retail net metering: size the system to cover ~100% of annual usage; a battery is optional.
• Net billing / low export: exporting cheaply wastes value. A battery lets you store midday production and use it at night instead of buying expensive grid power — often the difference between a good and bad deal.

The mechanics nobody explains: rollover and the annual true-up

Most guides stop at “you get a credit.” What actually determines your bill is how those credits are banked and settled.

Under most net-metering programs, kWh credits roll over month to month. That’s what lets a solar home bank surplus during long summer days and spend it down through the short, dim days of winter — the two halves of the year cancel out. The account isn’t settled every month; it’s settled once a year at a true-up, and the true-up date is almost always the anniversary of the day your system got Permission to Operate (PTO).

Here’s the part that surprises people. If you finish the year with leftover credits — you exported more than you ever pulled back — most utilities don’t pay you retail for the surplus. They cash it out at a near-wholesale “net excess generation” rate, commonly in the ~3–5¢/kWh range, or in some programs zero it out entirely. Practically, that means oversizing your array well past your annual usage often just hands the utility cheap power. The sweet spot under a rollover-plus-true-up system is a design that lands close to your yearly consumption, not one that runs a big permanent surplus.

A few states buck the pattern in your favor. Maryland, for instance, now lets net-metered customers roll unused credits forward indefinitely instead of forcing an annual cash-out — a genuinely better deal, because no credit ever expires at a lowball rate. This is exactly the kind of detail worth confirming for your own utility before you size anything.

Is net metering going away?

It’s the most-asked policy question in solar, state by state — is net metering going away in California, in Florida, in New York, in Massachusetts — and the honest answer has three parts.

First, where it has already changed, it changed for new customers, not existing ones. California is the clearest case: full-retail crediting ended for new applicants in 2023, but every transition so far has grandfathered existing systems for a long window. No US utility has retroactively stripped credits from an operating rooftop system under these transitions — the risk is about the terms you lock in, not the ones you already have.

Second, the direction of travel is real. Utilities in a growing list of states have petitioned to replace retail crediting with net billing or lower export rates, and the successor tariff is essentially always worse for new solar customers than the one it replaces. Which states have made the switch, and what it costs , is tracked separately.

Third, “going away” almost never means “to zero.” Even the stingiest regimes still credit exports at something; what disappears is the 1:1 retail deal. Practically, if your state still offers full-retail net metering, that’s an argument for deciding sooner rather than later — the grandfathering clock below explains why — but it is not a reason to panic-buy from the first door-knocker who mentions a deadline.

How time-of-use rates change the math

More and more utilities are putting solar customers on time-of-use (TOU) rates, where a kilowatt-hour’s price depends on the hour of day. That interacts with net metering in a way that can quietly reshape your savings.

Under true full-retail net metering, a TOU plan can even help you: export during a pricey afternoon window and each exported kWh is credited at that higher price. But under net billing, the two clocks work against you. Your panels export their biggest surplus around midday, when power is cheap and export credits are low, while your home leans hardest on the grid from roughly 4–9 p.m., when TOU rates peak. You end up selling low and buying high on the same day. That single dynamic — cheap midday export, expensive evening import — is the core reason a battery pays off under net billing but is optional under full-retail net metering. Store the noon surplus, spend it at 7 p.m., and you replace an expensive grid kWh with one you already banked for pennies.

Watch the caps and the grandfather clock

Net-metering rules aren’t permanent, and the date on your interconnection paperwork can matter more than any brochure. Two moving parts to watch:

• Program caps. Some states limit how much rooftop solar can enroll under the current rules. When a utility hits that cap, it can push new applicants onto a less generous successor tariff. California is the cautionary tale: as utilities filled up under NEM 2.0, new customers rolled to the far stingier NEM 3.0 net-billing structure.
• Grandfathering. The flip side is protection. Most net-metering transitions let existing customers keep their original terms for a fixed window — often around 20 years from interconnection. That’s why racing to lock in a soon-to-close tariff can be worth real money, and why significantly expanding an old system can accidentally forfeit those grandfathered terms.

If you’re shopping in a state that’s mid-transition, ask the installer point-blank which tariff your application will land on and when the current one closes.

Worked example: one system, two policies

To see why the export rate dominates your payback, put the same array under two different rules. The numbers below are illustrative — plug your own into the calculator — but the shape is real.

Picture a system that produces 10,000 kWh a year, where the home uses 4,000 kWh of that directly as it’s made and exports the other 6,000 kWh, then buys back 6,000 kWh from the grid at night, all at a retail price of 20¢/kWh.

• Under full-retail net metering: the 6,000 exported kWh earn 6,000 × 20¢ = $1,200 in credits, which almost exactly cover the 6,000 kWh you buy back. Your export income and your grid purchases wash out, and the array offsets nearly your whole variable bill.
• Under net billing at a 6¢ avoided-cost export rate: those same 6,000 exported kWh earn only 6,000 × 6¢ = $360, while buying back 6,000 kWh still costs 6,000 × 20¢ = $1,200. You’re left roughly $840 short every year compared to the full-retail case — a gap that adds years to payback.

Now add a battery to the net-billing scenario. If storage lets you self-consume 3,000 of those kWh in the evening instead of exporting them at 6¢ and re-buying at 20¢, you recapture about 3,000 × (20¢ − 6¢) = $420 a year. That single line is the entire argument for batteries under net billing, in one number.

The charges net metering can’t erase

A trap in solar sales pitches is treating net metering as if it zeroes your bill. It doesn’t, because two kinds of charges sit outside what exports can offset:

• Non-bypassable charges (NBCs). These are per-kWh fees baked into your rate to fund grid maintenance and public-purpose programs, and by design you can’t earn credit against them — in California they run roughly 2–3¢/kWh. Even a system that covers 100% of your usage still pays them on the power you draw, which is why solar homes there often see a residual $25–$35/month in non-bypassable charges alone.
• Fixed monthly charges. A growing number of utilities levy a flat connection charge that no amount of solar production reduces. California is the leading example: the state’s new income-graduated fixed charge phased into the big utilities through 2025 and early 2026 (about $24/month for a standard residential customer, less for CARE and FERA discount customers), with per-kWh delivery prices trimmed about 10% to offset it.

None of this makes solar a bad deal — it just means your realistic floor is a small monthly bill, not $0. When you model payback, subtract these from your expected savings so the number is honest.

When you have more than one meter: aggregate and virtual net metering

Standard net metering assumes one meter, one roof. But farms, multi-building properties, apartment owners, and some businesses have several meters — and two lesser-known variants let a single solar array serve all of them:

• Aggregate net metering lets one customer apply an array’s credits across multiple meters on the same property — a farmhouse, a barn, an irrigation pump — so only one good roof or field has to host the panels. It’s common enough on farms to be nicknamed “agricultural net metering.”
• Virtual net metering (VNM) spreads the output of one project across multiple accounts, often within a short radius (frequently around two miles), which is how a landlord can share a rooftop system’s credits among tenants, or how community solar works at all.

These aren’t universal — only about 25 states offer some form of virtual net metering and roughly 17 support aggregate net metering — so if your situation involves multiple meters, confirm your state and utility allow it before you design around it. (Community solar, covered in its own guide , runs on the virtual-net-metering mechanism.)

How to find your net-metering policy

Your policy is set by your utility, not just your state, so check the source directly:

1. Look up your utility on DSIRE — search your state, then filter to net metering / net billing. DSIRE’s net-metering and excess-generation credit maps are refreshed regularly and are the closest thing to a neutral national source.
2. Read your utility’s “solar” or “interconnection” page for the export rate, the true-up rules, and any monthly or interconnection fees.
3. Check the units — full-retail net metering credits exports at your retail ¢/kWh; net billing credits at a lower avoided-cost or export rate.
4. Ask three specific questions in writing: What rate are my exports credited at? Do credits roll over, and what happens to any surplus at true-up? Am I on a time-of-use rate, and if so, what are the peak hours?
5. Make any installer show it in the quote — the assumed export rate drives their savings estimate, so make them prove it.

A quote that won’t state your export rate, your true-up treatment, and your rate schedule is a quote you can’t trust.

Bottom line

Net metering used to be a footnote; in 2026 it’s the headline. With the federal credit at $0, the export rate, the rollover rules, and the true-up settlement are what actually decide whether your panels pay for themselves in eight years or fifteen. Find your utility’s export policy first, understand how the credits are banked, then plug your real numbers into the 2026 savings calculator , size against your annual usage, see what still applies in your state , and check how the export regime moves your state in the payback ranking . If you’re in California, read NEM 3.0 explained next — it’s the sharpest example of how much a single utility rule can move the answer.

Want the 2026 policy change rather than the mechanism? This guide explains how export credits work. For what happens when a state swaps full-retail net metering for net billing — and what that switch costs in real money — see the net-metering-vs-net-billing comparison linked in the “going away” section above.

Sources

• California net billing (NEM 3.0) — California Public Utilities Commission, net energy metering .
• State and utility programs — DSIRE program index , Database of State Incentives for Renewables & Efficiency, NC Clean Energy Technology Center.
• Electricity rates — U.S. Energy Information Administration, average price by state .
• Why rates vary — EIA, electricity prices and the factors affecting them .

Figures on this page are estimates built from the sources above, not quotes. State and utility programs change and are often budget-limited — verify current terms on DSIRE and with your own utility before relying on them. Nothing here is tax, legal or financial advice.

Frequently asked questions

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.

Where to go next

• California NEM 3.0 — The sharpest live example of net billing in the country, priced hour by hour across 576 values.
• The 2026 policy shift — Which states have swapped full-retail crediting for net billing, and what that swap costs in real money.
• Are batteries worth it? — The export rate is the number that decides storage. This is the other half of that calculation.
• Sizing your system — Export rules decide how big to build, not just what you earn — which is why the true-up rate belongs in your sizing.
• Payback by state — Rate plus export regime is most of the ranking. See where the combination leaves your state.