Net Metering by State and Country: How Solar Owners Get Paid for Excess Energy

Ask 10 solar salespeople what kills a deal and 9 will say price. They are wrong. In our financing work, the variable that moves payback by 3 years or more is not module cost, labor, or financing rate — it is the export credit rule attached to the meter.

A system in Massachusetts can export surplus power at the full retail rate, roughly $0.30 per kWh in 2026. A similar system 100 miles away under a different tariff can earn $0.05 for the same electron. That spread is larger than the entire installed cost decline of the last 5 years.

This matters more now than it did 12 months ago. The 30% federal residential tax credit expired on December 31, 2025, so the export tariff now carries more of the payback math than at any point in the last 15 years. Our /blog/us-solar-tax-credit-2026-guide covers what remains on the incentive side. This guide covers the other half: what your utility pays you.

In this guide:

• How net metering works, from the bidirectional meter to the annual true-up
• The difference between net metering and net billing, with the math behind it
• State-by-state US rules: full retail, reduced-credit, and net billing states
• Export compensation in Germany, the UK, Australia, India, and 7 other markets
• ROI math: how the export rate moves payback by years, not months
• When batteries and self-consumption beat exporting at reduced rates
• How to model export tariffs accurately in client proposals
• Where policy is heading, and the mistakes that cost solar owners money

What Is Net Metering? The Basics

Net metering is a billing mechanism that credits solar system owners for electricity they export to the grid. The utility measures energy flowing in both directions and bills you for the net difference. Our /glossary/net-metering entry covers the formal definition; here we focus on how it works in practice.

The mechanism starts with a bidirectional meter, which records imports and exports separately. Older meters simply spun backward; modern smart meters log each direction on its own register. Your monthly bill then nets the 2 registers against each other.

If you import 600 kWh and export 450 kWh in a billing cycle, you pay for 150 kWh of net consumption. The 450 exported kWh offset your imports at the retail rate, dollar for dollar. That 1:1 offset is the defining feature of full retail net metering.

Credits, Rollovers, and the True-Up

Solar systems rarely net to zero every month. Summer production exceeds consumption, and winter consumption exceeds production. Net metering rules handle this through credit rollover.

Excess generation typically converts to a kWh credit or a dollar credit on your account. That credit rolls forward to offset future bills. Most full retail programs roll credits indefinitely within a 12-month cycle.

The true-up is the annual settlement that closes the cycle. At the true-up date, remaining credits are either paid out at a lower rate, forfeited, or rolled into the next year. California pays leftover credits at a wholesale rate of a few cents per kWh. Some states pay nothing at all, which is why oversizing a system past annual consumption is usually poor economics.

kWh Credits vs. Dollar Credits

Programs differ in what the credit actually is. A kWh credit banks energy: export 100 kWh in June, draw 100 kWh free in January. A dollar credit banks value: your exports convert to currency at a defined rate, and the balance offsets future charges.

The distinction matters under time-of-use rates. A kWh credit ignores when you exported, while a dollar credit prices each hour. Utilities migrating to dollar credits are usually 1 step away from pricing exports below retail, so the credit type in a tariff is an early warning signal.

Eligibility, Size Caps, and Interconnection

Every net metering program sets eligibility boundaries. Residential caps typically run 10–25 kW, while commercial caps range from 100 kW to 2 MW depending on the state. Some programs also cap enrollment as a percentage of utility peak load.

The interconnection agreement is the contract that activates net metering. You do not get export credits until the utility approves the interconnection and swaps or reprograms the meter. In our experience, 2–6 weeks of interconnection delay is normal, and proposals should never promise export revenue before that approval lands.

One more boundary matters: net metering applies to the energy component of your bill, not necessarily the whole bill. Fixed charges, minimum bills, and non-bypassable charges — fees that apply regardless of netting — still appear every month. California’s NEM 2.0 customers pay non-bypassable charges on every imported kWh, and New York applies a Customer Benefit Contribution to new solar customers. The retail offset is large, but it is never 100% of the bill.

Net Metering vs. Net Billing: The Critical Difference

The single most important policy question for any solar project is 1 sentence: what rate does the utility pay for an exported kWh? The answer splits every market in the world into 2 camps.

Net metering in its classic form credits exports at or near the full retail rate. The retail rate bundles energy supply, transmission, distribution, and various policy charges into 1 per-kWh price. When you export, the utility credits you as if you had sold back that entire bundle.

Net billing separates the 2 flows. You buy electricity at the retail rate, and you sell exports at a different, lower rate. That rate is usually the avoided cost — what the utility would otherwise pay to generate or buy that energy — or a wholesale market price.

Why the Gap Is So Large

The retail rate in a high-cost state might be $0.30 per kWh. The energy-only portion of that rate — the part the utility actually saves when you export — might be $0.04–0.06. The rest pays for wires, meters, and programs that keep running whether or not your panels export.

Under full retail net metering, you are credited for wires you did not use. Under net billing, you are paid only for the energy itself. That is the entire policy fight, compressed into 1 number.

The Math in Practice

Take a home that exports 4,000 kWh per year. Under full retail net metering at $0.30 per kWh, those exports are worth $1,200 per year. Under net billing at $0.05 per kWh, the same exports are worth $200.

The $1,000 difference compounds across the system’s life. Over 25 years, at a 2% discount rate, it is roughly $19,500 of present value — more than half the cost of a typical residential system. No equipment upgrade comes close to that impact.

The Spectrum Between the 2 Extremes

Real-world policies sit along a spectrum, not at the poles. The main variants:

Gross metering sits outside this spectrum entirely. All production is metered and sold at a set price, and all consumption is bought at retail. Germany’s full-export option and India’s rules for systems above 500 kW work this way.

How to Tell Which One You Have

The fastest check is 3 questions, asked of the utility rather than the installer. What rate applies to exported kWh, in dollars? How are credits settled at the annual true-up? And which tariff schedule number governs the account?

If the export rate equals the retail rate on the same schedule, you have net metering. If the export rate comes from a different schedule, a published calculator, or a wholesale index, you have net billing — whatever the marketing calls it.

The direction of travel is clear. Since 2012, more than a dozen US states have moved from full retail toward reduced credits or net billing, and no state has moved the other way. Designers and salespeople who build proposals on yesterday’s tariff are underwriting a stranded assumption.

State-by-State Net Metering Guide (US)

US net metering is not 1 policy but 50-plus. State regulators set the rules, individual utilities file the tariffs, and both change on their own calendars. The tables below reflect the structure as of mid-2026 — verify against your utility’s current tariff sheet and the DSIRE database before relying on any entry.

States With Full Retail Net Metering

These states credit residential exports at or near the full retail rate, with credits rolling month to month.

A caution on the word “full.” Even in these states, the retail offset excludes fixed customer charges and certain riders. New York’s Customer Benefit Contribution, introduced for customers interconnecting after January 2022, adds a monthly fee based on system size. Full retail refers to the per-kWh offset, not a zero bill.

Massachusetts stacks its incentives unusually well. Retail net metering handles the bill offset, and the SMART program pays a separate per-kWh incentive for 10–20 years depending on system size. The 2 mechanisms are independent, so a Boston-area system collects both.

New York layers the Value of Distributed Energy Resources tariff for community and commercial projects while keeping retail netting for residential customers. The Customer Benefit Contribution, roughly $0.70–1.50 per kW of capacity per month, is the price of admission for new residential systems.

New Jersey deserves the “strongest program” label honestly. There is no system size cap beyond annual load, credits roll at retail, and the successor solar incentive program pays additional performance-based certificates. Florida nearly lost its 1:1 netting to a 2022 utility-backed bill, and the veto that preserved it is a reminder that even popular programs sit 1 vote from reform.

States With Reduced or Transitioning Credits

These states moved away from 1:1 retail netting but still pay a meaningful export credit.

Nevada’s structure is the elegant one in this group. The 2017 restoration law set export credits at 95% of retail for the first capacity tier, stepping down through 88% and 81% to a 75% floor as each tier fills. New applicants in 2026 land in the lower tiers, so a Nevada proposal should quote the current tier, not the headline 95%.

Illinois is the cleanest recent example of a mid-course correction. Customers who interconnected before 2025 keep 1:1 retail netting on their full bill. New customers net only the supply portion, which cuts the export credit by roughly a third. The lesson: grandfathering dates matter as much as the policy itself.

Net Billing and Avoided-Cost States

These states pay exports at avoided cost, wholesale rates, or regulator-set export prices well below retail.

California NEM 3.0: The Market Everyone Watches

California deserves its own discussion because it sets the template other states copy. NEM 3.0, adopted in December 2022 and effective April 2023, replaced retail netting with a net billing tariff for new customers.

Export credits now come from the Avoided Cost Calculator, which sets a different rate for every hour of the year. Average export values land around $0.04–0.08 per kWh, roughly 75–80% below retail rates that exceed $0.30. A handful of September evening hours pay far more — sometimes above $2.00 per kWh — which rewards battery dispatch over raw export volume.

Legacy protections are real but temporary. NEM 1.0 and NEM 2.0 customers keep their terms for 20 years from interconnection, and NEM 2.0 applies only to systems that filed complete interconnection applications before the April 2023 cutoff. The California Public Utilities Commission publishes the current tariff details.

The results are instructive. California residential installations fell sharply in 2023–2024, battery attachment rates jumped above 50% on new systems, and the market re-oriented around self-consumption. Any state considering net billing reform studies this sequence, and so should anyone modeling a project there.

States Without Statewide Net Metering

Texas has no statewide net metering mandate, but its deregulated market works differently rather than worse. Retail electricity providers compete for solar customers with buyback plans, and a few offer 1:1 credits up to monthly consumption. In regulated territories like Austin Energy, a Value of Solar rate around $0.10 per kWh applies. The plan choice is the policy, so comparing retailers matters more than anywhere else in the country.

Alabama, Mississippi, South Dakota, and Tennessee have no statewide net metering requirement. Individual utilities and co-ops in these states may offer programs, typically at avoided cost. Oklahoma requires utilities to offer interconnection but not retail-rate credits.

The remaining states — Washington, Wisconsin, Wyoming, Vermont, Minnesota, New Mexico, Montana, Missouri, Iowa, and others — run retail or near-retail programs with their own caps and true-up quirks. Washington nets at retail up to 100 kW with a 4% enrollment cap, Vermont layers siting adjusters onto its retail credit, and Minnesota pays retail below 40 kW and avoided cost above it. Treat any summary, including this one, as a map rather than the territory.

Net Metering in Key International Markets

Export compensation outside the US follows the same arc: generous early programs, then reform as solar penetration climbs. The mechanisms differ, but the direction is consistent.

Germany: Feed-in Tariff, Not Net Metering

Germany never adopted net metering. It uses a feed-in tariff — a state-set price per exported kWh, fixed for 20 years from commissioning. In 2026, small rooftop systems earn roughly 8 ct/kWh on surplus export, while grid electricity costs 30+ ct/kWh.

The policy logic is deliberate: the 4:1 gap between retail and export prices makes self-consumption the real return. German installers have designed around this for a decade, and their sizing discipline is exactly what net billing states are now learning.

United Kingdom: The Smart Export Guarantee

The Smart Export Guarantee requires large suppliers to offer an export tariff above zero. Rates are supplier-set, and in 2026 they range from about 3 p/kWh on basic tariffs to 15–30 p/kWh on premium or bundled tariffs, often tied to buying supply from the same company.

The practical move is shopping. UK solar owners can hold supply and export contracts with different suppliers, and switching export tariffs costs nothing. A household exporting 2,500 kWh per year gains £250+ annually by moving from a 5p tariff to a 15p tariff.

Australia: The Original Net Billing Market

Australia’s state feed-in tariffs once paid 44–60 cents per kWh on legacy schemes. Those premium rates have ended, and current retailer feed-in tariffs run roughly 3–10 cents while retail rates exceed 30 cents.

Australia shows where mature markets end up: self-consumption rates above 80% via batteries, hot water diversion, and load timing. Export revenue has become a rounding error in well-designed systems, by design rather than by accident.

Canada, Japan, and the Rest of the Field

Canada’s provincial programs — Ontario net metering, BC Hydro’s net metering, Alberta’s micro-generation regulation — still credit exports at retail within the billing period. Annual settlement rules and size caps differ by province, and none of the major programs has faced California-style reform yet.

Japan is the cautionary tale on cliffs. Its residential feed-in tariff carried a 10-year term, and hundreds of thousands of systems have already rolled off rates above 40 ¥/kWh onto post-FIT buyback rates near 7–9 ¥/kWh. The resulting battery retrofit market is the fastest-growing storage segment in Asia.

Brazil’s 2022 distributed generation law kept retail netting but phases in distribution charges on exported energy through the decade, which quietly converts net metering into partial net billing. South Africa’s compensation is municipal and avoided-cost based, with Johannesburg and Cape Town running separate feed-in frameworks while the national picture develops.

The Pattern Across Markets

Three trends repeat across nearly every country. First, export compensation converges toward the wholesale or avoided-cost value of energy. Second, time-varying export rates replace flat ones, rewarding evening and peak-hour discharge. Third, policy increasingly rewards flexibility — batteries, controllable loads, and vehicle charging — rather than raw export volume.

Markets differ on timing, not on direction. A proposal that assumes flat, retail-rate exports for 25 years is wrong everywhere; it is only a question of when it becomes visibly wrong.

How Net Metering Changes Solar ROI

Payback math is where policy stops being abstract. The export credit rate is usually the single largest assumption in a residential ROI model, and it is the one most often copied from a brochure instead of verified against a tariff.

A Worked Example: The Same System in 2 States

Take an 8 kW system installed for $22,400 at $2.80 per watt. It produces 11,000 kWh per year, and the household consumes 10,000 kWh annually with 40% daytime overlap. Retail electricity costs $0.28 per kWh in both scenarios, and utility escalation runs 3% per year.

Without the federal residential credit — expired since December 31, 2025 — the full $22,400 is the cost basis. The household self-consumes 4,400 kWh worth $1,232 per year at retail. The remaining 6,600 kWh exports.

Under full retail net metering, exports earn $1,848 per year. Total year-1 value is $3,080, and simple payback lands near 7.3 years. Under net billing at $0.06 per kWh, exports earn $396. Total year-1 value drops to $1,628, and simple payback stretches past 13.7 years.

Same panels, same roof, same sun — a 6.4-year payback difference from 1 tariff line. This is why we tell every installer the same thing: the export rate assumption is the proposal.

Extend the horizon and the divergence compounds. Over 25 years with 3% escalation and 0.5% annual degradation, the net metering scenario accumulates roughly $112,000 of nominal value against $59,000 under net billing. In financing terms, that is the difference between an unlevered return in the mid-teens and one in the high single digits.

The Self-Consumption Sensitivity

Self-consumption is the lever that shrinks the gap between the 2 scenarios. Each kWh used on-site is worth the full retail rate regardless of policy, because it avoids a purchase rather than generating a credit.

The retail net metering column stays flat because every kWh is worth the retail rate either way — until production exceeds annual consumption and the true-up starts paying surplus at wholesale. The net billing column climbs steeply with self-consumption, and the payback gap collapses from nearly 9 years to just over 1.

Two lessons follow. Under net billing, design quality determines returns more than policy does. And under full retail net metering, the temptation to oversize past annual consumption quietly destroys value at the true-up.

What This Means for Modeling

Three modeling rules follow from the math. First, size the system to consumption, not to roof area — oversizing only makes sense when the export credit is near retail. Second, model the true-up, because credits paid out annually at wholesale rates are worth a fraction of their face value. Third, escalate the retail rate and the export rate separately; they do not move together.

That last rule deserves emphasis. Retail rates have climbed 3–5% per year in many territories, while avoided-cost export rates are flat or declining by design. A model that escalates both at the same rate overstates net billing revenue by 15–25% over the system’s life.

Our /generation-financial-tool builds these scenarios directly into the cash-flow model, so you can show a client the retail-netting case, the net billing case, and the battery case side by side. Clients who see the sensitivity stop asking for the cheapest quote and start asking for the right design.

Batteries and Self-Consumption in a Net Billing World

Net billing changes what a battery is for. Under full retail net metering, the grid is already a perfect, free battery, and adding hardware storage rarely pays for itself on arbitrage alone. Under net billing, the battery converts 5-cent exports into 30-cent avoided purchases.

The Arbitrage Math

A battery’s energy value is the retail rate minus the export rate, times the kWh it cycles, times round-trip efficiency. At a $0.30 retail rate, a $0.05 export rate, and 90% efficiency, each cycled kWh is worth about $0.225.

A 10 kWh battery cycling 300 times per year shifts 3,000 kWh, worth roughly $675 per year in this example. At an installed cost of $8,000–10,000, simple payback on the battery alone runs 12–15 years without other value streams. That is honest math, and it is why blanket claims that “batteries always pay under net billing” are wrong.

When the Battery Actually Wins

Batteries cross into clear payback under 3 conditions. First, evening time-of-use rates widen the spread — California’s peak hours pay export credits above $2.00 per kWh in September, and discharging into those hours changes the math entirely. Second, backup value has a real price for the household, and assigning even $200–300 per year of resilience value closes most of the remaining gap. Third, battery installed costs continue falling, and sub-$6,000 installed 10 kWh systems now appear in competitive markets.

California’s attachment rate tells the story. More than half of new residential systems there now ship with storage, up from roughly 10% under NEM 2.0. The policy did not kill the market; it changed the product.

Sizing for Self-Consumption, Not Backup

The design mistake we see most is sizing the battery for backup fantasies instead of daily cycling. A battery that covers the evening load and cycles daily earns its keep. A battery sized to run central air conditioning through a 3-day outage sits idle 350 days a year.

For most net billing homes, the right size is the battery that absorbs the typical midday surplus — usually 5–13 kWh for a residential load. Our solar storage design guide walks through the sizing method step by step.

The Free Alternative: Load Shifting

Before quoting hardware, quote behavior. Running the dishwasher, washing machine, water heater, and EV charger during solar hours can lift self-consumption by 10–20 percentage points at zero capital cost. Smart plugs and appliance timers automate most of it for under $100.

Load shifting captures the same retail-rate value a battery does, at the cost of convenience rather than cash. In marginal net billing deals, it is often the difference between a project that pencils and one that does not.

The Tradeoff Worth Saying Out Loud

Here is the contrarian position: under full retail net metering, a battery is usually a financial mistake, and saying so builds trust. We have reviewed deals where adding a $9,000 battery to a 1:1 net metering home added 8 years to payback while delivering backup the client never asked about.

Storage is a tool for a specific tariff environment. Sell it where the export rate justifies it, disclose the payback honestly where it does not, and your close rate will improve in both cases.

How to Model Net Metering in Your Proposals

Everything above converges on the sales process. Export credit assumptions are where proposals either survive scrutiny or fall apart at the kitchen table, and the difference is process, not talent.

Verify the Tariff Before You Quote

Pull the actual tariff sheet from the utility, not from memory or last year’s proposal. Confirm 5 items: the export credit rate or netting rule, the true-up treatment, any size caps or enrollment caps, interconnection timeline, and pending regulatory proceedings that could change terms.

DSIRE summarizes state rules, and state commission dockets carry the live detail. For any deal above $20,000, the 20 minutes of verification is the cheapest diligence in the transaction.

Here is the first-hand observation from structuring $100M+ of solar financing: more proposals die from export-rate corrections than from price objections. A client who discovers your savings number assumed retail netting in a net billing territory does not renegotiate — they disappear. The correction always surfaces, either before signing or in year-1 bill shock, and only 1 of those outcomes is survivable.

Model the System Honestly

Export value starts with production, and production starts with shading. A 15% shading loss on the export-heavy afternoon hours hits net billing economics twice — once in lost energy and again in lost self-consumption. Running solar shadow analysis software on the actual roof geometry is what separates a modeled number from a guessed one.

Match the load profile to the production profile before assigning self-consumption shares. A 40% default self-consumption assumption is fiction for a home where everyone works away from the house. Interval data from the utility, or at minimum an honest conversation about occupancy patterns, beats any default.

Present Scenarios, Not Points

Single-number savings claims are fragile. Three-scenario presentations — conservative, expected, optimistic — survive policy changes and earn referrals.

The conservative case should use today’s export rate with no escalation, or the lowest published avoided-cost band. The expected case uses verified current terms with documented escalation. The optimistic case can include rate design improvements, but label it as speculative.

Good solar proposal software makes this practical by tying the financial model to the design file, so a shading change or a battery addition updates every scenario at once. The SurgePV workspace keeps the 3D design, yield simulation, and financial outputs in 1 place, which removes the spreadsheet drift that causes most quoting errors.

Write the Policy Risk Clause

Every proposal should state, in writing, which tariff version the savings model uses and that utility rates and policies may change. This is not legal boilerplate — it is expectation management that protects your reviews page.

Include the interconnection dependency as well. Savings begin at permission to operate, not at installation, and the gap between those dates is the utility’s schedule, not yours.

The handoff matters as much as the quote. When the project closes, the file should carry the tariff schedule number, the interconnection application date, and the modeled assumptions in a form the client can hand to their accountant. Deals that document assumptions generate referrals; deals that bury them generate disputes.

The Future of Net Metering: Where Policy Is Heading

Net metering policy moves in 1 direction globally: from crediting exports at retail toward paying their time-specific energy value. The interesting questions are about pace and design, not direction.

Trends Already in Motion

Five shifts define the current policy cycle. Avoided-cost and wholesale-linked export rates are replacing flat retail credits, as in California, Arizona, and Utah. Hourly or time-of-use export rates are spreading, tying compensation to when the grid actually needs power. Fixed charges and minimum bills are rising, shrinking the portion of the bill that netting can offset. Value-of-solar tariffs, which price exports by calculated grid benefit, keep appearing in regulatory proceedings even where adoption lags. And distributed energy programs — virtual power plants, battery aggregation, demand response — are layering new revenue on top of export credits.

The virtual power plant trend deserves a closer look. Utilities in several states now pay solar-plus-storage homes for dispatch capacity on top of export credits, sometimes $50–100 per kW per year. That revenue stream rewards exactly the flexibility that net billing punishes you for lacking.

The federal picture compounds all of this. With the residential tax credit expired and commercial credits under their own phase-down schedules, state export policy now carries more of the economics than at any time since 2010. Expect states with strong retail net metering to face fresh reform pressure as their solar penetration climbs.

The Contrarian Case: Full Retail Was Never the End State

The industry treats every net metering reform as an attack, and the reflex costs credibility. The honest version is more complicated.

Full retail net metering credits solar owners for grid services they do not provide. The delivery network still serves the solar home every night, and under 1:1 netting the solar customer pays little or nothing toward it. Utilities recover the shortfall from non-solar customers, and regulators eventually respond — that arithmetic, not lobbying alone, drives reform.

The tradeoff worth admitting: NEM 3.0 cut California export values by about 75% and also produced the highest battery attachment rate in the country, better load alignment, and systems designed for grid needs instead of meter games. The reform was clumsy in execution and directionally correct in principle. Both things are true, and installers who can hold both truths advise clients better than those chanting slogans in either direction.

What to Watch in Your Market

Track 3 signals in your state docket. Successor tariff proceedings, which announce reform 12–24 months before it lands. Cap utilization, because programs that approach enrollment caps trigger review. And cost-shift studies, since the framing of that debate predicts the successor tariff better than any press release.

Design flexibility is the only durable hedge. Systems sized for self-consumption, wired for storage, and quoted with scenario ranges survive every policy cycle we have financed through.

Common Net Metering Mistakes Homeowners Make

These 8 mistakes account for most of the disappointment we see in post-installation reviews. All of them are avoidable.

1. Assuming net metering exists everywhere. No federal law guarantees it. Alabama, Tennessee, and Texas regulate exports at the utility or retailer level, and some co-ops offer nothing at all. Verify before you buy, not after.

2. Confusing the retail rate with the export rate. The number on your bill is the import price. The export price is a separate line in the tariff, and in net billing states it is a fraction of the retail rate. Ask for the export rate in writing.

3. Oversizing the system past annual consumption. True-up rules pay leftover credits at wholesale rates or nothing. A system producing 120% of your usage donates the extra 20% to the utility at a steep discount.

4. Ignoring the true-up date. Credits often reset on a fixed anniversary. Consumption timing around that date can be worth hundreds of dollars, and your installer should set the date strategically.

5. Missing grandfathering deadlines. Policy transitions honor systems interconnected before the cutoff. California’s NEM 2.0 required a complete application by April 2023, and Illinois kept full retail only for pre-2025 interconnections. In a transition window, filing early is worth real money.

6. Believing the meter spins on installation day. Export credits start at permission to operate, after inspection and utility approval. Running the system before that approval can violate the interconnection agreement.

7. Skipping the battery math in net billing states. Exporting at $0.05 while buying back at $0.30 is a slow leak. A right-sized battery or even load shifting — running the dishwasher and EV charger at noon — captures value that exports surrender.

8. Treating the tariff as permanent. Net metering terms change, and legacy periods expire. The system lasts 25 years; the tariff that justified it may not. Buy a design that works under worse rules, and enjoy the upside if better rules survive.

Conclusion

Net metering decides what a solar system is worth more reliably than any hardware specification. Full retail programs in Massachusetts, New York, New Jersey, Maryland, and about 20 other states still make exported energy as valuable as consumed energy. Net billing in California, Arizona, Utah, and a growing list of markets makes exports worth a fraction of that, and pushes the return toward self-consumption and storage.

The 2026 context raises the stakes. With the federal residential tax credit expired, the export tariff is no longer 1 incentive among several — it is the incentive for most homeowners. Markets from Germany to Australia show the end state of this transition: compensation converges on energy value, and design quality replaces policy generosity as the driver of returns.

The practical playbook fits on an index card. Verify the export rate against the live tariff sheet. Size to consumption, not to roof area. Model the true-up and escalate retail and export rates separately. Quote scenarios, and put the policy risk clause in writing.

Our advice from the financing side has stayed constant across every policy cycle. Systems built on that discipline survive reform; systems sold on yesterday’s brochure do not. The installers winning net billing markets in 2026 are the ones who stopped selling cheap panels and started selling verified tariff math. The homeowners who fare best ask for the export rate before they ask for the price.

For term definitions, our /glossary/net-metering entry is the short version. For the incentive side of the ledger, see /blog/us-solar-tax-credit-2026-guide, and for storage design under weak export rates, /blog/solar-storage-design-guide. When you are ready to turn tariff rules into client-ready numbers, SurgePV’s solar design software carries the project from roof model to bankable proposal — and the solar software workspace keeps design, simulation, and financials in sync as policies change.

Frequently Asked Questions

The questions below mirror the structured FAQ data for this guide.

What is net metering?

Net metering is a billing mechanism that credits solar owners for excess electricity they export to the grid. Under full retail net metering, the credit equals the retail electricity rate. Under net billing, the credit is lower, often the avoided cost or wholesale rate.

Which states have full retail net metering?

States with full retail net metering include California (NEM 2.0 legacy customers), Massachusetts, New York, New Jersey, Maryland, and several others. Rules change frequently, so verify with your utility and state regulator before modeling savings.

What is the difference between net metering and net billing?

Net metering credits exports at or near the retail rate. Net billing credits exports at a lower rate, such as the utility’s avoided cost or a fixed export rate. Net billing is becoming more common as states reform solar compensation.

How does net metering affect solar payback?

Full retail net metering shortens payback by maximizing the value of exported energy. Net billing lengthens payback and increases the value of self-consumption, batteries, and load shifting.

Can you still get net metering in California?

New California solar customers fall under NEM 3.0, which is net billing, not traditional net metering. Export credits are significantly lower than retail rates. Legacy NEM 1.0 and NEM 2.0 customers keep their existing terms for a limited period.

Do batteries make sense without net metering?

Yes. Without favorable net metering, batteries store excess solar energy for use when the sun is not shining. This increases self-consumption and can improve payback compared to exporting at low rates.

For program-specific detail, see the state and country sections above, and verify current rules with your utility before modeling savings.