Key takeaways
- Net metering lets the grid work like a bank for your solar power. When your panels make more electricity than your home is using, the extra flows to the grid and your utility credits your bill. When you need more than the panels make, those credits pay for the power you draw back.
- A net meter records electricity in both directions: what you pull from the grid and what your panels send to it. Your bill is based on the difference, so a sunny month can leave you with credits that carry forward to darker months.
- Many programs settle up once a year in a true-up. Credits roll over month to month, then any surplus left at the end of the 12-month period is handled under your utility's rules, which may pay it out at a lower rate or simply carry it forward.
- Net billing values the power you export at a lower rate than what you pay for power, so using solar at home or storing it in a battery is worth more. Under full net metering, the grid stores your extra power for you, which often makes a battery optional.
What is net metering?
Net metering is a billing arrangement between you and your electric utility. When your solar panels produce more electricity than your home is using, the extra power flows out to the grid and the utility gives you a credit for it. Later, when your panels produce less than you need, such as at night or on a cloudy day, you draw power from the grid and those credits pay for it.
The result is that you pay for your net use: what you took from the grid minus what you sent to it. The U.S. Department of Energy describes it simply: under net metering, solar owners are compensated for the power their system exports to the grid.
This matters because solar production and household use rarely line up. Panels peak in the middle of the day, when many people are at work, while most homes use the most power in the morning and evening. Net metering lets the midday surplus cover the evening shortfall without any equipment in your home storing it.
How does the meter track what you send and use?
Before your system turns on, the utility sets up a net meter on your home. It counts electricity moving in both directions: power you import from the grid and power your panels export to it. The name comes from the old spinning meters, which, as the Department of Energy notes, simply ran backward when a home was sending power out. Today's digital meters keep the two directions as separate readings.
Your solar panels feed your home first. Whatever your lights, fridge and heat pump are using right then comes straight from the roof, and only the leftover goes out through the meter. So there are really three numbers behind every bill:
- Solar used at home: power that never touches the meter and simply lowers what you buy.
- Exports: extra solar that flows to the grid and earns credits.
- Imports: power you draw from the grid when the panels aren't keeping up.
Your utility bill shows the last two. The first shows up only in your solar monitoring app, which is why your bill can look surprisingly small even though your panels are doing a lot of work.
What happens to extra credits from month to month?
In a month when you export more than you import, you end up with a credit balance, and it rolls forward to the next bill. That's the key to how solar works across the seasons. Long, sunny summer days build up credits, and short winter days draw them down.
An illustrative example
Say your system exports 500 kWh in June and you import 300 kWh that month. You finish June with a 200 kWh credit. In December, your panels make far less, and you import 400 kWh more than you export. The 200 kWh banked in summer covers half of it, and you pay for the rest. These numbers are only for illustration; your own depend on your roof, your home and your utility's rules.
Some utilities track the credit in kilowatt-hours, and others turn it into dollars at a set rate. Either way, the credit sits on your electric account and lowers future bills. Eversource's Massachusetts tariff, for example, carries any remaining net metering credit forward from billing period to billing period.
What is an annual true-up?
A true-up is the once-a-year settlement some net metering programs use. Credits roll over month to month through a 12-month period, and at the end the utility looks at the whole year. If you used more than you produced, you pay any balance you haven't already paid. If you have surplus credits left over, the program's rules decide what happens to them.
Rules for that leftover surplus vary a lot. In California's older net metering programs, for example, year-end surplus is paid at a net surplus compensation rate of roughly 2 to 3 cents per kWh, far below what the same power is worth as a bill credit. Other utilities let credits keep carrying forward. Eversource says its Massachusetts credits can't be cashed out.
The practical lesson is the same everywhere: credits are worth the most when you use them. That's why a well-designed system is sized to your home's yearly electricity use, not to fill every inch of the roof. Producing far more than you use mostly builds up credits that earn little.
How is net metering different from net billing?
The two sound alike, but they value your exports differently. With net metering, the power you send out generally earns a credit close to what you pay for power coming in. With net billing, exports earn a credit based on a separate, usually lower value, while the power you buy is still charged at the full rate.
| Feature | Net metering | Net billing |
|---|---|---|
| Value of exported power | Close to the retail rate you pay | A separate export value, usually lower than retail |
| How you're billed | On net use: imports minus exports | Imports at full price, exports credited at their own value |
| Best way to use solar | Use it or export it; both are worth about the same | Use it at home or store it; exports are worth less |
| Role of a battery | Optional for savings; mainly for backup | Raises savings by shifting solar to high-value hours |
California is the best-known example. According to the California Public Utilities Commission, customers applying for interconnection since April 15, 2023 take service on a net billing tariff. Export values there change by hour and are usually lower than retail rates, though they can rise above them on late summer evenings. Credits still roll over month to month until the annual true-up.
Do you need a battery if you have net metering?
For bill savings, usually not. Under full net metering, the grid already stores your extra power for you, and a credit for exported power is worth about the same as power you used at home. A battery doesn't add much savings in that setup, so many homeowners go solar without one.
Under net billing, the picture changes. The CPUC notes that customers can get the most out of the net billing tariff by adding battery storage, so they can use or export stored power during high-value hours.
A battery still has a job under net metering: keeping your essentials running when the grid goes down, and in some states earning money through utility battery programs. Our guide to how solar batteries work covers when that's worth it.
How does net metering work in New England and New Jersey?
Massachusetts, Rhode Island, Connecticut and New Jersey each set their own rules for how exports are credited and how long credits last. In Massachusetts, home systems of 10 kW or less on single-phase service, which covers most houses, keep full-value credits, and those credits carry forward from bill to bill. Our guide to net metering in Massachusetts explains how that works with the state's SMART 3.0 payments.
Rhode Island credits power up to your usage at most of the per-kWh price, with a lower wholesale credit beyond it. Connecticut replaced net metering with RRES in 2022; its Netting option credits exports at your retail rate but carries a $0.0402/kWh production charge for 2026 applications.
For each state's programs, see Massachusetts, Rhode Island, Connecticut and New Jersey solar incentives, or the full 2026 solar incentive guide. When Evergreen Solar designs a system, we size it to your past year of electric use, which is why we ask for your electric bill, so your credits get used rather than wasted.
Frequently asked questions
Do net metering credits expire?
It depends on your utility's rules. Some programs carry credits forward from one billing period to the next with no set end date, while others settle up once a year at an annual true-up. In California's net metering programs, for example, surplus left at the true-up is paid out at a much lower rate than retail power, so sizing a system to your yearly use matters.
Can I get a check for my net metering credits?
Usually not. Net metering is designed to lower your bill, so credits show up as a dollar or kilowatt-hour balance on your electric account rather than as cash. Eversource, for example, says Massachusetts credits can't be cashed out. A few programs pay for leftover surplus at the annual true-up, but at a low rate.
Does net metering work with a solar lease or PPA?
Yes. With a lease or power purchase agreement, the home stays on your utility account, so the net metering credits show up on your electric bill and lower it, just as they would if you owned the panels. You pay the lease or PPA for the system, and because the system qualifies for the 30% federal credit, that payment or rate is often lower than buying.
Does net metering keep my power on during an outage?
No. A grid-connected solar system without a battery shuts off when the grid goes down, so line workers stay safe, and it starts again when power returns. Net metering is a billing arrangement, not backup power. If keeping the lights on during outages matters to you, a home battery set up for backup power is what keeps essentials running.
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How we wrote this
This page was written by the Evergreen Solar team, which designs and installs home solar across Massachusetts, Rhode Island, Connecticut, New Jersey and Pennsylvania. Program rules and rates change, so we check every figure against the primary source listed below and note the date we last did. If something has changed, tell us at our contact page.