Guide · Updated November 2026 · Data: EIA Form 861 2025 and EIA-861M

Net Metering and Rooftop Solar: How Selling Power Back Works

When rooftop solar panels produce more electricity than a home is using, the surplus flows backward through the meter onto the grid. Net metering is the billing arrangement that decides what that surplus is worth.

The basic mechanics

Under classic net metering, the meter effectively runs backward: a kWh exported cancels a kWh imported, so at month's end you are billed only for the net. Export a surplus over the whole month and the excess typically rolls forward as a credit, sometimes paid out annually at a lower wholesale ("avoided cost") rate. The appeal is simplicity, and the catch is that a kWh at noon on a sunny April day is worth far less to the grid than a kWh at 7 p.m. in August - which is why many states have moved to successors: net billing (exports credited at a set, lower rate), time-varying export prices, or instant self-consumption designs.

Why rules differ so much

Net metering policy is set state by state, and within states it can differ between investor-owned utilities (usually under the state program) and municipal or cooperative utilities (often their own policy). Two neighbors on different utilities can face materially different solar economics on identical roofs. Before assuming a payback period, check your specific utility's current program - and note that most programs cap system size at or near the home's own consumption.

How much customer solar is out there?

Utilities report net-metered installations and capacity to EIA on Form 861. The pattern is stark: a small number of utilities in high-price, high-sun states host most of the country's rooftop capacity, because the economics are strongest where retail prices are highest. Our customer-solar ranking lists utilities by total net-metered capacity and installations, and every utility profile shows its own solar figures alongside its rates - the two belong together, since a high average realized rate is precisely what makes rooftop generation pay back quickly.

Solar and your bill, in one formula

A useful rule of thumb: a system offsets your bill at roughly your utility's average realized residential rate for every kWh it lets you avoid importing, and earns the export credit rate for every kWh sent out. Both numbers start on your utility's profile page and your state's rate table. For how those rates are computed, see average realized rate vs tariff rate.

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