Net metering is the billing arrangement that decides what happens to solar power you don't use. It is the least visible and most consequential variable in home solar economics.
The basic deal
Grid-tied solar homes export surplus power on sunny afternoons and import at night. Under classic full retail net metering, your utility credits exports at the same rate you pay for imports — a kWh out cancels a kWh in. Functionally, the grid acts as a free, perfectly efficient battery, and your bill reflects only your net consumption.
Why utilities are rolling it back
Utilities argue retail-rate credits let solar homes underpay for grid upkeep, since fixed costs live inside per-kWh rates. Whatever you think of the argument, the trend is real: successor policies credit exports below retail. The best-known is California's NEM 3.0 (April 2023), which moved to "net billing" with export values based on avoided cost — roughly 75% lower than retail on average. Other states have adopted or proposed similar cuts, while some still offer full retail credit. The DSIRE database tracks the current rule for every state and utility.
What a weaker export rate does to your math
Under full retail credit, system sizing is forgiving — overproduce in summer, burn credits in winter. Under net billing, every exported kWh earns a fraction of what a consumed kWh saves, which changes behavior in three ways: systems get sized closer to daytime self-consumption, batteries start to pencil (store the surplus instead of selling it cheap), and load-shifting — running the dryer and charging the EV at noon — has direct cash value.
What to do before you sign anything
Ask your installer three specific questions: Which net-metering or net-billing tariff will I be on? Is that rate grandfathered, and for how long? What does my year-one bill look like month by month, including fixed charges that solar can't offset? Grandfathering matters most — several states locked existing customers into the old rates for 10–20 years when they changed the rules, which is a real incentive to act before a pending change rather than after. Then run the Solar Savings Calculator with a conservative export assumption and see if the project still clears your bar.