What is net metering? Learn how it works, compare net billing and feed-in tariffs, and see solar export rules worldwide in 2026.
BySolar Bazaar Team
What is net metering, and why does it matter if you install solar? This guide explains how export programs work, how credits show up on your bill, and how rules change from one place to another. You will also see how net metering compares with net billing, feed-in tariffs, and gross metering.
Think of your roof as a small power plant. Some days it makes more than you can use.
What Is Net Metering and How Does It Work?
Basic concept of grid export and energy credits
Net metering is a billing setup that lets you send extra solar electricity to the grid and receive credits on your bill. When your system produces more than your home or business needs, the surplus flows out to the network. Your utility records that export and applies a credit that reduces what you owe.
Older programs were close to a one-to-one swap. One kilowatt-hour, or kWh, exported could offset one kWh you later draw from the grid. Many newer programs credit less than the retail rate, sometimes in the 50, 90% range, depending on local policy.
Why the change? Grids have real costs at different times of day, and some regulators want export prices to reflect that.
Role of bidirectional meters
This setup relies on a meter that measures power in both directions. It logs what you take from the grid and what you send back. Without it, the utility cannot calculate your net position for the billing period.
The meter tracks two streams:
Energy you consume from the grid
Energy you export to the grid
Your bill is based on the difference between those totals over the billing cycle. If exports exceed imports, you carry a credit forward or settle it later, depending on the rules.
Example of a household solar system
Picture a 5 kW residential system. During a sunny afternoon, it produces more than your home needs, so 10 kWh goes to the grid. After sunset, you draw 8 kWh. Under net metering, the 10 kWh export offsets the 8 kWh import, leaving a net credit of 2 kWh.
Credits can roll month to month or be reconciled once a year in a true-up. The details vary by utility and country.
It is simple on paper. The bill tells the real story.
Net Metering vs Net Billing vs Feed-in Tariff vs Gross Metering
Definitions of each model
There is no single global rule for paying for exported solar energy. Different regions choose different models to value your surplus.
Net metering: Exports earn credits close to the retail price you pay.
Net billing: Exports are paid at a lower, market-based rate.
Feed-in tariff (FiT): A fixed payment per kWh under a long contract.
Gross metering: All solar generation is exported, and you buy your own consumption separately.
Hybrid models: A mix of self-consumption and export payments.
Key differences in compensation
The main difference is the value assigned to each exported kWh. Net metering tends to provide the highest credit per unit, while gross metering sits at the lower end. Net billing and FiTs fall in between, depending on the rate design.
If you are comparing quotes, look beyond the system price. The export rate can change the payback by years.
Which model benefits homeowners most
For many households, net metering delivers stronger savings because it offsets consumption at or near retail prices. Still, many regions are moving to net billing or hybrid designs to better match grid costs and peak demand.
Model Type
How It Works
Export Compensation Rate (USD/kWh)
Settlement Method
Common Regions
Key Advantage
Key Limitation
Net Metering
Offsets consumption with exported energy credits
$0.08, $0.30 (retail-linked)
Annual or monthly true-up
USA (select states), Canada, India (residential)
High savings potential
Being phased out in many regions
Net Billing
Export credited at lower, market-based rate
$0.03, $0.20
Real-time or monthly
USA (reformed states), Australia
Reflects grid value
Lower export income
Feed-in Tariff
Fixed payment per kWh exported
$0.03, $0.15
Long-term contract (10, 20 years)
Germany, parts of Europe, Asia
Predictable income
Lower than retail rates
Gross Metering
All generation exported; consumption billed separately
$0.02, $0.10
Monthly payout
India (commercial), Middle East
Simple accounting
No self-consumption savings
Hybrid Models
Combination of self-use + export incentives
$0.04, $0.18
Mixed
South Africa, Brazil
Flexible
Policy complexity
How Buyback Rates Are Structured
Retail rate vs avoided cost vs fixed tariff
Export rates come from a few common approaches. Under retail-rate crediting, your exported kWh is valued close to what you pay. Avoided-cost rates reflect what the utility saves by not generating or buying that energy. Fixed tariffs set a stable price for each exported unit over a contract term.
This is why net billing payments can land around 30, 70% of retail prices, while many feed-in tariffs sit between $0.03 and $0.15 per kWh worldwide.
Time-of-use pricing and peak incentives
Many markets now price electricity by time of day. Power is worth more during busy evening peaks and less overnight or midday in some regions.
If your plan uses time-of-use pricing, the timing of exports matters. Sending energy during peak windows or discharging a battery then can increase the value you receive.
A quick check: when are your highest rates? That answer should guide how you use or store your solar energy.
Annual vs monthly settlement
Settlement rules define when credits are calculated and applied. With annual true-up, credits accumulate across seasons and are settled once per year. Monthly settlement applies credits each billing cycle and may limit how long you can carry a surplus.
Annual true-up: Common in North America, helpful for balancing summer surplus against winter use.
Monthly settlement: Used in parts of Asia and other regions, with shorter carryover periods.
Check the fine print. It affects how much value you keep.
Typical Requirements and Approvals
Permits and grid interconnection
Before you connect a solar system to the grid, you need approval from the local utility or authority. This process is called interconnection. It confirms your system can operate safely alongside the network.
Most applications include:
Interconnection forms and basic project details
System design diagrams and equipment lists
A request for a bidirectional meter
Timelines vary. In some areas it takes 2, 12 weeks. In others it can stretch to 2, 6 months.
Technical standards (inverters, safety)
Your equipment must meet local standards. Inverters need appropriate certifications, and the installation must follow electrical codes, grounding rules, and protection requirements.
Utilities may ask for certificates, test reports, and installer credentials before granting approval.
Utility agreements and inspections
After installation, an inspection may be required before permission to operate is issued. You will also sign an agreement that explains how exports are credited and how disputes are handled.
Installing a bidirectional meter can cost between $50 and $500, depending on the region and utility.
If anything is unclear, a short call with your utility can save weeks.
System Size Limits and Export Caps
Residential vs commercial thresholds
Programs usually set a cap on system size. Residential installations often fall between 3 kW and 15 kW worldwide, with some places capping eligibility around 10 kW. Larger systems may be placed under net billing or gross metering.
Size your system to your usage first, not just the roof space.
Grid capacity constraints
Local grid limits can also restrict how much you can export. These limits depend on transformer capacity, feeder loading, and how much solar is already connected nearby.
In constrained areas, utilities may reduce export capacity or require upgrades.
Regional differences
Export caps can range from 70% to 100% of your sanctioned load. The exact rule depends on local policy, so check what applies where you live.
Country Examples: How Policies Differ
North America example
In the United States and Canada, net metering has been common, but many jurisdictions are shifting toward net billing. Compensation can depend on time-of-use rates and avoided-cost calculations. Annual true-up is widely used.
Europe example
Germany and several European countries rely on feed-in tariffs rather than net metering. These programs set fixed payments, often for about 20 years, and encourage self-consumption alongside exports.
Asia example
India uses a mix of net metering, net billing, and gross metering. Residential systems are often eligible for net metering up to about 10 kW, while larger projects fall under other schemes.
Middle East/Africa example
Some countries in the Middle East run programs similar to net metering with annual settlement and strict compliance steps. South Africa uses hybrid models, with details set at the municipal level.
Australia/Latin America example
Australia applies net billing with export rates that are often around $0.03 to $0.10 per kWh. Brazil has offered net metering-style incentives, with reforms gradually lowering compensation.
If you move house or invest abroad, expect different rules.
Pros and Cons of Each Model
Financial returns
Net metering can deliver strong bill savings because exports offset consumption at near-retail prices. Net billing and feed-in tariffs offer lower per-kWh value, but they can provide steady income and clearer pricing over time.
Grid stability considerations
Utilities have shifted away from full retail crediting in some places because it does not reflect the cost of maintaining wires and balancing supply. Net billing and hybrid designs aim to align payments with when energy is most useful.
Policy risks
Policies change. Some regions protect existing systems under earlier rules, while new customers are placed on updated tariffs. Check current regulations before you commit.
Solar Bazaar keeps track of these shifts and explains how they affect payback without pushing a specific product.
Future Trends in Solar Export Programs (2026 and Beyond)
Shift toward net billing
Across many markets, programs are moving from net metering to net billing or hybrid structures. The aim is to match export payments with real-time grid value.
Role of battery storage
Batteries are becoming more relevant as export rates fall. Storing excess energy for evening use can increase self-consumption and reduce reliance on lower export credits.
In plain terms, you use more of what you make.
Smart grids and dynamic pricing
Smarter grids enable dynamic pricing and better control over when energy is used, stored, or exported. With the right setup, you can shift usage to cheaper periods and export when prices are higher.
What Is Net Metering and What Should You Do Next?
If you are considering solar, start with your local export policy. Find out whether your area uses net metering, net billing, or another model, and what rates apply.
Then check system size limits, approval timelines, and interconnection requirements. Solar Bazaar provides neutral guides to compare policies and understand buyback rates without sales pressure.
Finally, consider a battery if export rates are low. In many markets, using your own solar energy delivers better value than exporting it.
That one choice can change your savings more than panel size.
For a practical next step, review your last 12 months of electricity bills and match system size to your actual usage. Solar Bazaar offers tools to do that and to estimate how credits will show up on your bill.
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