Net Metering Explained: How Solar Credits Work in 2026
Net metering is the single most important policy that makes rooftop solar financially viable. Without it, you'd waste most of the electricity your panels produce during the day. Understanding how it works—and how it's changing—is critical before you sign any solar contract.
How Net Metering Works (Simple Version)
Imagine your electric meter as a two-way street:
- Daytime (Surplus): Your panels produce more electricity than your home uses. The excess flows OUT to the grid. Your meter runs backward, building up credits.
- Nighttime (Deficit): Your panels stop producing. Your home draws electricity IN from the grid. Your meter runs forward, using your credits.
- End of Month: The utility calculates the NET difference. If you exported more than you imported, you have a credit that rolls over.
In states with full 1:1 net metering, every kWh you export is worth the full retail electricity rate (e.g., 18¢/kWh). The grid effectively acts as a free, infinite battery.
The NEM 3.0 Problem (California's Warning)
In April 2023, California replaced its generous net metering policy with NEM 3.0 (Net Billing Tariff). Under the old rules, a kWh exported was worth ~30¢. Under NEM 3.0, that same kWh is only worth ~5-8¢ (the "avoided cost" to the utility). This reduced the value of solar exports by roughly 75%.
The result? Californians now must pair solar with a battery to capture the economic benefit. Store your daytime solar, use it during expensive evening peak hours (4-9 PM), and avoid exporting at rock-bottom rates.
Net Metering by State: 2026 Status
| State | Net Metering Status | Export Value |
|---|---|---|
| California | NEM 3.0 (Reduced) | ~5-8¢/kWh |
| New Jersey | Full 1:1 | ~18¢/kWh |
| New York | VDER (Value Stack) | ~12-16¢/kWh |
| Massachusetts | Full 1:1 + SMART | ~28¢/kWh |
| Florida | Full 1:1 | ~15¢/kWh |
| Texas | Varies by Utility | ~4-10¢/kWh |
| Georgia | Limited (EMC Only) | ~3-5¢/kWh |
For a comprehensive view by state, visit our Interactive Solar Map.
What If My State Eliminates Net Metering?
If your state reduces or eliminates net metering, your options are:
- Add Battery Storage: Store daytime solar and self-consume during peak hours. This is the #1 strategy post-NEM 3.0.
- Join a VPP: Enroll your battery in a Virtual Power Plant program to earn revenue from grid services.
- Maximize Self-Consumption: Run your dishwasher, laundry, and EV charger during the day when panels are producing.
Key Takeaways
- Net metering lets you earn credit for excess solar energy sent to the grid.
- Full 1:1 net metering is still available in many states but is being reformed.
- California's NEM 3.0 is a model other states may follow—making batteries essential.
- Always check your specific utility's policy before signing a solar contract.