Net Metering vs Net Billing: Why Export Rates Decide Solar Savings

Two ways to pay for exported solar power

A rooftop system makes power when the sun is up, and a home rarely uses all of it at that moment. The surplus flows to the grid. How the utility credits that surplus is the single biggest rule in a solar bill, and it falls into two broad types.

Net metering credits each exported kilowatt-hour (kWh) at or near the full retail price. The meter effectively runs backward when the system exports, so a kWh sent out offsets a kWh bought later. Under full retail net metering, it makes little financial difference when the household uses power.

Net billing credits exports at a separate rate, usually lower than the retail price. Power the household uses directly from the panels still avoids buying that power at retail, but power sent to the grid earns the export rate instead. The gap between the two rates is what changes the economics.

The details vary by state and often by utility, so no single national rule applies. The state pages on this site classify each state’s policy and cite the regulator’s decision.

Why self-consumption matters more under net billing

Take a hypothetical household that pays 20 cents per kWh at retail, with an export credit of 5 cents. Each kWh used on the spot is worth 20 cents of avoided purchase. Each kWh exported is worth 5 cents. Under full retail net metering, both would be worth 20 cents.

This means the same panels can produce very different savings depending on the household’s habits. A home with big daytime loads, such as an air conditioner running during the afternoon or someone working from home, uses more of its own output and exports less. An empty home during the day exports most of what it produces.

Two practical consequences follow. System size matters less than it used to, because extra panels mostly add low-value exports. And shifting flexible loads, like laundry, dishwashers, water heating, or electric vehicle charging, into the sunny hours raises the value of every kWh produced.

California: the Net Billing Tariff

California’s rule is the most closely watched. The California Public Utilities Commission (CPUC) adopted the Net Billing Tariff in Decision D.22-12-056 on December 15, 2022, as the successor to the older NEM 2.0 program. According to the CPUC, customers applying for interconnection since April 15, 2023 take service on the net billing tariff. The utilities call it the Solar Billing Plan. It applies to PG&E, SCE, and SDG&E, and the small utilities have their own tariffs.

The CPUC explains that, as with net metering, onsite generation is first used to serve onsite load. The difference is that exports are credited at a rate reflecting the value of the energy to the grid, which the utilities call Energy Export Credits. The CPUC states that this value is usually lower than the retail rate, but can rise above the retail rate on late summer evenings. The credit therefore varies by hour and season rather than staying flat.

Other features listed by the CPUC include these:

• Required rate plan. Customers must take service on a specific time-of-use rate with lower off-peak prices. The currently approved plans are E-ELEC for PG&E, TOU-D-PRIME for SCE, and EV-TOU-5 for SDG&E.
• Export adder. Residential PG&E and SCE customers who apply to interconnect before the end of 2027 receive slightly higher bill credits for exports for nine years. SDG&E customers are excluded.
• Nine-year legacy period. The original customer who interconnects under the tariff is guaranteed the use of the tariff for nine years.

Because the export rate changes hourly, this page does not quote a single California cents-per-kWh figure. The CPUC points to the PG&E, SCE, and SDG&E rate pages for current values. See the California page for the state summary.

Arizona: the Resource Comparison Proxy

Arizona Public Service (APS) uses a simpler design. Its Rate Rider RCP, approved by the Arizona Corporation Commission, pays a flat export rate based on the Resource Comparison Proxy, a method tied to what APS pays for utility-scale solar. APS describes it as a net billing rider that gives a monthly bill credit for excess power.

The rate steps down by year of application. APS’s rate schedule, effective September 1, 2026, lists these export rates:

Tranche	Applies	Export rate
2023	Sept. 1, 2023 to Aug. 31, 2024	$0.07619 per kWh
2024	Sept. 1, 2024 to Aug. 31, 2025	$0.06857 per kWh
2025	Sept. 1, 2025 to Aug. 31, 2026	$0.06171 per kWh
2026	Sept. 1, 2026 to Aug. 31, 2027	$0.05554 per kWh

The rider says the rate cannot fall by more than 10% in a year, and each customer’s initial rate applies for 10 years from interconnection. After that, the credit follows the rate in effect at the time and may change each year. The credit applies to the monthly bill, and APS issues a check after the December bill if the remaining credit exceeds $25. The Arizona page covers the state in more detail.

Not every state works like these two. Nevada and Florida have their own rules, covered on their state pages, and the policy class shown there can differ from California and Arizona.

How batteries change the math

Under net billing, a battery lets a household store midday surplus and use it in the evening instead of exporting it at a low rate. The saved kWh is then worth the retail price, not the export price. The CPUC says customers can maximize bill savings under the net billing tariff by installing battery storage along with their generation, so they can use or export stored energy during high-value hours. It also reports that nearly 70 percent of net billing customers had paired batteries with their solar by the end of 2024.

A battery adds cost and does not make sense everywhere. Where exports are credited at or near retail, a battery’s savings come mainly from backup power rather than bill arbitrage. Where the gap between retail and export rates is wide, the battery’s value rises. The right choice depends on the local rates, the time-of-use schedule, and the household’s load shape.

How the calculator models it

The payback estimates on this site use one simple, stated assumption. A fixed 40% of the system’s annual output is treated as used on the spot and valued at the retail electricity price. The remaining 60% is treated as exported and credited at the state’s export rate. Where a state’s rule credits exports at full retail, the export rate equals the retail price, and the two shares are worth the same.

That 40% figure is a modeling assumption, not a measurement of any household. A home with strong daytime use will do better than the estimate under net billing, and a home empty by day will do worse. The full method and data sources are on the methodology page.

The end of the federal credit makes these export rules matter more, since a higher net cost leaves less room for low-value exports. The guide on the federal credit ending explains that change.