Feed in Tariff and Net Metering: How Home Solar Export Credits Work

By Claire Whitaker

Updated November 2026

A feed in tariff and net metering are the two main ways utilities pay homeowners for solar electricity sent back to the grid. This guide explains what each one is, how the credits are calculated, how to check which program your utility offers, and what to ask before you sign anything. By the end, you should be able to read a utility’s solar terms and estimate roughly how much your exports are worth.

Feed in Tariff vs Net Metering: The Core Difference

Both programs compensate you for surplus power, but they do it differently. A feed in tariff (FIT) pays a fixed rate for every kilowatt-hour your system produces, usually under a long contract, and it often pays for all output whether or not you use it at home. Net metering works through your existing meter: power you export offsets power you import, and you pay only for the net difference over a billing period.

Shopping for one? See our guide: Net Metering Solar Program vs Self-Consumption: Which Is Better for Homeowners?.

In the United States, net metering is far more common. Feed in tariffs have appeared in some states and municipal utility programs, and they show up more often in other countries. Because the rules are set by state public utility commissions and individual utilities, the exact terms vary a lot, so always confirm the details with your provider.

How Each Program Calculates Your Credit

Understanding the math is the fastest way to spot a good or bad deal. Here is how the two approaches typically work.

Feed in tariff calculation

Under a feed in tariff, your payment equals the metered kilowatt-hours multiplied by the contracted rate. If your system produces 800 kWh in a month and the rate is fixed for 20 years, you receive that rate times 800, regardless of how much electricity your household consumed. Many FIT contracts also specify whether the rate escalates, declines over time, or stays flat.

Net metering calculation

Under net metering, the meter spins forward when you draw from the grid and backward when you export. At the end of the billing cycle, the utility nets the totals. Suppose you import 600 kWh and export 750 kWh in a month. You have 150 kWh of excess generation. Depending on your state, that excess may roll over as a credit for the next month, be paid out at a lower wholesale rate, or be credited at the retail rate. The third case is the most valuable and is more common in some states than others.

A quick example

Step-by-Step: Checking Which Program Applies to You

Follow these steps before you size a system or sign an interconnection agreement.

1. Identify your utility. Your bill lists the provider. Small rural co-ops and municipal utilities sometimes run their own programs that differ from the investor-owned utility in your region.
2. Find the tariff sheet. Search the utility name with “net metering” or “distributed generation tariff.” Look for the schedule that covers residential customers with solar.
3. Note the credit type. Check whether exports are credited at retail rate, avoided-cost rate, or a time-of-use rate. This single detail changes your payback more than almost anything else.
4. Check rollover rules. Find out whether unused credits carry forward month to month, and whether they expire at the end of the year.
5. Look for caps and eligibility limits. Many programs limit total enrolled capacity, or restrict system size to a percentage of your historic usage.
6. Confirm feed in tariff terms if offered. Ask for the rate, the contract length, whether the rate is fixed or indexed, and whether you must sell all output or only the surplus.
7. Get the terms in writing. Before you commit, ask the utility to confirm the program name, rate schedule, and effective date by email.

Tools and documents to have ready

• Your last 12 months of utility bills, showing kWh imported and any credits
• The utility’s current net metering or FIT tariff sheet
• Your planned system size in kW and an estimated annual production figure
• A spreadsheet or calculator for monthly import, export, and credit values
• Your interconnection application and any required single-line diagram

Factors That Change Your Payback

Two homes with identical panels can see very different results. These factors matter most.

Time-of-use rates

If your utility charges more in the evening, exports during midday may be worth less than imports at 7 p.m. Storing energy or shifting loads can help close that gap. Compare how your utility values exports against how it charges for imports in each time block.

Self-consumption

Under a feed in tariff, self-consumption does not change the payment for exported power, though it still lowers your bill. Under net metering, using power as you generate it avoids the question of credit value altogether. Running dishwashers, laundry, or EV charging during peak production usually makes sense in either program.

System size relative to usage

Many net metering programs allow systems sized to offset roughly 100 percent of your annual consumption. Oversized systems may be limited to a lower credit value for the excess, or may not be allowed at all. Size your array with the utility’s rules in mind.

Contract duration and rate changes

Feed in tariff contracts often run 15 to 25 years. A fixed rate protects you against falling retail prices but locks you in if rates rise. Ask how the contract handles changes in program rules and whether you can transfer the agreement if you sell the house.

Common Mistakes

• Assuming all exports are credited at retail rate. Many programs credit exports at a lower wholesale or avoided-cost rate. Confirm this before you calculate payback.
• Ignoring fixed monthly charges. Net metering reduces energy charges, but some utilities keep a grid access fee that remains even with a zero net bill.
• Forgetting rollover expiration. Credits that expire at year end can be lost during low-production months if you oversize seasonally.
• Signing before the interconnection is approved. Installing before utility approval can delay or void your ability to enroll in the program.
• Overlooking program caps. If capacity is nearly full in your area, you may face a waiting list or a different tariff than the one you expected.
• Relying on verbal promises. Installers and sales reps sometimes quote estimated savings based on optimistic assumptions. Ask for the tariff reference and a payback model built on your actual utility rates.

Tips for a Better Outcome

• Compare two or three scenarios: current rates, a 20 percent rate drop, and a 20 percent rate increase.
• Keep a record of every credit line on your bill for the first year to confirm the utility is applying the terms correctly.
• If your utility offers both net metering and a feed in tariff, model each for at least a full year of production data.
• Check whether your state has a separate solar credit or incentive that stacks with the export program.
• Before buying equipment, read Solar System Net Metering: How It Works and What Homeowners Should Know for a broader view of how the systems connect.

Net metering and feed in tariffs also interact with bill structure in ways that surprise many owners. If your bill stays high after going solar, Why Is My Net Metering Electricity Bill Still High? 6 Causes and Fixes walks through the most common reasons. For a plain-language overview of the financial upside, see What Is the Benefit of Net Metering for Home Solar Owners?. Programs also differ by region, and Net Metering in California: How It Works and What Homeowners Need to Know shows how one large state structures its rules.

FAQ

Is a feed in tariff better than net metering?

It depends on the rate. A feed in tariff with a high fixed rate can outperform net metering, especially if your exports are valued low under net metering. Net metering is often simpler and avoids long contracts, so it suits many households better.

Can I use both a feed in tariff and net metering at the same time?

Usually no. Most utilities offer one export program per system. Some arrangements let you choose between them when you apply, so check the tariff terms before you commit.

What happens to excess credits at the end of the year?

Rules vary. Some utilities pay out remaining credits at a set rate once a year, others let them expire, and some roll them forward indefinitely. Find the specific policy in your tariff sheet.

Do I need a special meter for net metering?

Most programs require a bidirectional meter that records both imported and exported energy. Some utilities install it at no charge, while others may require you to pay for an upgrade. Ask before installation.

How long does a feed in tariff contract last?

Contract lengths differ by program, but 15 to 25 years is common. Read the termination and transfer clauses carefully if you may move or sell the property.

Will net metering rules change?

Yes, policymakers and utilities revise these rules periodically. Many states have moved from full retail net metering to lower-value export credits over time. Check the current tariff and ask whether existing customers are grandfathered.

Should I hire a professional to review my contract?

For a large system or a long-term feed in tariff contract, consulting a licensed solar professional or an energy attorney is a sensible step. Rules and financial commitments can be complex, and a short review can prevent costly misunderstandings.

Conclusion

Feed in tariffs and net metering both reward you for solar exports, but they pay in different ways. Net metering nets your usage against production through your meter, while a feed in tariff pays a set rate for output under contract. Read your utility’s tariff sheet, model your actual usage, and get the terms in writing before you invest.

Related reading

• What Is a Net Metering Bridge Rider? Meaning, Costs and Fixes
• What Is Net Metering Cap? A Homeowner's Guide to Limits (2026)
• Virtual Net Energy Metering vs Physical Net Metering: Which Is Better?

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.