Net metering is a utility billing mechanism that allows homeowners with solar panels to receive credit for excess electricity their system produces and sends back to the power grid. It is one of the most important financial incentives for residential solar adoption across the United States.
Here's how it works: during sunny daytime hours, your solar panels may generate more electricity than your home consumes. That surplus energy flows back through your electric meter to the grid, and your utility company credits your account for those kilowatt-hours. Later — at night or on cloudy days — when your panels aren't producing enough, you draw electricity from the grid and use those credits to offset the cost.
Net metering effectively allows your electric meter to "spin backward" when you're producing excess power. At the end of each billing cycle, you only pay for your net electricity usage — the difference between what you consumed from the grid and what you exported.
Policies vary by state, but most Northeast states offer favorable net metering programs with full retail-rate credits. Some states allow credits to roll over month to month, which is especially valuable since solar production peaks in summer while electricity usage may spike in winter. Net metering can save homeowners hundreds of dollars annually and significantly shorten the payback period for a solar investment.