Net Metering Explained: How Exported Solar Power Is Credited
Net metering credits your solar system's excess power against the electricity you draw from the grid. Here is how the billing works and how to get set up.
By Galactic News Editorial · Published 2026-11-07T22:38:16+00:00 · Updated 2026-11-07T22:38:16+00:00
Net Metering Explained: How Exported Solar Power Is Credited
Net metering is a billing arrangement that credits your solar system for the electricity it sends back to the grid. When your panels produce more power than your home uses, the surplus flows out to the utility. Your meter records that export, and your utility applies credits to your bill. You only pay for the net electricity you consume.
The idea is simple. Your panels make power during the day. Your home uses some of it right away. The rest goes to the grid. At night, when your panels are idle, you draw power back. Net metering lets the daytime surplus offset the nighttime draw.
Net metering explained: how the meter works
Net metering needs a bidirectional meter. A standard meter only measures power flowing in one direction. A bidirectional meter measures both directions. It records how much electricity you import from the grid and how much you export to it.
At the end of each billing cycle, the utility nets the two numbers. If you imported 400 kilowatt-hours and exported 300, you are billed for 100. If you exported more than you imported, the difference becomes a credit. That credit usually carries forward to your next bill.
The meter is the heart of the system. Without it, the utility cannot tell how much power you sent back. Most utilities install the bidirectional meter as part of the interconnection process. Some charge a small fee for the swap. Others include it at no cost.
What exported solar power is actually worth
Not all credits are equal. The value of your exported power depends on the program your utility runs. There are two common models.
Under classic net metering, each exported kilowatt-hour offsets one imported kilowatt-hour. The credit equals the full retail rate. This is the most generous version. It is also the version that is becoming rarer as programs are revised.
Under net billing, exported power is credited at a lower rate than the retail rate. You still save money, but each exported unit is worth less than each imported unit. Some programs pay a wholesale rate. Others pay a set export rate that sits between wholesale and retail.
| Program | How exports are credited | Effect on your bill |
|---|---|---|
| Classic net metering | One exported kWh cancels one imported kWh at the retail rate | Lowest bill; exports and imports have equal value |
| Net billing | Exports credited at a lower export rate | Higher bill than net metering; self-consumption matters more |
| Gross metering | All solar generation is exported and credited; all home use is billed | Savings depend entirely on the export rate |
Which model applies to you depends on your state and your utility. Rules are set at the state and utility level. They can change when a program reaches a capacity cap or when regulators revise the tariff. Always confirm the current rules with your utility before you sign a solar contract.
What happens to unused credits
Credits do not last forever in most programs. In a good month, your system may export more than you use. The surplus becomes a credit balance. That balance usually rolls over to the next billing period.
Most programs settle the balance at a set point. This is often called a true-up. At the true-up, any remaining credit may be paid out at a low rate, carried forward for a limited time, or allowed to lapse. The details vary widely. Some utilities true up annually. Others settle monthly.
Fixed charges are a separate matter. Most bills include fixed charges for the meter, service, or minimum usage. Solar credits usually do not offset these charges. Expect a small bill even in months when your net usage is zero.
How to get net metering set up
- Check your utility's program. Ask whether net metering or net billing applies in your area. Ask about size caps, credit rates, and true-up timing.
- Apply for interconnection. Your installer usually files this with the utility. The application covers your system size, equipment, and the meter swap.
- Pass inspection. The utility or a local inspector checks the installation. The bidirectional meter is installed at this stage.
- Receive permission to operate. The utility sends written approval. Only then should the system be switched on to export power.
- Read your first bills carefully. Check that imports and exports are both listed. Confirm the credit rate matches what you were told.
The process can take weeks. Paperwork and inspection queues are the usual bottlenecks. A good installer handles the filing and keeps you updated.
Net metering and batteries
A battery changes the math. Without a battery, your surplus goes straight to the grid. With a battery, you can store the surplus and use it at night. That raises self-consumption and reduces the power you buy at retail rates.
Under net billing, a battery often pays back faster. The export rate is low, so storing power is worth more than selling it. Under classic net metering, a battery adds less bill savings. The grid already acts as free storage. In that case, a battery is mainly useful for backup during outages.
Bottom line
Net metering turns the grid into a ledger for your solar power. You export when you have surplus. You draw when you need it. You pay for the difference. The value of that arrangement depends on your utility's program, so confirm the credit rate, the rollover rules, and the true-up schedule before you buy. The billing model matters as much as the panels.