Net Metering Explained: How It Works & State Policies (2026)
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How Net Metering Works
When your solar panels produce more electricity than you use during the day, the excess flows to the grid. Your meter tracks this export, and you receive credits on your utility bill. At night, you draw from the grid and use those credits, effectively using the grid as a free battery.
Full Retail vs Reduced Rate Net Metering
Full retail net metering credits you at the same rate you pay for electricity. This provides the best economics for solar. Some states have moved to reduced rate programs that credit at wholesale or avoided cost rates, reducing the value of exported solar by 30-60%.
Net Metering Policies by State
States with strong net metering include New Jersey, Massachusetts, New York, and Colorado. California shifted to NEM 3.0 with reduced export rates in 2023. States without mandatory net metering include Texas, Georgia, and Tennessee. Policies continue to evolve as solar adoption grows.
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Maximizing Value Without Net Metering
If your state has weak net metering, maximize self-consumption by running appliances during solar production hours. Battery storage captures excess production for evening use. Smart home systems can automate energy shifting to minimize grid exports.
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