What Is Net Metering? How Solar Credits Work
What is net metering?
Net metering is the billing arrangement that pays you back for the surplus solar electricity your home sends to the grid. Your panels often produce more than you're using at midday; instead of wasting that energy, it flows to the grid and you receive a credit. At night or in winter, when the panels make little, you draw electricity back from the grid and those credits offset what you'd otherwise pay. In effect, the grid acts like a giant battery.
How generously each exported unit is credited is the single biggest factor in your solar savings — so it's worth understanding before you size a system.
How net metering works
A bidirectional meter tracks energy in both directions:
- Daytime surplus — panels produce more than the home uses; the excess is exported and credited.
- Evening/low-sun draw — the home pulls power from the grid, drawing down those credits.
- Billing period — your bill reflects the net: total drawn minus total exported.
If you export as much as you import over the period, your energy charges can approach zero (you'll still pay fixed connection fees).
Full retail vs reduced export rates
The crucial detail is what an exported kWh is worth:
- Full retail net metering — each exported kWh is credited at the same rate you pay to buy power. The most generous arrangement.
- Reduced/avoided-cost rates — exports are credited at less than retail (e.g. the utility's wholesale cost).
- Net billing / export tariffs — you're paid a set export price, often well below retail.
Two homes with identical panels can save very differently depending on which applies.
How export value affects your savings
Because self-consumed solar offsets power at full retail price while exports may be worth far less, the value gap drives strategy. The chart compares the worth of a kWh under common arrangements.
Illustrative cents per exported kWh. Full retail net metering values exports like the power you buy; export tariffs pay far less.
| Value per kWh (¢) | |
|---|---|
| Full retail | 15 ¢ |
| Avoided cost | 8 ¢ |
| Wholesale export | 4 ¢ |
When exports are credited at full retail, system size barely matters. When they're worth little, using power as you produce it (running appliances by day, or storing it) becomes far more valuable than exporting.
A simple example
Picture a sunny day: by noon your panels make 4 kWh more than the house is using, so 4 kWh flow to the grid and you bank a credit. That evening, after the sun's gone, the house needs 4 kWh and you draw it back, cancelling out the charge. Over a month the utility tallies everything: if you exported 300 kWh and imported 320, you're billed for the net 20 kWh plus fixed fees. Multiply that across the seasons — exporting heavily in summer, importing in winter — and an annual view shows how net metering smooths solar's natural ups and downs, rewarding homes that self-consume more during production hours.
What net metering doesn't change
Net metering credits energy, but most bills also include fixed charges — a daily standing charge or connection fee — that solar can't erase. You'll keep paying those even if your energy balance nets to zero. It also doesn't store anything physically: you're relying on the grid being available to absorb your exports and supply your draws. If the grid goes down, a net-metered system without a battery shuts off for safety. So net metering is about savings, not backup — resilience during outages is a separate question that needs storage.
Why it matters for sizing and batteries
Net-metering rules shape two big decisions:
- System size — generous export credit rewards a larger array that banks summer surplus for winter; poor export rates favour sizing closer to your daytime use.
- Battery — where exports pay little, a battery that lets you self-consume the evening becomes much more worthwhile. Where full retail net metering exists, the grid already plays that role for free.
How net metering is changing
Many regions are shifting from full retail net metering toward lower export rates and time-based pricing as solar adoption grows. That trend tilts the economics toward self-consumption and storage. Always check your current local terms rather than assuming — they directly change the payback math.
FAQ
Is net metering the same everywhere? No — it ranges from full-retail credit to low export-only tariffs, and varies by utility and region. Check your local policy.
Do I get a cheque for exported power? Usually it's a bill credit, not cash. Some schemes pay out surplus annually, often at a low rate.
Does net metering make my bill zero? Energy charges can approach zero if exports balance imports, but fixed connection/standing fees usually remain.
Should I get a battery instead of relying on net metering? If export rates are poor, a battery to self-consume can pay off; with full retail net metering, the grid already acts as your storage.
Bottom line
Net metering is what turns surplus solar into savings: export by day, draw credits back later. The key variable is how much an exported kWh is worth — full retail makes solar simplest, while low export rates reward self-consumption and storage. Check your local terms, then size accordingly. See how solar works and whether you need a battery.
Last updated June 2026. Informational only — net-metering rules vary by location and change over time; confirm your current terms.