How Net Metering Works (And Why It Could Save You Thousands)

If you’ve been researching solar energy, chances are you’ve come across the term net metering—and with good reason. Net metering is one of the biggest financial advantages of going solar. It’s a billing arrangement that allows solar homeowners to earn credits for the extra energy they produce and reduce their electric bills, sometimes dramatically.

In this article, we’ll break down exactly how net metering works, why it’s so valuable, and what to consider depending on your state or utility provider.

⚡ What Is Net Metering?

Net metering (also called net energy metering, or NEM) is a policy that allows you to send unused solar electricity back to the grid and receive credits on your utility bill.

Here’s how net metering works:

1. During the day, your solar panels may produce more energy than your home uses.
2. That excess electricity is sent back to the utility grid.
3. Your utility company tracks how much energy you’ve contributed.
4. You earn credits that offset your energy use at night or on cloudy days.

🔁 In short: you only pay for the “net” amount of electricity you use each month.

💸 Why Net Metering Can Save You Thousands

Net metering directly affects your bottom line. Instead of wasting excess energy or paying high utility bills when the sun isn’t shining, you get compensated for contributing to the grid.

Financial Benefits Include:

• Lower utility bills
• Faster payback period on your solar investment
• Increased return on investment (ROI)
• Ability to design a smaller battery system (or skip one altogether)

💰 Over the lifetime of your solar system, net metering can help you save $10,000 to $30,000 or more, depending on your location and energy use.

📍 Does Every State Offer Net Metering?

Net metering policies vary significantly across the United States. While many states offer strong net metering programs that reward solar homeowners with generous energy credits, others have limited or evolving rules that can affect your potential savings.

Understanding your state’s approach to net metering is crucial to estimating your return on investment and choosing the right system size and financing plan.

🗺️ A Quick State-by-State Overview

Here’s a simplified breakdown of how net metering works in some of the most solar-active states:

State	Net Metering Available?	Credit Value	Notes
California	✅ Yes (NEM 3.0)	Export rate (lower than retail)	Under NEM 3.0, homeowners are credited at the utility’s hourly rate, not full retail. Adding battery storage is now more valuable.
New York	✅ Yes	Close to retail rate	Offers a strong value stack with credits near retail and state-level incentives like NY-Sun.
Texas	⚠️ Varies by utility	Some offer retail credits	Texas doesn’t have a statewide policy. Your savings depend on which retail electric provider (REP) you choose.
Florida	✅ Yes	Full retail credit	Homeowners are credited one-to-one for excess solar, making it one of the most favorable states.
Arizona	✅ Yes (limited)	Export rates (lower than retail)	Arizona no longer offers traditional net metering—customers are credited based on utility-determined rates.
Nevada	✅ Yes	Tiered export rates	After rolling back and restoring net metering, Nevada now offers fair compensation—but not full retail.
Colorado	✅ Yes	Full retail credit	Excellent net metering laws with strong solar utility programs.
Illinois	✅ Yes	Retail credit + incentive programs	Offers retail net metering plus renewable energy credits (RECs) under Illinois Shines.
North Carolina	✅ Transitioning	Time-of-use-based export credits	Shifting from full retail to time-of-use crediting with smart meters.

⚠️ Why It Matters

Many states that previously offered full retail net metering have updated or replaced their policies with “successor programs.” These often introduce export rates—meaning the electricity you send back to the grid is credited at a rate lower than what you pay to consume electricity from the grid.

These changes can:

• Reduce your overall savings
• Shift value toward battery storage and self-consumption
• Change system design strategy (e.g., smaller systems or hybrid systems)

🔍 How to Check Your State’s Net Metering Policy

Because rules are changing frequently, it’s important to get up-to-date, local information. Here’s how:

1. Contact your local utility company – They can explain the specific net metering policy in your service area.
2. Check your state’s public utilities commission (PUC) website.
3. Speak with a solar broker – Brokers track net metering trends and can tell you how current rules impact your savings.

📣 In deregulated markets like Texas, brokers can also compare electricity providers who offer special net metering plans—something most installers don’t do.

💡 What If Your State Doesn’t Offer Net Metering?

Don’t worry—solar can still be a smart investment. In states with reduced or no net metering, homeowners often:

• Install battery storage to store and use excess power
• Optimize for self-consumption (use the energy as you produce it)
• Take advantage of time-of-use billing to shift usage to cheaper hours

⚡ A custom system design can still deliver excellent savings even without traditional net metering—you just need the right strategy.

🔋 How Batteries Affect Net Metering

Adding a battery to your solar system lets you store excess power instead of sending it back to the grid. While this can reduce the benefits of net metering slightly, it adds:

• Backup power during outages
• Time-of-use arbitrage (using stored power during expensive peak times)
• Greater energy independence

💬 In areas with low or no net metering, batteries can help maximize solar ROI.

🧾 Will I Still Have an Electric Bill?

Yes—but it could be minimal.

Even with net metering, you may still pay:

• A basic service charge from your utility
• Charges for electricity used when solar isn’t available
• Demand or time-of-use charges in certain areas

📉 In many cases, homeowners reduce their bills by 70% to 100%, especially during sunny months.

✅ How to Take Advantage of Net Metering

To make the most of net metering:

• Install a system sized to meet your average annual energy usage
• Understand your local utility’s credit rules and payout structure
• Work with a solar broker who can match you with providers that optimize for net metering savings

🔍 A broker can also help you compare financing options and design a system that gets the best ROI based on your utility’s policy.

Final Thoughts: Why Net Metering Still Matters

Despite changing policies in some states, net metering remains one of the most valuable parts of going solar. It helps homeowners turn the sun into savings—by turning excess power into energy credits.

If you’re planning to go solar, understanding your local net metering rules is just as important as choosing the right panels or installer.

💡 Want to know if net metering is available in your area? Get a free solar consultation today and let a broker guide you through the smartest setup for your home.

Additional Resources

Check out our sister brands here.