In short: When your solar panels produce more electricity than your home uses, the surplus flows to the grid. How much you get paid for it depends on where you live. Net metering credits exports at or near the retail price you pay. Net billing and export tariffs (such as the UK’s Smart Export Guarantee) pay a separate, usually lower, rate for exported energy. This difference can change your payback period by years.
Of all the parts of a solar quote, this is one of the most misunderstood and one of the most important. Two identical systems can have very different returns depending on how your utility values the power you export. This guide explains the main models, how they compare, and what to ask before you sign.
What happens to the extra electricity your solar panels produce?
Your home always uses solar power first. Whatever you can’t use at that moment is either exported to the grid or stored in a battery. If it is exported, your utility or supplier handles it in one of three main ways:
- Net metering: exports offset your imports, typically at the retail rate.
- Net billing (or «net feed-in»): exports are credited at a different rate than imports, often lower and sometimes varying by time of day.
- Feed-in or export tariffs: you are paid a set rate per kWh for everything you export, on a separate contract.
If you’re new to how the whole system fits together, start with How Does a Home Solar System Work?
What is net metering?
With net metering, a bidirectional meter tracks the electricity you import from the grid and the electricity you export. At the end of each billing period, the two are netted against each other.
Example: In June you use 900 kWh and your panels export a net surplus that brings you to 1,100 kWh of production over the month. You’ve produced 200 kWh more than you used. That 200 kWh is normally carried forward as a credit and reduces future bills.
Under full retail net metering, each kWh you export is worth as much as each kWh you would otherwise buy. In effect, the grid works like a free battery, and a system sized to your annual usage can offset most of your electricity bill. This is the most favorable model for solar owners.
Net metering is common in the United States and in parts of Canada, but it is being reduced or replaced in many places.
What is net billing?
Net billing keeps the meter and the billing cycle but changes the value of exports. Instead of crediting each exported kWh at the retail price, the utility credits a lower rate, often tied to the wholesale or «avoided cost» of electricity, sometimes with different values at different times of day.
Why it matters: under net billing, the electricity you use from your panels directly (self-consumption) is worth much more than the electricity you export. That changes system design: it favors smaller systems matched to daytime use, and it makes solar batteries more attractive because storing your midday surplus for the evening beats selling it cheaply.
California’s move from its older net metering rules to a net billing structure (often called NEM 3.0) is the best-known example, and other states and utilities have made similar shifts. Policy trackers such as the NC Clean Energy Technology Center’s 50 States of Solar report show that net metering rules are changing in dozens of states every quarter, and that successor programs typically pay less for exports than the plans they replace.
What are export tariffs and feed-in tariffs?
In many countries, exported solar power is paid under a separate contract with a fixed or variable rate per kWh. There is no «netting» against your bill: exports and imports are priced independently.
Example: the UK’s Smart Export Guarantee (SEG)
The Smart Export Guarantee requires larger licensed electricity suppliers (those with at least 150,000 domestic customers) to offer at least one export tariff to eligible small-scale generators, including home solar. Smaller suppliers can join voluntarily. Key points:
- Suppliers set their own rates, but any SEG rate must be above zero.
- You can choose your supplier for export, and it doesn’t have to be the same company that supplies your electricity.
- Eligibility: a certified installation (typically MCS) and a meter that records exports, typically half-hourly.
- Rates vary widely: from a few pence per kWh on basic tariffs to much higher rates on some smart or battery-linked tariffs, and they change often. Check current offers before you decide.
The Smart Export Guarantee, which began in January 2020, replaced the earlier Feed-in Tariff scheme for new installations. Read our full guide to the Smart Export Guarantee and the best UK export tariffs.
Example: If you export 1,500 kWh a year, the difference between a 4p and a 15p per kWh export rate is 1,500 × (0.15 − 0.04) = £165 per year. Over 20 years, that adds up.
Net metering vs net billing vs export tariff: comparison
| Net metering | Net billing | Export tariff (e.g., SEG) | |
|---|---|---|---|
| How exports are valued | At or near retail price | At a lower or time-varying rate | At a rate set in a separate contract |
| How you’re paid | Bill credits | Bill credits | Bill credits or cash payments |
| Value of self-consumption | Similar to exporting | Much higher than exporting | Much higher than exporting |
| Battery benefit | Lower | High | High |
| Choice of provider | Usually your utility | Usually your utility | Often yes |
| Typical regions | Some US states, parts of Canada | California and a growing number of US utilities | UK and several other countries |
How your export rules change your solar decision
- System size: with full net metering, sizing for your annual usage often makes sense. With low export rates, a smaller system matched to daytime use may pay back faster. See How Many Solar Panels Do I Need?
- Battery or not: the bigger the gap between import and export prices, the stronger the case for storage. See Do You Need a Solar Battery?
- Payback period: the same installation can pay back years faster or slower depending on export value. See how to calculate your solar payback period.
- Time-of-use rates: if your utility charges more in the evening, shifting your consumption (or using a battery) increases your savings.
- Future changes: export rates tend to get less generous over time, not more, so build your business case on conservative assumptions.
Will the rules change after I install?
Often, existing customers are «grandfathered» for a fixed number of years (or the life of the system) when a region moves to a less generous model, although the details vary. Some places let you expand an existing system while keeping legacy terms; others don’t. Because rules differ so much, ask your utility or installer for the current terms in writing, and check whether your rate is locked in and for how long.
How to find your export rules
- Check your utility or supplier’s website for «net metering,» «net billing,» «interconnection,» or «export tariff.»
- Look at your regulator: in the US, your state public utility commission; in the UK, Ofgem’s SEG pages.
- Use a policy database such as DSIRE (US) to see your state’s rules and incentives.
- Ask your installer to show the savings estimate under your specific rate plan, not a generic one.
Questions to ask installers about exports
- Which export model applies to my address, and what is the current export rate?
- Is that rate fixed, and can the utility change it?
- Am I eligible for legacy terms, and for how long?
- Does your savings estimate assume net metering or the lower export rate?
- Would a battery improve my return under these rules?
- Do I need a specific meter or certification to receive payments?
Always compare multiple quotes and check for red flags before choosing.
Where to next:
Frequently asked questions
What is the difference between net metering and net billing?
Net metering credits exported energy at or near the retail rate, so exports offset imports almost one-for-one. Net billing credits exports at a different, usually lower, rate, so self-consuming your solar power is worth more than exporting it.
Do I get paid for excess solar power?
Usually yes, but how much varies. In some places you receive bill credits, in others a payment per kWh, and in some areas the rate is very low. Check the rules for your utility or region.
What is the Smart Export Guarantee?
It’s a UK scheme that requires larger electricity suppliers to offer a tariff paying small-scale generators, including homes with solar panels, for electricity they export to the grid. Suppliers set their own rates, which must be above zero.
Is net metering going away?
In several US states and utilities it is being replaced or reduced, typically by net billing with lower export credits. Other states still offer full retail net metering. Policies change often, so check current rules for your area.
Do I need a battery if export rates are low?
Not always, but a battery becomes more attractive when the export rate is much lower than the import price, because stored energy is worth more when you use it yourself.
Can I choose who pays me for my exported electricity?
In some markets, such as the UK under the Smart Export Guarantee, yes: you can often choose a supplier for export that is different from your supplier for import. Under most US net metering programs, your existing utility handles it.