What Is Net Metering, And How Can It Save You Money On Your Electric Bill?

Have you recently installed solar panels and want to discover ways to save more money on your energy bill? You’d benefit from implementing solar net metering for your home or business. As the local solar experts, RxSun can teach you all about how net metering works and why it saves you significant money on your utility bills.

What Is Solar Net Metering?

Solar net metering is a billing arrangement that allows you to earn credits for the extra electricity your solar panels produce. In simple terms, for every kilowatt-hour of power your system generates but you don’t use, your utility company gives you a credit for one kilowatt-hour. You can use those credits later, like at night or on cloudy days, when your panels aren’t producing enough power.

How Does Net Metering Work?

To make this possible, your home needs a bi-directional electricity meter. This special meter tracks the electricity you consume from the grid and the extra energy you send back. Because it requires a grid connection, net metering isn’t available for off-grid homes. With the correct setup, you can generate enough electricity to offset much—or even all—of your home’s energy use, significantly reducing your monthly bill.

Net Metering Benefits: How Solar Net Metering Saves You Money

What are the net metering benefits? 

· Cost savings: Even if you don’t completely supplement your power usage in your home or business, you’ll still save considerable money. Since you’re generating your own power and obtaining credits, you’ll pay for only a fraction of the electricity you use.

· Energy independence: Are you tired of electrical companies with frequent outages or increasing rates? When you achieve energy independence, you’re not beholden to the whims of utility companies.

· Expedite ROI: Solar panels cost a significant amount of money, and making your money back from your savings can take several years. When you incorporate net metering, you speed up the rate at which you’ve saved more than you spent.

· Improve your community: As an environmentally friendly option, solar panels care for and improve your community. When you add net metering, it reduces the overall burden on your community’s electrical grid, allowing others to have the power they need without risking damage to the grid.

The Impact of Net Metering on Your Electricity Bill

How much can solar net metering save you on your electricity bill? It depends on several factors, but consider the following information:

· According to the Energy Information Administration, the average household in the United States uses about 30,000 kilowatt-hours of electricity per day.

· The average home needs between 10 and 20 solar panels to offset its electricity usage. 

· Several conditions, such as clouds and shade, can reduce the productivity of your solar panels.

Not every home can produce enough power to offset their electricity completely, but with the right configuration and other tips, you may obtain completely free electricity. 

Net Metering Policies and Regulations

Net metering rules are not the same everywhere. Each state sets its own policies, meaning the value of excess solar power can vary depending on where you live. In recent years, many states have started adjusting how they credit solar customers, moving away from older models that gave full retail value.

Key Things to Know

• State Participation: More than half of U.S. states still have mandatory net metering programs, while others have switched to voluntary or modified versions. This means some households get strong benefits, while others see reduced incentives.
• Credit Values: In some states, solar customers still receive full retail rate credits for the energy they send back to the grid. In others, credits are calculated at the wholesale rate or through a net billing system, which provides lower savings.
• Credit Rollover: Rules also differ on what happens with unused credits. Some states allow them to roll over indefinitely, others reset them at the end of a billing year, and a few limit how long they can be carried forward.
• Policy Shifts: A third of states are revising their programs, with changes designed to balance customer savings against utility concerns. These adjustments may reduce credit values or change eligibility requirements for new solar customers.

State Examples to Watch

Illinois

Illinois offers one of the more favorable net metering programs. Homeowners receive full retail value credits for every kilowatt-hour of electricity they send back to the grid. It includes the bill’s supply and delivery portions—at least for now. Starting in 2025, delivery charges will no longer be part of the credit calculation for new customers, slightly reducing savings. Customers already enrolled under the current rules can keep their benefits, making early adoption more rewarding.

Florida

Florida maintains a one-to-one net metering program, giving homeowners full retail credit for excess energy exported to the grid. Solar customers can offset their electric bill if their system generates enough power. While proposals have surfaced in recent years to reduce these benefits, the current structure remains intact, keeping Florida one of the stronger states for net metering savings.

Wisconsin

Wisconsin takes a more limited approach. Most utilities do not offer full retail credit but compensate solar customers at an “avoided-cost” rate, significantly lower than retail electricity prices. It makes solar adoption slightly less lucrative compared to states like Illinois or Florida. However, some local utilities have their own programs, so homeowners may still find reasonable payback depending on location and provider.

Why This Matters for You

Net metering can make a big difference in your solar savings. The type of credit you receive—whether full retail, wholesale, or value-based—directly affects your payback period and return on investment.

If you plan to go solar, understanding your state’s policies is as important as choosing your equipment. By knowing how credits are calculated, how long they roll over, and whether policy changes are on the horizon, you can make smarter decisions about system size, financing, and adding battery storage for maximum savings.

How Much Can You Really Save With Net Metering?

Savings vary depending on your state policy, system size, and usage patterns. On average, homeowners with net metering reduce their utility bills by 50%–100%. A well-sized solar system can even bring bills close to zero, saving tens of thousands of dollars over the system’s lifetime.

Tips for Maximizing Savings With Solar Net Metering

How can you maximize your solar net metering savings?

Install the Right Size Solar Panels

Your home may have space restrictions, but ideally, you should install enough solar panels to over-produce the power you need. You don’t want to produce too much power, or you’ll never use all the credits you receive. While wasted credits don’t lose your actual money, you still might consider it an inefficient use of energy.

Additional Read: Residential Solar Panels: Powering Your Home and the Planet With a Residential Solar Panel Installation

Time Your Energy Usage

To ensure you don’t run through all your credits when you’re not producing power, you should focus on your greatest power usage during the day when you’re producing electricity. For example, you don’t want to charge your car at night because you’ll quickly exhaust your credits and start paying for power. Don’t leave lights on you’re not using, and use other power conservation methods.

Monitor Rate Changes

You should stay aware of any changes to the one-to-one value you receive for your power. However, you should also know how much people are currently paying for power. This puts a quantifiable value to the money you’re saving rather than just knowing how many kilowatt-hours you have.

Alternatives to Net Metering

As net metering policies evolve and compensation rates decrease in some states, homeowners are exploring other ways to maximize their solar energy systems. Here are some of the most common alternatives:

Net Billing

Instead of crediting you at the retail electricity rate, utilities may pay a lower wholesale or avoided-cost rate for the extra energy your system sends to the grid. While this reduces savings compared to traditional net metering, it still provides a way to earn value for surplus power.

Buy-All, Sell-All Programs

In this model, you sell all of the electricity your solar panels generate to the utility at a fixed rate, and then purchase all of the electricity you consume at the standard retail rate. While less common, this setup ensures predictable compensation but doesn’t directly offset your household usage.

Time-of-Use (TOU) Credits

Some states and utilities use time-of-use pricing, where electricity is more expensive during peak demand hours. With TOU credits, the value of your exported energy depends on the time of day it’s sent to the grid. Pairing solar panels with a battery system can help you store and release energy during these high-value periods.

Value of Solar (VOS) Tariffs

A few states, such as Minnesota, are experimenting with Value of Solar programs, which calculate credits based on solar’s broader benefits, including environmental impact, avoided grid costs, and reduced reliance on fossil fuels. It creates a more structured and transparent compensation system.

Solar + Storage Self-Consumption

As incentives change, many homeowners store their excess solar power in batteries instead of sending it to the grid. It allows them to use their stored energy during peak demand or outages, reducing utility reliance and maximizing energy independence.

Common Questions About Net Metering

Q: Do unused credits expire?

A: In many states, they roll over month to month, but some utilities reset them annually.

Q: Can I get cash for my extra power?

A: Most utilities issue credits, not cash, but a few may pay out at the end of the year.

Q: Does net metering work off-grid?

A: No, it requires a grid connection. Off-grid homes need batteries instead.

Schedule Solar Panel Installation With RxSun

If you’re interested in solar net metering or solar panel installation, RxSun always provides high-level service. From expert advice to installing premium and efficient solar panels, we’ll help you achieve energy independence and considerable savings. Get more information or obtain a free quote by calling 800-607-9786.