Net Metering Rules by State (2026)

Net metering is a solar incentive that allows homeowners to receive bill credits for excess electricity their solar panels send to the power grid. Think of the grid as a giant battery: when your panels produce more than you need during sunny hours, the surplus goes to the grid and you earn credits. When you need electricity at night or on cloudy days, you pull from the grid and use those credits. At the end of each billing cycle, you only pay for the net difference between what you consumed and what you produced — hence the name “net metering.”

Net metering is crucial for solar economics because most homeowners aren’t home during peak solar production hours (10am–3pm). Without net metering, all that midday excess would be wasted from a financial perspective. With net metering, it’s as valuable as electricity consumed directly, allowing a properly-sized solar system to offset 80-100% of your annual electricity bill.

The quality of net metering varies dramatically by state. Some states mandate full retail rate credits, meaning every kWh you export is worth the same as every kWh you buy. Others offer reduced compensation, and some states have no net metering policy at all. This variation is why a solar system in New Jersey can pay for itself in 6 years while the same system in a state without net metering might take 13 years.

The financial impact of net metering on your solar investment is substantial. In a state with full retail net metering and a 15¢/kWh electricity rate, an 8kW solar system producing 11,000 kWh annually generates $1,650 in annual value. In the same state without net metering, only the portion consumed directly (roughly 30-40% without a battery) creates savings — dropping annual value to approximately $500-$660. That’s a $1,000/year difference, or $25,000 over the system’s 25-year lifetime.

For homeowners in states with reduced or no net metering, battery storage becomes a critical component of the solar equation. A home battery like the Tesla Powerwall or Enphase IQ Battery stores excess daytime solar production for evening use, effectively creating your own “personal net metering.” While batteries add $8,000-$15,000 to system cost, the improved self-consumption can make the investment worthwhile in states where export credits are low or nonexistent.

Time-of-use (TOU) rate structures add another layer of complexity. In California and other TOU states, the value of your solar exports varies by time of day. Peak rates (4pm-9pm) can be 2-3x off-peak rates (midnight-6am). Strategic battery usage — storing solar energy and using or exporting it during peak hours — can actually make solar more valuable under TOU than under flat-rate net metering in some cases.

The national trend is moving away from full retail net metering. California’s NEM 3.0 in 2023 was a bellwether, reducing solar export values by 75% or more. Other states are following suit. This makes going solar now — while your state’s current net metering policy is in effect — particularly important. Most states grandfather existing solar customers under the policy that was active when they installed, protecting your savings for 10-20 years.

Net metering credits solar exports at the retail rate, effectively using the grid as free storage. Your meter measures net consumption, and you only pay for the difference between what you use and what you produce. This is the most favorable arrangement for solar owners.

Net billing (sometimes called “reduced net metering”) credits exports at a rate lower than retail — often based on avoided cost, wholesale rates, or a fixed buyback rate. You still send excess to the grid, but each exported kWh is worth less than each kWh you purchase. California’s NEM 3.0 is a form of net billing.

Feed-in tariffs (FiTs) are long-term contracts where the utility agrees to buy your solar energy at a fixed rate for 10-20 years. While common in Europe, FiTs are rare in the US. They provide income certainty but may pay less than retail net metering in high-rate states.

Understanding which compensation structure your utility uses is essential for accurately calculating your solar ROI. We recommend using our solar calculator with your specific utility information for the most accurate savings estimate.