By Claire WhitakerUpdated November 2026
A net metering program is a billing arrangement that lets your home solar system send extra electricity to the grid and receive credit for it on your utility bill. In this guide you will learn how the program works, what the credits cover, and which details to check before you rely on net metering to lower your power costs.
How Net Metering Works in Practice
Your solar panels produce electricity whenever the sun is shining, and your home uses that power first. When production exceeds what your household needs, the surplus flows through your meter onto the utility grid. The utility records that energy and applies it as a credit against the electricity you draw from the grid at night or on cloudy days.
Shopping for one? See our guide: PPL Net Metering Program vs Standard Grid Export: Which Should You Choose?.
The meter does the heavy lifting. A bidirectional meter tracks power flowing in both directions, so the utility knows exactly how many kilowatt-hours you exported and how many you imported. Most programs bill you only for the net difference over the billing period, which is where the name comes from.
What the Credits Are Worth
Not every kilowatt-hour you export is valued the same way. Some utilities credit exports at the full retail rate, while others pay a lower wholesale or avoided-cost rate. The difference matters, because it determines how quickly your system pays back its installation.
Also check how unused credits roll over. Many programs carry credits forward month to month, but some reset annually and may pay out any remaining balance at a lower rate. Read your interconnection agreement and tariff sheet before assuming a credit will always benefit you.
Program Rules That Vary by Location
Net metering is set by state regulators and individual utilities, so rules change from one service territory to the next. Size limits, eligibility for different system types, and monthly charges all differ. Some states have recently moved toward alternatives that pay less for exports, which can change the math on a system you are planning now.
Before you commit, confirm three things with your utility: whether your system size qualifies, how exports are credited, and whether any fixed fees apply. Our overview of Net Metering by State: Rules, Credits and What to Check (2026) lists the main differences across states.
Questions to Ask Your Utility
- What is the maximum system size allowed for my account?
- Are exports credited at the retail rate or a lower rate?
- How long do credits roll over, and what happens to any balance left at year end?
- Are there interconnection fees or monthly charges tied to solar customers?
- Is there a bridge or recovery charge that applies to net metering customers?
Common Mistakes to Avoid
- Assuming net metering pays the same rate for every kilowatt-hour year round.
- Sizing a system far larger than your household uses, which can leave credits unused.
- Skipping the utility interconnection step, which is required before you switch on.
- Ignoring policy changes; check whether your program is closed to new customers or being reduced.
FAQ
Is net metering the same as net billing?
No. Net metering credits your exports at or near the retail rate, while net billing typically values exports at a lower rate set by the utility or regulator.
Do I need a special meter for net metering?
Usually yes. A bidirectional meter records both imported and exported energy, and the utility often installs it as part of the interconnection process.
Can net metering credits pay for a whole year of electricity?
Sometimes, but it depends on system size, consumption and how credits roll over. Many homeowners still have some grid charges, and a licensed installer or utility representative can model your specific case.
Conclusion
A net metering program lets your home solar system export surplus power and receive bill credits for it. The value depends on your state rules, how exports are priced and how credits roll over. Confirm these details with your utility before you size or buy a system.
Related reading
- What Is the Benefit of Net Metering for Home Solar Owners?
- What Is a Net Metering Bridge Rider? Meaning, Costs and Fixes
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About Claire Whitaker
Claire Whitaker is part of our editorial team and reviews and edits our home solar guides, checking product details against manufacturer specifications and owner feedback.
