Net Billing

Net billing is a compensation structure for solar customers where excess electricity sent to the grid is credited at a rate lower than the retail electricity rate — as opposed to traditional net metering, which credits exports at the full retail rate. Net billing is becoming more common as states reform their solar compensation policies.

Under traditional net metering, a kWh exported to the grid is worth the same as a kWh consumed — full retail value. Under net billing, the export rate is typically set at the utility’s avoided cost, wholesale rate, or a reduced time-of-use value, which can be 40–75% less than the retail rate. California’s NEM 3.0 (implemented in 2023) is the most prominent example, reducing export credits by approximately 75% and shifting solar economics toward self-consumption and battery storage. Net billing makes batteries significantly more valuable because it’s financially better to store excess solar energy for personal use later than to export it at a low rate. As more states transition from net metering to net billing, the economic case for solar-plus-storage grows stronger, and system design increasingly focuses on maximizing self-consumption rather than grid exports.