Where Does Excess Go?
On a sunny afternoon, your solar panels might produce 6 kW while your home only uses 1 kW. That extra 5 kW has to go somewhere. For grid-tied systems (the vast majority), it flows into the utility grid—essentially powering your neighbors' homes.
What you get in return for that exported energy depends entirely on your utility's policies. This can range from full retail credit (great) to almost nothing (terrible). It's one of the most important factors in solar economics.
Net Metering Explained
What Is True Net Metering?
Net metering is the gold standard for solar owners. Under true net metering, every kWh you export earns you a credit equal to the retail rate you'd pay to buy that kWh. Your meter literally spins backward when you export.
How It Works
- Daytime: You produce 50 kWh, use 20 kWh → export 30 kWh to grid
- Nighttime: You use 25 kWh → draw from grid
- Net result: Only billed for 25 - 30 = -5 kWh (5 kWh credit carries forward)
True Net Metering Examples
| Utility | Export Credit | Rollover | Rating |
|---|---|---|---|
| ComEd (IL) | Full retail (~$0.14/kWh) | Monthly, annual cash-out | Excellent |
| PSEG (NJ) | Full retail (~$0.16/kWh) | Annual rollover | Excellent |
| Xcel (CO) | Full retail (~$0.12/kWh) | Monthly rollover | Good |
| National Grid (MA) | Full retail (~$0.25/kWh) | Monthly | Excellent |
Net Billing Differences
What Is Net Billing?
Net billing (sometimes called "buy all/sell all" or "avoided cost") is less favorable. Instead of 1:1 credits, you're paid a lower rate for exports—often the utility's wholesale or "avoided cost" rate—while still paying retail for imports.
California's NEM 3.0: A Case Study
California shifted from generous net metering to net billing (NEM 3.0) in 2023. The results show why this matters:
| Time Period | Export Credit | Retail Rate | Value Gap |
|---|---|---|---|
| Midday (10am-4pm) | ~$0.05/kWh | ~$0.35/kWh | -86% |
| Evening peak (4-9pm) | ~$0.25/kWh | ~$0.50/kWh | -50% |
Under NEM 3.0, a kWh you export at noon is worth 86% less than one you use yourself. This dramatically changes system design—batteries become essential to shift solar production to high-value evening hours.
Other Net Billing Utilities
- Arizona (APS, SRP): Export rates of $0.02-$0.05/kWh vs $0.12-$0.15 retail
- Nevada (NV Energy): Avoided cost rates around $0.03-$0.04/kWh
- Hawaii (HECO): Varies by island, generally poor export rates
Utility Buyback Rates
Common Rate Structures
| Structure | Export Value | Example |
|---|---|---|
| Full retail net metering | 100% of retail rate | ComEd, PSEG, National Grid |
| Reduced net metering | 75-90% of retail | Some co-ops, older policies |
| Wholesale/avoided cost | 25-40% of retail | SRP, NV Energy, most of CA |
| Time-of-export rates | Varies by time | CA NEM 3.0, Hawaii |
| Feed-in tariff | Fixed rate (varies) | Some municipal utilities |
What Happens to Excess Credits?
In most net metering programs, unused credits roll over month to month. At the end of the year (your "true-up"), different utilities handle remaining credits differently:
- Cash payout: Some utilities pay you for excess credits (often at wholesale rate)
- Credits expire: Some zero out your credits annually—use them or lose them
- Indefinite rollover: A few programs let credits roll forever
- Community benefit: Some programs donate excess to low-income programs
Battery Storage Option
Keep Your Excess for Yourself
Instead of exporting excess to the grid for reduced credits, you can store it in a battery and use it later. This makes sense when:
- Poor export rates: If you get less than $0.08/kWh for exports, batteries often pay off
- Time-of-use rates: Store cheap solar, use during expensive evening peaks
- Outage protection: Keep power during blackouts (grid-tied solar shuts off in outages)
- Energy independence: Use more of your own clean energy
Battery Economics Example
In California under NEM 3.0, a battery can shift your midday excess (worth $0.05/kWh as export) to evening peak usage (avoiding $0.50/kWh purchase). That's a $0.45/kWh value difference—potentially $500+/year in additional savings for a 10 kWh battery.
When Batteries Don't Make Sense
- Full retail net metering: If exports are worth 100%, no financial benefit to storing
- Flat rate electricity: No time-of-use arbitrage opportunity
- Tight budget: Batteries add $10,000-$15,000 to system cost
Maximizing Your Excess
Strategies for Different Situations
With Full Net Metering:
- Size system to 100% of annual usage
- No battery needed for economics (maybe for backup)
- Let the grid be your free battery
With Reduced Export Rates:
- Size system more conservatively (80-90% of usage)
- Consider time-of-use rate plans
- Shift heavy loads (laundry, dishwasher, EV charging) to daytime
- Battery may improve economics
With Very Poor Export Rates:
- Battery storage almost essential for good ROI
- Or size system to match daytime-only usage
- Maximize self-consumption
- Consider PPA/lease with battery included
Smart Home Integration
With poor export rates, maximizing self-consumption becomes critical. Smart home tools help:
- Smart thermostats: Pre-cool/pre-heat during solar production
- EV charging: Charge during peak solar hours
- Pool pumps: Run during midday solar surplus
- Water heaters: Heat water with excess solar
- Smart appliances: Delay-start dishwashers and laundry
What's Your Utility's Policy?
Tell us your utility company, and we'll explain what happens to your excess solar and how to maximize its value.
Check My Utility