Net Metering in the United States

Jordan Grimmer

Last Updated: August 17th, 2022

Per the Solar Energy Industries Association (SEIA), net metering, in its simplist terms, "is a billing mechanism that credits solar energy system owners for the electricity they add to the grid." In other words, if a home with a solar panel system contributes more energy to the grid than it borrows, the homeowner is effectively paid back by the utility for that energy in the form of a credit on the utility bill.

However, because net metering is not a nationally regulated policy, states differ on how (or if) solar panel owners are credited for their surplus solar energy. Hover or click on our interactive map (below) to find your state's unique net metering score.

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Net Metering by State

How We Calculated the Scores

Net metering scores are on a scale of zero to five, and were determined using five main factors:

  • How states define net metering
  • Who is required to provide net metering
  • Demand charges set by utilities
  • The state rollover policy
  • Access to "virtual" net metering

How States Define Net Metering

Every state, except for South Dakota, has rules in place defining how solar owners will be compensated for their excess solar energy. States that credit solar owners on a "1-to-1" basis, meaning the credit is applied at the full retail rate to all surplus energy and credited on the next month's utility bill, were given higher grades.

Meanwhile, states that credit solar users at less than the full retail rate, or implement "non-bypassable charges" to the credit, received lower grades. States that award no credit for excess generation were given the lowest grades.

Who Is Required to Provide Net Metering

Even in states with an active net metering policy, not every utility provider is required to provide it. States that mandate net metering be adhered to by all utility providers received the highest scores. States only requiring investor-owned utilities (private, non–state run companies that provide public utility access) to provide net metering, or that set different rules for each utility provider in the state, received lower grades.

States not requiring utility providers to provide any kind of compensation program received the lowest grades.

Demand Charges Set by Utilities

Utility companies generally perceive net metering programs as a revenue loss, and often fight against pro-solar policies like net metering in an effort to maximize their profits. Demand charges and other set fees represent the utility's effort to penalize solar system owners by charging a fixed, monthly fee on all systems connected to the power grid.

States that prohibit demand charges received higher grades; states with demand charges, lower grades.

The State Rollover Policy

Some states provide solar users a generous rollover policy that allow continuous rollover of excess kilowatt-hours in perpetuity, while others pay out an annual true-up settlement. These states were awarded higher grades.

Some states, meanwhile, will also implement an true-up statement, but pay back solar customers at the wholesale rate, which is lower than the full retail rate. Other state require solar users to forfeit their surplus kilowatt-hours at the end of each month, meaning solar owners will only benefit financially from their systems during sunny months.

Access to "Virtual" Net Metering

Virtual net metering allows state residents with multiple properties to offset their electric bill using the solar power generated at one of their properties. It also allows community solar investors to likewise offset their power bill through off-site solar installations.

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If you're ready to start maximizing your energy bill savings with solar, click the link below and enter your ZIP code to be directed to top solar companies near you:

See Solar Companies in Your Area
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