Net Metering Explained: What Changed in 2026 and What It Means for You

Net metering used to be the single best reason to go solar. You installed panels, your meter spun backward when you produced more than you used, and your utility credited you at the full retail rate. Simple, generous, and wildly effective at making solar pay for itself.

That era is ending. As of 2026, roughly a third of U.S. states have reduced, replaced, or are actively revising traditional one-to-one retail net metering. Some changes are modest. Others -- like California's NEM 3.0 -- slashed export values by 75% or more overnight.

If you're considering solar, already have panels, or just trying to understand what's happening, this guide breaks down everything: what net metering is, how it's changed, what your state pays for exported solar, and how to maximize your savings even as the rules shift against you.

Table of Contents

• What Is Net Metering? The Simple Version
• How Net Metering Used to Work vs. How It Works Now
• The Big Picture: Why States Are Cutting Net Metering
• State-by-State Net Metering Table (2026)
• California NEM 3.0: The Biggest Shift in Solar Policy
• Florida: A Step-Down Schedule That Keeps Stepping Down
• Other States Making Major Changes
• Fixed Monthly Solar Surcharges: The Hidden Cost
• Why Batteries Are Becoming Essential
• Time-of-Use Rates and How They Interact with Solar
• How to Maximize Savings with Reduced Net Metering
• States That Still Have Good Net Metering
• The Federal Tax Credit Is Gone -- Now What?
• FAQ: Net Metering in 2026

What Is Net Metering? The Simple Version

Net metering is a billing arrangement between you and your electric utility. When your solar panels produce more electricity than your home uses at any given moment, the excess flows back into the grid. Your electric meter tracks that export, and your utility gives you a credit on your bill.

Think of it like a bank account for electricity:

• Deposit: Your panels overproduce during the day, sending surplus power to the grid. You earn credits.
• Withdrawal: At night or on cloudy days, you pull power from the grid and spend those credits.
• Statement: At the end of each billing cycle, you only pay for your net usage -- what you consumed minus what you exported.

In the best-case scenario, your exports zero out your imports, and your electric bill drops to nothing (or close to it -- you'll still owe a small connection fee). In many states, excess credits roll over month to month, letting summer overproduction offset winter shortfalls.

That's the basics. Now here's where it gets complicated.

How Net Metering Used to Work vs. How It Works Now

The Old Model: 1:1 Retail Credit

Under traditional net metering, every kilowatt-hour (kWh) you exported was worth the same as every kWh you consumed from the grid. If your retail electricity rate was $0.15/kWh, your export credit was also $0.15/kWh.

This was enormously favorable for solar owners. It meant that a kWh produced at noon -- when the grid was already flooded with cheap solar power -- earned the same credit as a kWh consumed at 7 PM when electricity was expensive and in high demand.

The New Models: Reduced Credits, Net Billing, and Value-of-Solar

States that have reformed net metering generally move toward one of these structures:

Net Billing (Reduced Export Rate): Your exports are credited at a rate lower than retail -- often based on the utility's "avoided cost" of generating or purchasing that power. This might be $0.04-0.08/kWh instead of $0.15-0.30/kWh.

Time-Varying Export Rates: Your export credits fluctuate based on the time of day and season. Midday exports (when solar is abundant) earn less; evening exports earn more. California's NEM 3.0 is the most prominent example.

Value-of-Solar Tariff: A calculated rate meant to reflect what your solar exports are actually "worth" to the grid, factoring in avoided fuel costs, grid infrastructure, and environmental benefits. This usually lands between wholesale and retail rates.

Supply-Only Credits: You get credit only for the generation (supply) portion of the electricity rate, not the delivery charges, taxes, or fees. Illinois adopted this model in 2025 for new installations.

The bottom line: in a growing number of states, the electricity you send to the grid is now worth significantly less than the electricity you buy from it.

The Big Picture: Why States Are Cutting Net Metering

Let's be honest about what's driving these changes, because it's not one simple story.

The utility argument: Utilities say that solar customers who export cheap midday power and then draw expensive evening power are being subsidized by non-solar customers. They argue that net metering shifts grid maintenance costs onto people who can't afford panels. There's some truth to this -- and some self-interest, since lower utility revenues threaten their business model.

The grid reality: In states with high solar penetration (California, Hawaii, Arizona), the grid genuinely has more midday solar than it can use. Paying retail rates for power that's oversupplied doesn't reflect its actual value to the system.

The political reality: Utilities are well-funded lobbyists. Solar advocates are well-organized but often outspent. The resulting policies usually land somewhere between what's fair and what's favorable to incumbent utilities.

What it means for you: Regardless of the reasons, the trend is clear. Full retail net metering is being phased out across the country. The question isn't whether it will happen in your state, but when and by how much.

State-by-State Net Metering Table (2026)

Here's a snapshot of where key states stand as of early 2026. Policies are complex and vary by utility, so check with your local provider for exact rates.

Note: Rates are approximate averages and vary by utility territory, rate plan, and season. Always verify current rates with your specific utility.

California NEM 3.0: The Biggest Shift in Solar Policy

California's Net Billing Tariff -- commonly called NEM 3.0 -- went into effect in April 2023, and its impact has been seismic. This is the policy change that every other state's utilities are watching closely.

What NEM 3.0 Actually Does

Under the old NEM 2.0, California solar owners earned close to the full retail rate for exported power -- roughly $0.30-0.50/kWh depending on their utility and time-of-use period. Under NEM 3.0:

• Average export values dropped 75-80%. Midday solar exports now earn roughly $0.04-0.08/kWh with PG&E, around $0.07/kWh with Southern California Edison, and approximately $0.04/kWh with SDG&E.
• Export values are time-varying. This is critical. While midday exports are worth almost nothing, evening exports (4-9 PM) can earn $0.30-0.52/kWh -- sometimes even higher during heat waves. The system is designed to push solar owners toward storing energy and using it during peak demand.
• Retail rates remain sky-high. With PG&E retail rates at $0.40-0.50/kWh, the gap between what you pay for grid power and what you earn for exports has never been wider.

The NEM 2.0 Grandfathering Deadline

If your system was submitted for interconnection before April 2023, you could lock in NEM 2.0 rates -- but only if your system achieves Permission to Operate (PTO) by April 15, 2026. That deadline is imminent. If you're one of the remaining NEM 2.0 applicants who hasn't finished installation, the clock is ticking.

What This Means in Practice

A California solar owner who would have saved $150/month under NEM 2.0 might save $40-60/month under NEM 3.0 with solar alone. Add a battery, and savings can recover to $100-130/month because you're storing cheap midday solar and using it during expensive peak hours instead of exporting it for pennies.

The takeaway: In California, solar without a battery no longer makes strong financial sense. Solar with a battery still does -- especially given the state's extreme retail electricity rates.

battery products ↗

Florida: A Step-Down Schedule That Keeps Stepping Down

Florida's net metering story is a cautionary tale about legislative inertia. In 2022, the state legislature passed a bill that would have gutted net metering. Governor DeSantis vetoed it. But a revised version passed in 2024, establishing a gradual step-down:

• 2024-2025: New solar customers receive 75% of retail rate for exports
• 2026: Credit drops to 60% of retail
• 2027-2028: Credit drops to 50% of retail

The Fine Print

• Systems interconnected in a given year are grandfathered for 20 years at that year's credit rate. So if you connect in 2026, you lock in 60% for two decades -- which is far better than waiting until 2027's 50%.
• Utilities can petition for higher monthly fixed charges for net metering customers if they can prove the cost is justified.
• If solar penetration reaches 6.5% for any utility's territory, that utility can petition for even more restrictive rates.

What This Means for Florida Solar Shoppers

The message is clear: every year you wait, the deal gets worse. If you're seriously considering solar in Florida, locking in 2026's 60% credit rate before year-end is significantly better than getting 50% in 2027. And 2026 is already worse than the 75% rate you could have gotten last year.

Florida's high electricity rates (averaging $0.14-0.16/kWh) and abundant sunshine still make solar viable, but the economics are tightening. Battery storage is increasingly important here too, especially as utilities push time-of-use rate structures.

Other States Making Major Changes

Arizona

Arizona was one of the first states to dismantle retail net metering, with the Arizona Corporation Commission approving reduced export rates as early as 2017. In 2026, solar exports to Arizona Public Service (APS) earn roughly $0.03-0.06/kWh via the Resource Comparison Proxy (RCP) rate -- a far cry from the $0.12-0.14/kWh retail rate. The Commission continues to review annual limits on rate changes, with staff recommending a cap of 10% annual reductions.

Nevada

Nevada's net metering saga has been dramatic. After effectively killing rooftop solar in 2015 with retroactive rate changes (and then partially reversing course after massive public backlash), the state now operates under a net billing framework. Two major utilities have filed tariffs to move from monthly netting to 15-minute netting intervals for systems under 25 kW -- a change that further reduces the value of solar exports by counting production and consumption in tiny slices rather than letting them offset over a full month.

Idaho

Idaho Power's shift from net metering to net billing took effect January 1, 2024, reducing solar export compensation by an estimated 32% according to the Sierra Club. The change applies to new installations; existing systems were grandfathered under their original terms.

Illinois

Illinois made a significant change on January 1, 2025, switching from full retail net metering to supply-only credits for new installations. Under the old system, you earned credit for the full retail rate -- supply, delivery, taxes, and fees. Now you only get credit for the supply portion: roughly $0.06-0.08/kWh, about half of what legacy customers earn.

The silver lining: under the Climate and Equitable Jobs Act (CEJA), net metering credits now roll over indefinitely instead of expiring after 12 months. And systems installed before January 1, 2025 are grandfathered for the life of the system (25+ years).

Hawaii

Hawaii eliminated traditional net metering back in 2015 -- making it the first state to do so. The current Customer Grid Supply (CGS) program pays around $0.10-0.12/kWh for exports, and participation is capped. Hawaii's extremely high electricity rates ($0.35-0.45/kWh) still make solar plus storage one of the best investments in the country, but the grid-export model alone doesn't pencil out.

North Carolina

North Carolina replaced its net metering program with revised tariffs that align export compensation more closely with the actual purchase price of electricity, reducing the premium that solar owners previously received. Duke Energy customers have seen export values decrease, though the state's solar market remains active thanks to relatively low installation costs.

Fixed Monthly Solar Surcharges: The Hidden Cost

Beyond reducing export credits, some states and utilities are introducing fixed monthly charges specifically targeting solar customers. These fees are charged regardless of how much -- or how little -- electricity you use from the grid.

Where Surcharges Are Emerging

• California: The CPUC approved income-graduated fixed charges for the state's investor-owned utilities. SDG&E and SCE customers began seeing these charges in late 2025, with PG&E customers added in early 2026. While not solar-specific, these $15-24/month charges reduce the savings solar can offset.
• Florida: Utilities can petition for higher monthly base charges for net metering customers. Orlando Utilities Commission (OUC) has implemented fixed charges of $5-15/month based on peak usage starting in early 2026.
• Arizona: APS charges a demand-based fee for solar customers that can effectively add $15-30/month to bills, depending on peak grid usage.
• Alabama, Oklahoma, and others: Several states in the Southeast and Midwest have allowed utilities to impose $5-30/month surcharges for distributed generation customers, framed as grid access fees.

Why This Matters

Even if your solar panels and battery zero out your energy consumption, a $25/month fixed charge means you're paying $300/year just for the privilege of being connected to the grid. That adds a year or more to your solar payback period and eats into lifetime savings.

When evaluating solar proposals, always ask: "What fixed charges will I still owe after going solar?" A good installer will account for these in their savings projections. A bad one will conveniently leave them out.

Why Batteries Are Becoming Essential

Here's the uncomfortable truth: in most states that have reformed net metering, solar panels alone no longer maximize your savings. The math has fundamentally changed.

The Old Math (Full Retail Net Metering)

With 1:1 credits, it didn't matter when your panels produced or when you consumed. Every kWh was worth the same. Batteries were a nice-to-have for backup power, but they didn't improve the economics.

The New Math (Reduced Export Rates)

When your exports earn $0.05/kWh but your consumption costs $0.30/kWh, every kWh you export instead of store costs you $0.25 in lost value. A battery lets you capture that difference by:

1. Storing midday solar instead of exporting it at rock-bottom rates
2. Discharging in the evening when you'd otherwise buy expensive grid power
3. Arbitraging time-of-use rates by charging during off-peak and discharging during on-peak
4. Providing backup power during outages -- increasingly valuable as grid reliability concerns grow

The Numbers in 2026

Home battery costs have dropped significantly. A typical 10-13 kWh battery system (like the Tesla Powerwall 3 or Enphase IQ Battery 5P) runs approximately $10,000-$15,000 installed. In states with high electricity rates and poor net metering, a battery can save $600-1,200/year beyond what solar alone provides -- meaning it pays for itself in 8-12 years, well within its warranty period.

In California specifically, adding a battery to a solar system can recover 60-80% of the savings lost under NEM 3.0. That makes it not just a smart addition but practically a requirement.

battery products ↗

Time-of-Use Rates and How They Interact with Solar

Time-of-use (TOU) rates are increasingly common, and understanding them is essential to maximizing solar savings in 2026.

What Are TOU Rates?

Instead of charging a flat rate for electricity (say, $0.15/kWh all day), TOU plans charge different rates depending on the time of day:

• Off-peak (late night to early morning): Lowest rates, often $0.08-0.15/kWh
• Mid-peak (morning and early afternoon): Moderate rates
• On-peak (typically 4-9 PM): Highest rates, often $0.25-0.55/kWh

The Solar Mismatch Problem

Here's the catch: solar panels produce the most power during midday, which is increasingly off-peak or mid-peak on TOU schedules. Your highest consumption (and highest rates) typically hit in the evening, when solar production is dropping to zero.

Without a battery, you're exporting your cheapest power and buying the most expensive power. With a battery, you're storing cheap midday power and deploying it when rates spike.

How to Optimize

If you're on a TOU plan with solar and a battery:

1. Let solar power your home during the day (direct self-consumption)
2. Charge your battery with excess solar during midday
3. Switch to battery power at the start of the on-peak period
4. Only draw from the grid once your battery is depleted
5. If your battery has remaining capacity in the morning, use it during the mid-peak period before solar kicks in

If you're on a TOU plan with solar but no battery:

1. Shift heavy loads (dishwasher, laundry, EV charging, pool pump) to midday when your panels are producing
2. Pre-cool your home in the early afternoon so your AC runs less during peak hours
3. Use smart plugs and timers to automate load shifting
4. Accept that your evening consumption will be billed at peak rates

Modern battery systems handle this automatically. Products like the Tesla Powerwall, Enphase IQ Battery, and Franklin WholHome come with software that reads your utility's TOU schedule and optimizes charging/discharging without any manual input.

battery products ↗

How to Maximize Savings with Reduced Net Metering

Even if your state has gutted net metering, solar can still be a strong investment. You just need a smarter strategy.

1. Right-Size Your System

Under full retail net metering, oversizing your solar system made sense -- excess production was money in the bank. Under reduced net metering, oversizing means exporting kWh at a loss. Work with your installer to size your system to match your actual consumption, not exceed it.

2. Add Battery Storage

We've covered this, but it bears repeating: in any state where export credits are below 75% of retail rate, batteries improve your economics. The worse your net metering, the more valuable a battery becomes.

3. Shift Your Loads

Move energy-intensive tasks to peak solar production hours:

• EV charging: Charge during midday, not overnight
• Laundry and dishwasher: Run between 10 AM and 2 PM
• Water heater: Use a timer to heat water during solar hours
• Pool pump: Schedule for midday operation
• Pre-cooling: Drop your thermostat 2-3 degrees before peak TOU rates begin

4. Optimize Your Rate Plan

Many utilities offer multiple rate plans. After going solar (especially with a battery), a TOU plan with very cheap off-peak rates and expensive on-peak rates may save you more than a flat-rate plan -- because you can avoid almost all on-peak consumption.

5. Monitor and Adjust

Use your solar monitoring app (SolarEdge, Enphase, Tesla, etc.) to track production, consumption, and export patterns. Many homeowners discover they're exporting far more than they realize -- energy that could be captured with a battery or shifted loads.

6. Consider Going (Partially) Off-Grid

If net metering continues to decline in your state, reducing your grid dependence may make sense long-term. A larger battery bank or a hybrid inverter system can let you operate independently during the day and rely on the grid only as a backup at night.

States That Still Have Good Net Metering

Not every state is racing to cut solar compensation. Several still offer full or near-full retail net metering, making them some of the best places in the country to go solar in 2026:

Top-Tier Net Metering States

New Jersey: True 1:1 retail net metering for systems up to 5 MW. Excess credits roll over monthly at the full retail rate. Combined with the state's SREC-II program, New Jersey remains one of the best solar markets in the country.

Massachusetts: Full retail net metering with some of the highest electricity rates in the nation ($0.25-0.32/kWh). This combination makes solar exceptionally valuable -- every kWh you produce is worth a quarter or more.

Maryland: The Public Service Commission mandates full retail credit for all residential solar customers. Clean and simple.

New Mexico: 100% retail rate credit for solar exports. Combined with abundant sunshine and falling installation costs, New Mexico is increasingly attractive for solar.

Vermont: Strong net metering protections at full retail rates. Vermont's high commitment to renewable energy has kept its policies solar-friendly.

Oregon: A well-designed net metering program that credits exports at the full retail rate, with broad eligibility.

Colorado: Most utilities, including Xcel Energy, still offer 1:1 retail net metering. Colorado's strong renewable energy standards have helped protect the policy.

Virginia: Full retail net metering for residential systems up to 25 kW, with legislative protections that make near-term changes unlikely.

States Worth Watching

New York uses a Value of Distributed Energy Resources (VDER) system that's more complex than simple net metering but still provides reasonable compensation, especially in high-value grid locations. Credits range from $0.08-0.15/kWh depending on location and time.

Pennsylvania and Ohio still have net metering policies in place, but utilities in both states have been pushing for reforms. Changes could come within the next 1-2 years.

If you're in one of these states, the message is: go solar sooner rather than later. Policies can change, and grandfathering provisions typically protect existing customers. Locking in favorable rates now is a hedge against future policy shifts.

The Federal Tax Credit Is Gone -- Now What?

One of the biggest changes affecting solar in 2026 has nothing to do with net metering: the 25D residential solar investment tax credit expired on December 31, 2025. Under the Inflation Reduction Act, the credit was supposed to continue at 30% through 2032. But the "One Big Beautiful Bill" repealed or phased out the IRA's clean energy provisions, and the residential solar credit was among the casualties.

What This Means

• Homeowner-owned systems: No federal tax credit in 2026. Period. This increases the net cost of a typical residential solar installation by 30%, or roughly $6,000-$9,000 on an average system.
• Leases and PPAs: The business-side 48E tax credit for solar remains available through the end of 2027. If a third-party company owns the system (as in a lease or power purchase agreement), they can still claim the credit -- and presumably pass some savings to you through lower monthly payments.
• State credits and incentives: Many states offer their own tax credits, rebates, or performance-based incentives that partially offset the loss of the federal credit. Check your state's current offerings.

Is Solar Still Worth It Without the Tax Credit?

In states with good net metering and high electricity rates -- absolutely. Massachusetts, New Jersey, and California all have retail rates high enough that solar pays for itself within 7-10 years even without the federal credit. In states with cheap electricity and poor net metering, the math is tighter, and a thorough financial analysis is essential before committing.

FAQ: Net Metering in 2026

What is net metering in simple terms?

Net metering is a billing system where your utility credits you for excess solar electricity you send to the grid. When your panels produce more than you use, the surplus goes to the grid and you get a credit. When you use more than you produce, you draw from the grid and use those credits. You only pay for the net difference.

Is net metering going away?

Traditional full-retail net metering is declining but not disappearing entirely. About a third of states have reduced or reformed their net metering programs, but most still offer some form of export compensation. The trend is toward lower credits, not elimination. Two states (South Dakota and Tennessee) have no net metering whatsoever.

What is NEM 3.0?

NEM 3.0 (officially the Net Billing Tariff) is California's successor to its previous net metering program. It reduced solar export credits by approximately 75-80% compared to NEM 2.0 and introduced time-varying export rates based on when electricity is most valuable to the grid. It took effect in April 2023 for new solar installations.

Can I still get full retail net metering?

Yes, in several states. New Jersey, Massachusetts, Maryland, New Mexico, Vermont, Oregon, Colorado, and Virginia all still offer full or near-full retail net metering as of early 2026. Check our state-by-state table above.

How does net metering work with a battery?

With a battery, you store excess solar production instead of (or in addition to) exporting it. This is especially valuable in states where export credits are low: instead of sending power to the grid for $0.05/kWh, you store it and use it later when you'd otherwise pay $0.25-0.50/kWh. The battery essentially lets you "self-consume" nearly 100% of your solar production.

What is a solar buyback rate?

A solar buyback rate is the price your utility pays you for electricity your solar panels send to the grid. Under traditional net metering, this equals your retail rate. Under newer net billing or reduced net metering programs, it's typically much lower -- often close to wholesale electricity prices.

Do I get grandfathered into my current net metering rate?

In most states, yes. When net metering rules change, existing solar customers are typically "grandfathered" under the rules that were in place when they connected. Grandfathering periods vary -- some states guarantee your rate for 10 years, some for 20, and Illinois guarantees it for the life of the system. This is one of the strongest arguments for going solar sooner rather than later.

Is solar still worth it with reduced net metering?

In most cases, yes -- but the strategy has changed. With reduced net metering, you need to maximize self-consumption (using the power you produce, not exporting it). This means right-sizing your system, adding battery storage, and shifting heavy electrical loads to solar production hours. In states with high retail rates, solar plus storage remains one of the best investments you can make -- even without generous net metering.

What are fixed solar surcharges?

Some utilities charge solar customers a fixed monthly fee ($5-30/month) regardless of energy usage. These are framed as "grid access fees" or "demand charges" meant to cover the cost of maintaining grid infrastructure. These charges reduce your solar savings and can't be offset by net metering credits.

How do time-of-use rates affect solar savings?

TOU rates charge different prices for electricity depending on the time of day. Solar panels produce most during midday (often an off-peak or mid-peak period) and produce nothing during evening peak hours. Without a battery, TOU rates can actually reduce solar savings because you're exporting cheap midday power and buying expensive evening power. With a battery, TOU rates can increase savings because you store midday solar and use it during high-rate peak hours.

The Bottom Line

Net metering in 2026 is a far cry from the generous policies that launched the rooftop solar revolution. The simple, elegant concept of "your meter spins backward" has been replaced with a patchwork of reduced credits, time-varying rates, supply-only compensation, and fixed surcharges.

But here's what hasn't changed: electricity rates keep going up. The average U.S. residential rate has increased steadily year over year, and there's no sign of that slowing down. Every kWh you produce and consume yourself is a kWh you don't buy at an ever-increasing price. Net metering changes affect what your exports are worth, but they don't diminish the value of self-consumption.

The winning solar strategy in 2026 looks different than it did five years ago:

• Size your system to match your consumption, not overproduce
• Add a battery if your state's export rates are below 75% of retail
• Shift your loads to maximize direct solar consumption
• Lock in current rates before they drop further -- grandfathering is your best friend
• Don't wait for policies to improve -- the trend is going in one direction

Solar remains one of the best long-term investments a homeowner can make. The rules have changed, but the sun hasn't stopped shining.