Why exports appear on a bill
A household with solar panels or another small generator does not always use its own power at the moment it is produced. Output from a solar system peaks around midday, when many homes are empty, and falls to zero at night. When the home produces more than it needs, the extra flows out to the grid. When the home needs more than it produces, it draws from the grid. A two-way meter, or a pair of meters, records both directions.
The bill then has to answer a question: how should the exported energy be counted? Different places answer it differently, and the answers have changed over time. The two best-known approaches are net metering and separate export payments.
Net metering
Under net metering, the meter effectively runs forward when you import and backward when you export, or the bill otherwise subtracts exports from imports. You are billed for the net amount over the billing period.
A simple, invented example: in one month a home imports 400 kWh from the grid and exports 150 kWh. Net use is 400 minus 150, which is 250 kWh. At a rate of 20 cents per kWh, the energy charge is 250 x 0.20 = $50.00, compared with $80.00 for 400 kWh with no exports. The export has been credited at the same rate as the import.
Many net metering systems also allow surplus credits to carry forward. If in a sunny month the home exports more than it imports, the net is negative, and the extra credit may be applied to later bills. Rules on how long credits last, and whether they are paid out in cash at some point, differ.
Details to watch for:
- Which charges are netted. Sometimes only the energy portion is netted, and delivery charges, fixed charges and taxes still apply to imports or to a minimum bill. The standing charge does not go away.
- Netting period. Netting might happen monthly, annually or in real time.
- Credit value. Some programs credit exports at the full retail rate, and others at a lower rate that excludes some delivery or policy costs.
- System size limits. Programs often cap system size relative to household use.
Export payments
Another approach pays for exports separately from imports. Your imports are billed at the normal rate, and your exports are paid at a different rate, such as a fixed export price, a rate linked to wholesale prices, or a rate that varies by time of day. The two flows are measured and shown as separate lines.
With export payments, the value of the export rate relative to the import rate matters a great deal. Imports usually cost more than exports are paid, because the retail rate includes delivery, taxes and other costs that an export does not incur. If the export rate is lower, using your own solar output in the home is worth more than sending it out. A worked example: with an import rate of 20 cents and an export rate of 8 cents, one kWh used at home avoids a 20 cent purchase, while one kWh exported earns 8 cents. Shifting some use, such as laundry or water heating, into sunny hours can then have a real effect.
Why policies differ and keep changing
Net metering was often designed to encourage early adoption of small-scale generation. As more homes install rooftop solar, regulators and utilities have reexamined whether full retail-rate credits are fair to households without generation, because network and policy costs still need to be paid by someone. Supporters of generous credits point to benefits such as lower peak demand and reduced need for large power plants. Critics argue that network costs get shifted to non-participants. Evidence and estimates vary by location, and reasonable people disagree.
As a result, many places have adjusted their rules, for instance by moving to export-rate payments, time-varying credits, or limits on existing arrangements. Some jurisdictions protect existing customers for a number of years under their original terms. Because of this, the rules that applied to a neighbor’s installation may not apply to yours.
What the bill looks like
A household with generation may see on its bill:
- Imported energy, in kWh.
- Exported energy, in kWh.
- Net energy, if netting applies.
- Credits, either applied or carried forward.
- An export payment line, if payments are separate.
- The same fixed and delivery charges as other customers, depending on local rules.
If you are unsure what a line means, ask the supplier or check your regulator’s guidance. The article on how to read your energy bill describes the general layout.
Questions to ask before installing generation
- Is net metering or an export payment available at my address, and what are the current terms?
- At what rate are exports credited or paid?
- How are unused credits treated at the end of the netting period?
- Do fixed charges or minimum bills still apply?
- Could the terms change, and are existing customers protected?
- Are there approval steps or technical requirements for connecting to the grid?
Connection to the grid involves safety requirements. Installation and connection of generation should be done by qualified, authorized people following local rules, and the equipment must usually be approved by the utility. Do not attempt to connect a generator to the home wiring yourself.
Setting expectations
Payback calculations for home generation depend on many things, including the price of the system, local sunshine, your usage pattern and the credit rules. Estimates in sales material may assume favorable conditions, so treat them as a starting point and ask for the assumptions. The article on rooftop solar looks at what to understand before installing, and the explainer on solar power covers the technology itself.
This is general information, not financial or legal advice. Programs and terms depend on your location and can change.