What is net metering?

Net metering is a billing arrangement where the electricity your solar panels export to the grid earns a credit on your utility bill. When your panels produce more than you use (typically midday), the excess flows to the grid. That credit offsets electricity you draw from the grid later (typically at night). Your meter effectively tracks the net difference.

Which states have the best net metering policies?

States with full retail rate net metering offer the best value: New Jersey, Massachusetts, New York, Maryland, Connecticut, Colorado, Oregon, and most of New England. In these states, every kWh you export earns a credit equal to the full retail electricity rate.

Does California still have net metering?

California replaced traditional net metering with NEM 3.0 (Net Billing Tariff) in April 2023. Under NEM 3.0, export credits are based on avoided cost rates that vary by time of day and month, averaging roughly $0.05-$0.08/kWh — about 75% less than the full retail rate of $0.30+/kWh. This has made battery storage essential for maximizing solar value in California.

How does net metering affect solar payback?

Net metering dramatically affects payback. With full retail net metering, a system that exports 40% of its production still gets full value for every kWh. Without it, those exported kWh might earn only $0.03-$0.05/kWh instead of $0.17/kWh. This can extend payback by 3-5 years and makes self-consumption and battery storage more important.

What happens to excess net metering credits at the end of the year?

This varies by state. Some states (NJ, MA, NY) allow indefinite credit rollover month to month. Others (CA, AZ) reset credits annually, paying out any remaining balance at the avoided cost or wholesale rate (much lower than retail). A few states allow annual credit rollover at full retail. Check your state's specific policy.

What is the difference between net metering and net billing?

Net metering credits exports at the full retail rate. Net billing (used in California NEM 3.0 and some other states) credits exports at a different rate — usually based on the avoided cost of energy, which is lower than retail. Net billing still provides value for solar exports, but less than traditional net metering.

Can my utility deny me net metering?

In states with mandatory net metering laws, utilities must offer net metering to qualifying customers (usually up to a certain system size, such as 10-25 kW for residential). Some states have aggregate capacity caps — once a certain percentage of customers have solar, the utility can stop accepting new net metering applications. Check if your utility has reached its cap.

Should I get a battery if my state does not have net metering?

If your state has no net metering or offers very low export credits, a battery helps you use more of your own solar production (self-consumption). Without a battery, a typical home self-consumes only 30-40% of solar production. With a battery, self-consumption rises to 70-90%, capturing value from kWh that would otherwise be exported at low or no credit.

Is net metering going away?

Net metering is evolving rather than disappearing. States are gradually shifting from full retail credits to reduced rates that better reflect the grid value of solar exports. California led this trend with NEM 3.0 in 2023. Other states are studying similar changes. However, most states that currently offer net metering have not set expiration dates, and new solar customers are often grandfathered under current policies for 15-20 years.

Net Metering By State: Which States Still Offer Full Retail Credit? (2026)

Net metering is the policy that determines how much your utility pays you for excess solar electricity exported to the grid. In states with full retail net metering, every kWh you export earns a credit equal to the retail rate — effectively making your meter spin backward. In states without it, exported electricity earns far less. This single policy can swing your solar payback period by 3-5 years, making it one of the most important factors in solar economics. Here is the current net metering status for all 50 states.

How Net Metering Works

A typical home solar system produces more electricity than the home uses during midday hours and less than it needs in the morning, evening, and overnight. Without storage, that excess midday production flows to the grid.

Net metering determines the credit you receive for those exported kWh:

Full retail net metering: You earn a credit equal to the full retail electricity rate (e.g., $0.17/kWh). When you draw power from the grid at night, credits offset your bill dollar-for-dollar. If you export 500 kWh and import 500 kWh in a month, your net usage is zero and your bill is just the fixed charges.

Reduced rate / net billing: You earn a credit below the retail rate for exports. California's NEM 3.0 is the most prominent example — export credits average $0.05-$0.08/kWh versus a retail rate of $0.30+/kWh.

Avoided cost / wholesale: You earn a credit at the utility's avoided cost of generation, typically $0.03-$0.05/kWh. This provides minimal value for exports.

No net metering: Your excess production either earns nothing or you cannot export to the grid at all. Solar is still viable through self-consumption, but the economics are significantly worse without battery storage.

Calculate Your Savings Under Different Net Metering Policies

State

System size

Cost per watt (installed)

$/W

Federal tax credit

Electricity rate inflation

%/yr

Estimated payback period

0years

For a 5 kW system in California at $2.85/W with 30% tax credit

System cost (after ITC)

$9,975

$14,250 before tax credit

Year 1 savings

$2,774

11,096 kWh at $0.25/kWh

25-year net profit

$91,163

$101,138 total savings

Cost by state Peak sun hours

Net Metering Policy By State (2026)

The following table summarizes the net metering or successor policy for each state. Policies change frequently — verify current rules at DSIRE.org or your utility's website before making purchase decisions.

Full Retail Credit States

These states offer the best net metering policies, crediting solar exports at the full retail electricity rate:

State	Policy	Credit Rate	Annual Rollover	System Size Limit
New Jersey	Full retail NEM	Retail rate	Yes, indefinite	25 kW
Massachusetts	Full retail NEM	Retail rate	Yes, monthly rollover	10 kW (residential)
New York	VDER (Value Stack)	~Retail equivalent	Yes	25 kW
Maryland	Full retail NEM	Retail rate	Yes, paid out annually	10 kW
Connecticut	Full retail NEM	Retail rate	Yes	25 kW
Colorado	Full retail NEM	Retail rate	Yes (12-month cycle)	25 kW
Oregon	Full retail NEM	Retail rate	Yes, annual payout	25 kW
Vermont	Full retail NEM	Retail rate	Yes	15 kW
New Hampshire	Full retail NEM	Retail rate	Yes (12-month cycle)	100 kW
Maine	Full retail NEM	Retail rate	Yes	25 kW
Rhode Island	Full retail NEM	Retail rate	Yes	25 kW
Pennsylvania	Full retail NEM	Retail rate	Yes, annual payout at wholesale	Varies by utility
Ohio	Full retail NEM	Retail rate	Yes, monthly rollover	No cap
Delaware	Full retail NEM	Retail rate	Yes	25 kW
Illinois	Full retail NEM	Retail rate	Yes (annual payout)	25 kW
Iowa	Full retail NEM	Retail rate	Yes	500 kW
Minnesota	Full retail NEM	Retail rate	Yes	40 kW
Montana	Full retail NEM	Retail rate	Yes, annual payout	50 kW
West Virginia	Full retail NEM	Retail rate	Yes	25 kW
Wisconsin	Full retail NEM	Retail rate	Yes, monthly rollover	20 kW

Reduced Rate / Net Billing States

These states credit solar exports at a rate below full retail:

State	Policy	Credit Rate	Notes
California	NEM 3.0 (Net Billing)	~$0.05-$0.08/kWh (TOU-based)	~75% reduction from NEM 2.0; battery storage strongly recommended
Nevada	NEM 2.0 (restored)	75% of retail rate	Restored after controversial 2016 elimination
Arizona	Export rate	~$0.03-$0.05/kWh (varies by utility)	APS and TEP use avoided cost; SRP offers specific export rates
Hawaii	Customer Grid-Supply (CGS)	~$0.10-$0.15/kWh	Grid-supply rate varies by island
Utah	Net billing	~$0.06/kWh export credit	Transition from full retail completed 2024
Indiana	Net billing	Varies by utility	Transitioning away from full retail
Michigan	Inflow/outflow	Outflow credit varies by utility	DTE uses inflow/outflow billing
Arkansas	Net billing	Reduced from retail	Transitioning away from full retail
Louisiana	Avoided cost	~$0.03-$0.04/kWh	Very low export value

No Statewide Net Metering Mandate

These states do not mandate net metering, though individual utilities may offer it voluntarily:

State	Status	Notes
Alabama	No state mandate	Alabama Power offers no solar export program
Tennessee	No state mandate	TVA-served areas have different programs
South Dakota	No state mandate	Limited solar policies
Idaho	No state mandate	Idaho Power offers customer generation program
Mississippi	No state mandate	Some utilities offer limited programs
Texas	No state mandate	Varies by retail provider; some offer buyback programs

States With Evolving Policies

Several states are actively reviewing or modifying their net metering rules:

Georgia: Georgia Power's net metering program has a participation cap. Once reached, new customers are offered a reduced export rate. Check current status with Georgia Power.

North Carolina: Duke Energy has proposed reducing net metering credits. Current customers are grandfathered for their existing terms.

South Carolina: Full retail net metering is currently available but capped at 2% of a utility's peak demand. Once the cap is reached, new applicants receive a reduced rate.

Florida: Net metering is currently at full retail for systems up to 2 MW, but the legislature has considered changes in recent sessions.

Virginia: Net metering at full retail up to 25 kW for residential, with aggregate caps per utility.

States With The Best Net Metering Policies

The strongest net metering states combine full retail credit with favorable rollover rules and high retail rates:

New Jersey — Full retail credit, indefinite monthly rollover, high retail rates ($0.16-$0.18/kWh), and SREC-II income on top. One of the best states for solar economics.

Massachusetts — Full retail credit, SMART program production incentives, high retail rates ($0.28/kWh average). Solar payback of 5-7 years.

New York — The Value of Distributed Energy Resources (VDER) tariff provides roughly retail-equivalent compensation that accounts for the time, location, and environmental value of your exports. Combined with NY-Sun rebates, strong economics.

Maryland — Full retail credit plus SREC income and a $1,000 state grant. Moderate rates ($0.16/kWh) but strong incentive stack.

Connecticut — Full retail credit with some of the highest retail rates in the country ($0.29/kWh). Fast payback periods of 5-7 years.

Colorado — Full retail net metering with a 25 kW residential cap and strong solar resource (5.3 peak sun hours). Reliable policy environment.

Oregon — Full retail credit for the first 25 kW. Combined with Oregon's Solar + Storage Rebate Program, strong economics despite moderate rates.

California NEM 3.0: A Case Study In Policy Change

California's shift from NEM 2.0 to NEM 3.0 (Net Billing Tariff) in April 2023 is the most significant net metering policy change in US history and offers a preview of where other states may head.

What Changed

Under NEM 2.0: Exports credited at full retail rate (~$0.30-$0.35/kWh on average). A 7 kW system exporting 40% of production earned about $1,600-$1,900/year in export credits.

Under NEM 3.0: Exports credited at "avoided cost" rates that vary by time of day and month. Midday exports (when solar production peaks) earn the least — roughly $0.05-$0.08/kWh. Evening exports earn more ($0.15-$0.30/kWh) but solar production is minimal at those times. The same 7 kW system now earns roughly $400-$600/year in export credits.

Impact On Payback

Scenario	Net Cost	Annual Savings	Payback
NEM 2.0 (solar only)	$14,000	$2,800	5.0 years
NEM 3.0 (solar only)	$14,000	$1,900	7.4 years
NEM 3.0 (solar + battery)	$23,000	$2,600	8.8 years

NEM 3.0 added roughly 2.4 years to the payback period for solar-only systems. However, adding a battery to shift exports to high-value evening hours partially recovers the lost value, at the cost of a higher upfront investment.

Why It Matters For Other States

California's NEM 3.0 was driven by arguments that net metering creates a cost shift — solar customers pay less into the grid infrastructure that they still rely on, shifting those costs to non-solar customers. This argument is being made in state utility commission proceedings across the country. States likely to see net metering changes in the coming years include North Carolina, Florida, Georgia, and Virginia.

If you are in a state with full retail net metering, this is an argument for installing solar sooner rather than later. New solar customers are typically grandfathered under the net metering policy in effect at the time of their interconnection for 15-20 years.

How Net Metering Affects Your Solar Decision

With Full Retail Net Metering

System sizing is simple — install enough to offset your annual usage. It does not matter if you export 50% of your production during the day because you get full credit for it. Battery storage is optional (backup power only) since your exports already earn full value.

Without Full Net Metering

Self-consumption becomes critical. Every kWh you use directly from your panels saves you the full retail rate. Every kWh you export earns a fraction of that. You want to maximize self-consumption by:

Shifting heavy loads (EV charging, laundry, dishwasher) to midday hours
Running pool pumps during peak production
Pre-cooling your home in the afternoon

Battery storage becomes financially important. A battery lets you store midday excess and use it in the evening, avoiding low-value exports. In California under NEM 3.0, a battery adds $8,000-$13,500 but recovers $700-$1,200/year in value that would otherwise be lost to low export credits.

System sizing changes. Without good net metering, it may not make sense to install a system that covers 100% of your usage. A system sized to cover 60-80% of usage (maximizing self-consumption) might deliver better ROI than a larger system that exports heavily at low rates.

What Happens If Your State Changes Net Metering

If your state modifies its net metering policy after you have installed solar, you are typically grandfathered under the terms in effect when you interconnected. Grandfathering periods vary:

California NEM 2.0 customers: grandfathered for 20 years
Nevada: grandfathered for 20 years after the 2016 controversy
Most other states: 10-20 year grandfathering period

This is another reason to install solar sooner rather than later in states where net metering changes are being discussed. Locking in full retail net metering for 20 years has significant financial value — potentially $10,000-$20,000 more in lifetime savings compared to a reduced-rate successor policy.