Short answer: with net metering, the solar power you send to the grid earns a credit at (or close to) the retail price, and your meter effectively spins backward. With net billing, exports earn a lower, often time-varying rate. The difference is big: when California moved to net billing (NEM 3.0) in April 2023, average export credits fell about 75%, from roughly 30¢ to 8¢ per kWh, according to Solar.com.
How net metering works
- During the day your panels power your home first.
- Extra power flows to the grid, and your utility credits you for it.
- At night or on cloudy days you draw from the grid and use those credits.
- Your bill reflects net use (grid power used minus solar exported), plus fixed charges.
Credits often roll over month to month, so summer surpluses can cover winter shortfalls. Rules for leftover credits at year-end vary.
Net metering vs net billing
| Net metering | Net billing | |
|---|---|---|
| Export credit | At or near retail rate | Below retail; may vary by hour |
| Best strategy | Size panels to cover yearly use | Use solar yourself; consider a battery |
| Payback | Shorter | Longer unless you self-consume |
California’s NEM 3.0 example
- Applies to systems that applied to interconnect after April 14, 2023, with PG&E, SCE and SDG&E.
- Export values come from an “avoided cost” formula and vary by month and hour. Evening exports in late summer can be worth far more than midday exports.
- Earlier customers keep their older net metering terms for 20 years.
- In Solar.com’s example of a 7.6 kW cash purchase, payback rose from 4.6 years under NEM 2.0 to 6.5 years under NEM 3.0, and lifetime savings dropped by about $43,000.
Other states have adopted or are debating similar changes; check your state utility commission or your utility’s solar page for current rules.
How the rules change your solar plan
- Full net metering: sizing to 100% of yearly use usually makes sense. See how many panels you need.
- Low export credits: a smaller system that matches daytime use, shifting loads (EV charging, laundry) to midday, or adding a battery to cover the evening peak. See are home batteries worth it.
- Time-of-use rates: the value of each kWh depends on the hour. See time-of-use rates.
Questions to ask your utility or installer
- What rate do I get for exported kWh, and does it change by hour or season?
- Do credits roll over monthly, and what happens to leftover credits each year?
- Is there a minimum bill or fixed charge I’ll pay regardless?
- If rules change later, am I grandfathered, and for how long?
FAQ
Do I get a check for extra power? Usually not much. Most programs give bill credits; annual payouts, if any, are often at a low wholesale rate.
Does net metering work with a lease? Yes; the rules apply to the account where the system is connected.