If you are considering solar for your home, you have probably heard the term Net Metering. But what exactly is it, and why is it considered the absolute most important factor for making a solar investment financially viable? Here is everything you need to know about how net metering works, how it affects your electric bill, and why you want to get approved for it as quickly as possible.
What is Net Metering?
Net Energy Metering (NEM), commonly called net metering, is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. Because solar panels produce the most electricity during the middle of the day—when many people are not home using appliances—your system will often generate more power than your home is consuming at that exact moment.
Without net metering, that excess energy would simply be lost. But with net metering, that excess power flows backward through your electric meter and onto the local power grid to be used by your neighbors. In exchange, your utility company provides you with a credit.
How Does 1-to-1 Net Metering Work?
In states with strong net metering laws, like Maryland, you are currently credited on a 1-to-1 basis. This means that for every kilowatt-hour (kWh) of electricity you send to the grid, you get a one-kilowatt-hour credit on your electric bill.
At night, or on cloudy days when your panels aren’t producing enough energy to run your home, you pull electricity back from the grid. Instead of paying the utility for this electricity, you simply use the credits you banked during the sunny days.
At the end of the billing cycle, you are only billed for your net energy usage—the difference between what you produced and what you consumed. If you produced more than you consumed, those extra credits roll over to the next month.
Why is Net Metering in Danger?
Net metering is incredibly beneficial for homeowners, but utility companies do not like it because it cuts into their profits. As a result, utility companies across the nation have been heavily lobbying to drastically reduce or eliminate 1-to-1 net metering benefits.
We are already seeing this happen:
- California (NEM 3.0): In 2023, California slashed solar export credits by roughly 75%, fundamentally changing the economics of going solar and forcing new buyers to purchase expensive battery systems.
- Maryland Net Metering Caps: Maryland utility companies have strict legal caps on how much solar capacity can be connected to the grid under net metering rules. In May 2026, the Maryland legislature had to intervene because commercial and community solar projects almost hit this hard cap, which would have entirely frozen new residential net metering enrollments.
Why You Need to Get Approved Now
The golden rule of net metering is that utility companies and state laws typically grandfather in existing solar customers. This means that if you install solar and get approved for 1-to-1 net metering before the rules change, you are locked into those favorable rates for a set period (often 15 to 20 years, depending on the state).
However, if you wait until after a state transitions to a new net metering framework (like California’s NEM 3.0), the return on investment for your solar system could plummet, making the system take much longer to pay for itself.
Getting your system designed, permitted, and properly submitted to your local utility company for net metering approval is the single most important step in the solar process right now. Because utility review times can be lengthy, time is truly of the essence.
Want to lock in your net metering status before the rules change?
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