2 guides

Net metering and utility rate guides

How your utility credits the solar power you send to the grid decides much of your savings. Some states still pay the full retail rate; others, like California, pay far less for exports. Learn the rules and value your exports.

Net Metering & Rates

California NEM 3.0 in 2026: How Net Billing Changes Solar Savings

California NEM 3.0 pays a few cents for exported solar. See how net billing, the 9-year lock-in and the new fixed charge shape savings in 2026.

Updated Oct 18, 2026

Net Metering & Rates

What Is Net Metering? Net Metering vs Net Billing, Explained With Real Numbers

What is net metering? Learn how utilities credit the solar power you export, how net billing differs, and how much each rule is worth on a typical home.

Updated Oct 18, 2026

25D credit (Residential Clean Energy Credit): A 30% federal tax credit homeowners could claim for solar and batteries they paid for. It ended for expenditures made after December 31, 2025; the IRS counts the expense when installation is completed.
48E credit: A federal business tax credit for clean electricity property. Companies that own leased or PPA systems on homes may claim it, subject to construction deadlines and sourcing rules. The homeowner does not claim it.
Avoided cost: What it would cost a utility to produce or buy the same power elsewhere. Some states pay rooftop exports at an avoided-cost rate, which is far below retail.
Dealer fee: A charge a solar lender takes from the loan, usually built into the amount you borrow so the advertised interest rate looks low. The CFPB has warned these fees can add tens of percent to the price.
Degradation: The slow loss of a panel’s output over time. NREL research puts the median around 0.5% per year, and most panel warranties guarantee roughly 80–90% of original output after 25 years.
Escalator: A yearly percentage increase written into a lease or PPA, often 0–3%. A 2.9% escalator raises the payment by about 100% over 25 years.
FEOC rules: Federal “foreign entity of concern” sourcing limits added in 2025 that a business must meet to claim 48E credits on projects starting construction in 2026 or later.
Interconnection: Your utility’s approval to connect a solar system to the grid. Most utilities require an application before installation and a final permission to operate (PTO) before you turn it on.
Inverter: The device that turns the direct current (DC) from panels or batteries into the alternating current (AC) your home uses. Types include string inverters, microinverters and hybrid inverters that also manage a battery.
Islanding (backup mode): When a solar-plus-battery system disconnects from the grid during an outage and keeps powering your home. Ordinary grid-tied solar without a battery shuts off in an outage for line-worker safety.
kW (kilowatt): A unit of power: how fast electricity is made or used at one moment. Solar system size is quoted in kW of panel capacity (DC). A 7 kW system has panels rated 7,000 watts in total.
kWh (kilowatt-hour): A unit of energy: using 1 kW for one hour. Your electric bill charges you per kWh, and solar output and battery capacity are measured in kWh.
Microinverter: A small inverter mounted under each panel. Shade on one panel affects only that panel, and each panel can be monitored separately. Usually costs a little more than one central string inverter.
NABCEP certification: A voluntary professional certification for solar installers from the North American Board of Certified Energy Practitioners. It is a useful signal, but you should also check state contractor licensing.
NEM 3.0: The common name for California’s Net Billing Tariff, which applies to new rooftop solar customers of PG&E, SCE and SDG&E who applied on or after April 15, 2023. Exports earn hourly values far below retail rates.
Net billing: A billing rule where exported solar earns a credit set by a separate, usually lower, export rate rather than the full retail price. California’s Net Billing Tariff (often called NEM 3.0) is the best-known example.
Net metering: A billing rule where each kWh your panels send to the grid earns a credit equal (or close) to the retail price you pay. Credits offset power you buy later, often rolling over month to month.
Offset: The share of your yearly electricity use that solar is designed to produce. A 100% offset aims to match a year of use; under low export credits a smaller offset can pay back faster.
Payback period: How many years of bill savings it takes to recover what you paid for a system. A shorter payback means a better investment, all else equal.
Peak sun hours: Daily sunlight expressed as the number of hours at full-strength sun (1,000 watts per square meter). Five peak sun hours means the day’s sunlight equals five hours of full sun.
PPA (power purchase agreement): A contract where a company owns the system and you pay for the electricity it produces at a set price per kWh, often rising each year.
PTO (permission to operate): The utility’s final go-ahead to switch on a grid-connected system. Running a system before PTO can violate your utility agreement.
Round-trip efficiency: The share of energy you get back out of a battery compared with what went in. About 90% is typical for home lithium batteries.
Solar lease: A contract where a company owns the panels on your roof and you pay a fixed monthly amount, often with a yearly increase (escalator), usually for 20–25 years.
Specific yield: Yearly energy a solar system produces per kW of capacity, in kWh/kW. It depends on sunshine, tilt, direction and shade. Sunny Southwest roofs often reach 1,600–1,800; cloudier northern roofs 1,100–1,300.
Time-of-use (TOU) rate: An electricity plan where the price per kWh changes by time of day, with the highest prices in late afternoon and evening. Batteries save money by covering those peak hours.
True-up: The annual settlement on a net metering or net billing account. Charges and credits from the past 12 months are totaled, and you pay any balance owed. Leftover credits may be paid out at a low rate or lost.
Usable capacity: The share of a battery’s energy you can actually draw. Spec sheets list it in kWh; compare usable, not total, capacity between batteries.

Net metering and utility rate guides

California NEM 3.0 in 2026: How Net Billing Changes Solar Savings

What Is Net Metering? Net Metering vs Net Billing, Explained With Real Numbers

Related calculators

Net Metering Calculator

NEM 3.0 Calculator (California)

Solar Savings Calculator