Quick definition
Solar panels produce the most power midday, but most homes use more power in the morning and evening. Net metering bridges that mismatch: surplus solar power sent to the grid during peak production earns a bill credit worth close to the retail rate, which then offsets power pulled from the grid when the sun isn't shining. Your meter effectively tracks the net difference between what you sent out and what you pulled in.
This is the billing structure that made grid-tied solar without a battery financially sensible for most homeowners, avoiding the need to store every bit of surplus production locally.
At a glance: net metering policy is set individually by each state and province, and varies significantly, so the specific rules that apply depend entirely on your local jurisdiction and utility.
Why it matters
Net metering is one of the single biggest factors in solar's financial return for most grid-tied homeowners, since it determines how much value surplus production actually generates. Under generous, full-retail-rate net metering, exporting a kWh at noon and importing a kWh at 8 PM roughly cancels out on the bill, effectively letting the grid function as a free, unlimited-capacity battery without the cost of buying and maintaining actual storage hardware.
This is exactly why net metering policy matters so much to solar economics, and why changes to that policy, like a shift toward net billing or a reduced credit rate, can meaningfully affect payback periods for both existing and new solar owners. A system sized and financed under one set of net metering assumptions can see its real savings shift if the underlying policy changes during the system's lifetime. State-level net metering rules also change often enough that the N.C. Clean Energy Technology Center publishes a quarterly tracker, "The 50 States of Solar," specifically to keep up with the volume of state-by-state policy activity on this exact topic.
The specific mechanics also matter in practice, not just the headline concept. How often credits reset, called the true-up period, and what happens to unused credit at that reset point both affect real value. A program that lets credits roll over indefinitely functions very differently for a homeowner's savings than one that resets annually and pays out any leftover credit at a lower rate. DSIRE's database of state incentives and policies lists the net metering rules that apply in each state, since they vary widely.
Where you'll see this
The system size for net metering cap limit tool checks whether your planned system fits within any size cap your net metering program sets.
If you're weighing whether a battery still makes sense under your net metering program, the battery size for net metering free utility tool models that decision specifically.
This term comes up in nearly every grid-tied solar proposal, in state and provincial energy policy discussions, and on the utility bill itself once a system is interconnected and generating credits. Natural Resources Canada publishes solar photovoltaic information for Canada, where net metering rules are set province by province.
Related terms
Frequently asked
No. Net metering policy is set state by state and province by province, and varies significantly, including some regions that have shifted to net billing or other structures instead. It's worth checking your specific state, province, and utility rather than assuming a particular policy applies.
This depends on the specific program. Some utilities let credits roll over indefinitely, others reset them at an annual true-up date, sometimes paying out any remaining surplus credit at a lower rate or forfeiting it entirely. Checking your specific program's true-up rules matters for understanding what unused credits are actually worth.
Not typically. Most utility bills still include fixed charges, like a basic connection fee, separate from the energy usage that net metering offsets, and many systems are sized to offset most but not necessarily 100% of usage. A truly zero electric bill is possible in some cases but isn't automatic.
Not for typical grid-tied economics, since net metering already lets the grid effectively bank your surplus solar credit. A battery still adds value for backup power during outages, since net metering alone doesn't keep the lights on when the grid itself goes down.