Net metering & net billing, explained

The basic idea

A grid-tied solar system sends power to your home first. When you produce more than you're using, the surplus flows back to the grid; when you produce less (evening, night), you pull from the grid as usual. Net metering is the accounting for that back-and-forth, how the utility values the electricity you send out versus the electricity you take in.

Full retail net metering (1:1)

The gold standard, and still the rule in most states (New Jersey, Massachusetts, New York, Florida, and many more). Every kWh you export earns a credit worth the full retail rate, the same price you'd pay to buy it. Your meter effectively spins backward. With 1:1 net metering, a correctly sized system can offset nearly your entire bill across the year, because a summer surplus banks credits that cover a winter deficit.

Net billing (the NEM 3.0 model)

A growing number of states have moved away from 1:1. Under net billing, exported power earns only the utility's avoided cost, often 5-8¢/kWh, while you still buy grid power at the full retail rate of 30¢+. California's NEM 3.0 is the landmark example (roughly a 75% cut to export value); Arizona, Nevada, and others have similar structures.

The consequence is a shift in strategy. When exports are worth a fraction of retail, the value is inusing your own solar as it's generated rather than selling it cheaply. That's why, in net-billing states, people:

• Size systems a little more conservatively (a giant export surplus isn't worth much).
• Shift big loads, EV charging, laundry, pool pumps, pre-cooling, into daylight hours.
• Add a home battery to store midday surplus and use it at night, capturing full retail value instead of the low export rate.

Why our calculator asks about this

Because it changes the answer dramatically. Two states with nearly identical electricity rates can have very different paybacks purely on export policy. Our per-state pages apply the real export credit for your state, full retail where it exists, and the reduced rate where net billing has taken over, so self-consumed power is valued at full retail and only your exported surplus is discounted, exactly as your bill would work.

Policies change often, and several states have proceedings underway. Always confirm the current rules with your utility or at DSIRE before you sign anything.