By Claire WhitakerUpdated November 2026
Net metering is the billing arrangement that lets your home solar system send extra electricity to the grid and receive credit for it. When your panels produce more than your house uses, the surplus flows to the utility and reduces the cost of power you pull back later at night or on cloudy days. This guide walks through how that exchange is measured, how credits are applied, and what to check on your bill.
Understand the Two-Way Meter
Net metering depends on a bidirectional meter, sometimes called a net meter. It tracks two numbers separately: kilowatt-hours (kWh) you import from the grid and kWh you export to it. A standard meter only counts consumption, so your utility will usually install a new meter before your system is switched on.
Shopping for one? See our guide: Dominion Power Net Metering (2026): How It Works and Who Benefits.
Your inverter converts the direct current from your panels into alternating current that your appliances use. Whatever your home does not consume at that moment is pushed out to the grid, and the meter logs it.
Follow the Credit Cycle Month by Month
Most utilities settle net metering on a monthly basis. Here is how a typical billing cycle works:
- Daytime production: Your panels generate power. Electricity your home uses is supplied directly, and extra power is exported.
- Nighttime or cloudy periods: When production drops, you draw from the grid as usual, and the meter records those imports.
- Netting: At the end of the billing period, the utility subtracts exported kWh from imported kWh.
- Billing result: If you exported more than you imported, the surplus becomes a credit carried forward. If you imported more, you pay for the difference.
Know How Exports Are Valued
The value of each exported kWh depends on your utility and state rules. Some utilities credit exports at the full retail rate, which is the same price you pay for grid power. Others credit exports at a lower avoided-cost or wholesale rate, and some use time-of-use pricing so that midday exports are worth less than evening usage.
Check your interconnection agreement or tariff sheet to find the export rate. It is the single most important number for estimating your savings.
| Billing element | What it means |
|---|---|
| Imported kWh | Power drawn from the grid |
| Exported kWh | Surplus solar power sent to the grid |
| Net kWh | Imports minus exports for the billing period |
| Carryover credit | Unused credit that rolls to the next month |
Check Your Program Rules and Annual Settlement
Net metering rules differ widely by state and utility. Some programs roll unused credits forward indefinitely, while others pay them out or reset them at the end of the year. Many programs also set a system size cap relative to your past electricity use, so an oversized array may not qualify.
If you are unsure which program applies to your address, start with your utility’s solar or distributed generation page. For example, Net Metering Solar Program: How It Works and How to Get Credited explains how credits are typically reset and paid out, and Solar PV Net Metering Explained: How It Works and Credits Your Bill covers how the monthly math plays out on a real statement.
Annual true-up is another point to watch. Some utilities run a full-year reconciliation, which can result in a final balance or payout. Net Energy Metering True-up: How It Works and What Homeowners Should Check walks through that process.
Recommended gear
A few items make it easier to verify what your system is producing and exporting.
- Enphase Envoy gateway: Provides production and consumption data so you can compare your readings with the utility’s meter. View on Amazon
- Sense Home Energy Monitor: Tracks circuit-level usage, helping you see when your home is exporting versus importing. View on Amazon
Common mistakes
- Assuming every exported kWh is worth the same as a kWh you buy. Export rates are often lower.
- Forgetting that unused credits may expire or be paid out on a set schedule.
- Sizing a system far beyond your annual usage, which can violate program caps.
- Ignoring time-of-use rates, where midday exports may earn less than evening imports cost.
- Never comparing your inverter data with the utility bill, which makes billing errors harder to catch.
FAQ
Does net metering pay me cash for extra solar power?
Not always. Many utilities apply excess credits to future bills, while some pay out remaining credits at year end. Your tariff will say which method applies.
Do I need a special meter for net metering?
Usually yes. A bidirectional meter records imports and exports separately, and most utilities install one before a system is connected.
Is net metering the same as net billing?
No. Net billing credits exports at a different, often lower, rate than retail. Check which structure your utility uses, because it changes your savings.
Conclusion
Net metering works by subtracting the electricity you send to the grid from the electricity you draw back, then billing you for the difference. Your savings depend on your export rate, your program’s rollover rules and any annual settlement. Review your tariff and compare it with your monthly statement, and consult your utility or a licensed installer if anything is unclear.
Related reading
- Xcel Energy Solar Net Metering: How It Works and How to Get Credited
- What Is Virtual Net Metering? How It Works for Home Solar Owners
- What Is Group Net Metering? How Shared Solar Credits Work
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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.
