Net metering has long been one of the biggest financial incentives for homeowners going solar. It allows solar owners to send excess electricity back to the grid in exchange for credits, effectively lowering their utility bills. However, many states are shifting away from traditional net metering and adopting alternative compensation structures, raising concerns about the future value of solar energy.
Why are states moving away from net metering?
Utilities and regulators argue that net metering creates an unfair cost shift, where non-solar customers bear a disproportionate share of grid maintenance costs. As solar adoption grows, some states have responded by restructuring how solar energy is compensated to ensure a more balanced distribution of costs. These changes can impact the long-term savings of solar customers, making it more important than ever to understand the evolving landscape.
New compensation models replacing net metering
Instead of traditional net metering, states are introducing alternative programs such as net billing, time-of-use (TOU) rates, and dynamic pricing structures. Net billing typically compensates solar exports at a lower wholesale rate rather than the full retail rate. TOU rates adjust electricity prices based on demand, meaning solar customers may receive lower credits during off-peak hours. Dynamic pricing models further vary compensation based on real-time grid conditions. Some regions also implement virtual net metering, allowing shared solar benefits for community solar participants.
How this affects solar customers
The shift away from net metering means solar customers may receive lower compensation for the excess energy they produce. While solar still provides significant savings and a number of other surprising benefits, homeowners need to consider factors such as energy storage and self-consumption to maximize financial benefits. Battery storage systems, for example, allow homeowners to store excess energy for use during peak-rate periods, reducing reliance on lower export credits.
What you can do
If you’re considering solar, now is the time to act. Many states are phasing out net metering but still offer transitional incentives. Your All Energy Solar representative can help you navigate these changes, ensuring you take advantage of available savings and design a system that works best under your state’s policies.
While net metering may be evolving, solar energy remains a powerful tool for reducing electricity costs and promoting energy independence. By working with a knowledgeable solar professional, you can understand your state’s specific compensation structure and make the most of your solar investment in the years to come.
