Policy
What Is Net Metering?
A billing arrangement that credits solar system owners for electricity they add to the grid. When solar produces more than needed, the excess is sent to the grid and the meter "runs backward." Policies vary significantly by state.
Net metering made rooftop solar economical: every surplus kilowatt-hour exported offsets one purchased, effectively paying the full retail rate for home generation. Since retail rates bundle in grid costs, utilities have long argued full-retail crediting shifts fixed costs onto non-solar customers — solar advocates counter that distributed generation delivers unpriced grid and environmental benefits.
That fight has produced a patchwork of successor policies. California's NEM 3.0 (2023) cut export compensation roughly 75% by tying it to avoided cost, collapsing simple-solar economics while making solar-plus-battery the default. Dozens of states are running similar transitions, so the value of a rooftop system now depends heavily on the state — and the vintage of its rules.
Related terms
Part of the CleanPowerDaily Clean Energy Glossary — 12 in-depth explainers and 50 defined terms. Definitions are free to cite with attribution.