Guide
Net metering is the billing rule that decides what your utility pays for the solar electricity you send back to the grid. Under full retail net metering, every kWh you export is worth exactly as much as a kWh you buy, which is the best case for your savings. Under partial or avoided-cost rules, and under California's NEM 3.0 net billing, exports are worth much less, which stretches your payback. This one policy can swing your payback by years, so it matters as much as sun or price.
Rooftop solar makes most of its power in the middle of the day, often more than your home uses at that moment. The surplus flows back onto the grid. Net metering is how your utility accounts for that surplus: it decides whether you are credited at the full price you pay for power, a reduced rate, or something in between. Because a typical home exports a meaningful share of what its panels make, the export rate directly sets how much of your solar actually turns into savings.
Policies vary by state and often by utility. Most fall into one of these buckets, which is the same framework the report uses when it estimates your savings.
| Type | What you get for exports | Effect on payback |
|---|---|---|
| Full retail net metering | Same rate you pay to buy power | Best case, fastest payback |
| Partial / avoided-cost | A lower wholesale-style rate | Slower, exports worth less |
| Net billing (CA NEM 3.0) | Time-based avoided-cost credits | Slower unless you self-consume |
| No state mandate | Up to each utility, sometimes nothing | Varies widely, check locally |
This is the homeowner-friendly version. A kWh you push to the grid at noon offsets a kWh you pull back at night, one for one. In effect the grid acts as a free battery. Where full retail net metering is in force, solar savings are at their strongest and the payback period is at its shortest. It is also the arrangement most under review, as utilities and regulators revisit the rules.
Many places credit exports at less than the retail rate, often something closer to what it would have cost the utility to generate the power itself. If you buy at 15 cents but are credited 5 cents for exports, the power you send back is worth a third of the power you use directly. The lesson is simple: the more of your own solar you use as you make it, the better your economics under these rules.
California moved new solar customers to NEM 3.0, a net-billing scheme, for systems interconnected since April 2023. Instead of full retail credit, exports earn time-varying credits based on the grid's avoided cost, which are much lower than the old one-for-one rate, especially during sunny daytime hours. The result is that exporting surplus is far less rewarding than it used to be. Californians can still do well, but the strategy shifts toward using more of your own production, which is where a battery comes in.
Some states have no statewide net-metering requirement, leaving the terms to individual utilities. In those places the export credit ranges from reasonable to nearly nothing, so the only reliable move is to check your specific utility's tariff. The DSIRE database tracks net-metering and interconnection policy by state and utility, and it is the source we use to classify each state.
A home battery changes the math most when exports are paid below the retail rate. Instead of selling midday surplus cheaply and buying it back expensively at night, you store it and use your own solar after dark, avoiding power at the full retail price. Under full retail net metering the case for a battery is weaker, because the grid already credits you fairly. Under NEM 3.0 or avoided-cost rules it is much stronger. We weigh this in are solar batteries worth it.
Two identical homes with identical systems can have paybacks years apart purely because of net-metering rules. That is why a national average is not enough and a state-specific number is worth having. The report reflects whether your state offers full retail, partial credit, NEM 3.0 net billing, or leaves it to your utility, and it adjusts your savings accordingly. Our methodology shows exactly how, so the payback year you get reflects your rules, not a generic assumption.
Skip the estimates. Get your actual payback year for your ZIP.
