Selling excess solar power back to the grid — net metering — used to be a straightforward, generous deal in most states. That’s changed significantly, especially in California, as utilities shift to lower export compensation rates. Understanding your state’s specific net metering policy is now essential to accurately projecting solar savings.
How Net Metering Works
When your panels produce more electricity than your home is using, the excess flows back to the grid, and your utility credits your account — historically at the same retail rate you pay for electricity (net metering 1.0/2.0), though many states have moved toward lower “avoided cost” compensation instead.
NEM 2.0 vs. NEM 3.0
| Policy | Export Compensation | Best Strategy |
|---|---|---|
| NEM 2.0 (legacy, grandfathered) | Near retail rate (~30-40 cents/kWh in CA) | Export freely, no urgency for battery |
| NEM 3.0 (California, current) | Avoided cost rate (~5-8 cents/kWh) | Self-consume or store in battery instead of exporting |
Why NEM 3.0 Changes Strategy
Under NEM 3.0, exporting solar to the grid earns a fraction of what it costs to buy electricity back — making battery storage far more valuable, since storing midday solar for evening use avoids both the low export credit and the high evening purchase price.
State-by-State Variation
Net metering policy varies significantly by state and even by utility — some states retain full retail-rate net metering, others have moved to avoided-cost models similar to California, and still others fall somewhere in between. Checking your specific state and utility’s current policy is essential before estimating solar payback.
SREC Markets: An Additional Revenue Stream
In states with Solar Renewable Energy Certificate (SREC) markets, system owners can earn additional income by selling certificates representing the environmental value of their solar production, separate from net metering credits — available in select states, not nationwide.
Want to understand your state’s net metering policy? Get a free quote: (855) 427-0058
Frequently Asked Questions
Can I sell excess solar power back to the grid?
Yes, through net metering, though compensation rates vary significantly by state and current policy.
What is the difference between NEM 2.0 and NEM 3.0?
NEM 2.0 pays near retail rate for exports; NEM 3.0 pays a much lower avoided-cost rate (roughly 5-8 cents/kWh in California).
Does battery storage help under NEM 3.0?
Yes — storing solar for evening use avoids both low export credits and high evening purchase prices.
Do all states have the same net metering policy?
No — policies vary significantly by state and utility, from full retail-rate credits to avoided-cost models.
What is an SREC?
A Solar Renewable Energy Certificate representing the environmental value of solar production, sellable for additional income in select states.
Are grandfathered NEM 2.0 customers affected by NEM 3.0?
Existing NEM 2.0 customers are typically grandfathered under their original terms for a set period.
How do I find my state’s net metering policy?
Check with your utility or state public utilities commission for current rules specific to your area.
Summing Up
Understanding your net metering policy is essential to accurately projecting solar savings. To get a personalized analysis for your area, call (855) 427-0058 or visit us.solarpanelsnetwork.com.
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