Net Metering Explained: What's Left in 2026 and What It Means for Your Solar ROI — The Off Grid Outpost
Net metering is disappearing across the US. Here's the current state-by-state reality and how it affects your solar economics.
Net Metering Explained: What’s Left in 2026 and What It Means for Your Solar ROI
Net metering used to be simple: your solar panels make electricity, you use what you need, and you sell the extra back to the utility at the same price you’d buy it. Your meter spins backward. End of month, you pay the net difference.
That model is disappearing. Utilities across the country are replacing true net metering with systems that pay you less — sometimes dramatically less — for the electricity you export. Understanding what’s happening and how it affects your solar economics is essential before you buy a system in 2026.
Net Metering 101: The Simple Explanation
When your solar panels produce electricity during the day, three things can happen with that power:
- You use it immediately — powering your home in real time. This is the most valuable use because it offsets electricity you’d otherwise buy at full retail price.
- You store it in a battery — to use later (evening, overnight, during outages). This is the second most valuable use.
- You export it to the grid — sending excess power to your utility. What the utility pays you for this export is the net metering question.
The value of your solar system depends heavily on how much credit you get for exported electricity. If you get full retail credit, great — every kWh your panels produce is equally valuable whether you use it or export it. If you get half the retail rate or less, the economics shift, and system design choices (sizing, battery storage, consumption timing) become more important.
Three Compensation Models
Across the US, utilities use three basic models for compensating solar exports. The names vary, but the mechanics are consistent.
Model 1: Full Retail Net Metering
What it means: You get credited at the full retail electricity rate for every kWh you export. If you pay $0.14/kWh for electricity, you get a $0.14 credit for every kWh you send back. Credits roll over month to month (typically within a 12-month billing cycle), and you only pay for your net consumption.
Where it still exists: Fewer places every year. North Carolina (through December 2026), parts of New England, and a handful of other states still have full retail net metering. But almost everywhere, it’s either been eliminated, reduced, or has an announced sunset date.
Economics: The best possible scenario for solar. Your system’s value is straightforward: annual production x retail rate = annual savings. Batteries add no economic value (though they still provide backup). System sizing is simple — build the biggest system your roof and budget allow.
Model 2: Net Billing (Reduced Export Rate)
What it means: You get credited for exports at a rate below retail — often the utility’s “avoided cost” or a wholesale-based rate. You still buy electricity at full retail when you need it.
The gap between your buy rate and your sell rate is where the economics get tricky. If you buy at $0.14/kWh and sell at $0.05/kWh, every kWh you export is worth only 36% of what you’d save by using it yourself.
Where it’s used: California (NEM 3.0), Arizona (most utilities), and an expanding list of states that have transitioned away from full net metering.
Economics: Self-consumption becomes critical. You want to use as much of your solar production as possible during the day and minimize exports. This is where batteries earn their keep — store daytime solar and use it in the evening instead of exporting at $0.05 and buying back at $0.14.
Model 3: Avoided Cost / Buy-All-Sell-All
What it means: You sell all your solar production to the utility at an avoided cost rate (what it would have cost the utility to generate or purchase that electricity from another source) and buy all your consumption at retail. There’s no netting.
Avoided cost rates are typically $0.02-$0.04/kWh. You can see why this model makes solar economics very challenging without significant self-consumption or battery storage.
Where it’s used: Some utilities in states without net metering mandates (parts of Texas, some southeastern utilities). This is also the default in states where net metering rules don’t apply or have expired.
Economics: Solar only makes sense if you’re consuming most of the production on-site. Exporting at $0.03/kWh provides almost no return. Battery storage and load-shifting (running heavy loads during solar production hours) are essential.
State-by-State: NC, TX, and AZ
The Off Grid Outpost focuses on three markets: North Carolina, Texas, and Arizona. Here’s the net metering reality in each.
North Carolina
Current status: Full retail net metering through December 2026.
North Carolina has been one of the best states in the country for solar net metering. Duke Energy and Duke Energy Progress both offer full retail net metering for residential systems up to 25 kW. Credits roll over month to month and are trued up annually.
What’s changing: North Carolina’s net metering rules sunset in December 2026. The NC Utilities Commission has been developing a successor tariff that will transition to a net billing model. The exact export credit rate hasn’t been finalized, but early indications suggest it will be significantly below full retail — likely in the $0.04-$0.08/kWh range.
What this means for you:
- If you install before December 2026, you may be grandfathered into the current full retail net metering rate for a period (typically 15-25 years, depending on the final rules). This is a massive long-term advantage.
- If you install after the transition, your export credits will be worth less, making self-consumption and battery storage more important for your ROI.
Our recommendation: If you’re considering solar in North Carolina, the clock is ticking. Installing in 2026 — even without the federal ITC — locks in full retail net metering that could be worth tens of thousands of dollars over the life of your system. The grandfathering window is the single most valuable incentive available to NC homeowners right now.
| NC Net Metering Detail | Current | Expected Post-2026 |
|---|---|---|
| Export credit rate | Full retail (~$0.12-$0.14/kWh) | Net billing (~$0.04-$0.08/kWh) |
| Rollover period | 12-month annual true-up | Monthly (likely) |
| System size limit | 25 kW | TBD |
| Grandfathering | N/A | Expected 15-25 years for pre-deadline installs |
Texas
Current status: No statewide net metering mandate.
Texas is a deregulated electricity market. There’s no state law requiring utilities or retail electricity providers (REPs) to offer net metering. What you get depends entirely on your REP and your specific plan.
The reality on the ground:
- Some REPs offer buy-back plans that credit excess solar production. Rates vary from $0.04/kWh to near-retail, depending on the provider and plan.
- TXU Energy, Green Mountain Energy, and Chariot Energy have historically offered reasonable solar buy-back rates. Plans change frequently — check current offerings before signing up.
- Many REPs offer nothing for solar exports. If you’re on a standard residential plan without a solar provision, your excess production may earn no credit at all.
- Oncor (the largest TDU) processes interconnection applications for grid-tied solar, but the compensation rate is set by your REP, not Oncor.
What this means for you:
Texas solar economics depend almost entirely on self-consumption. Without guaranteed net metering credits, you need to design your system to minimize exports:
- Size conservatively. Don’t overbuild — size your system to cover 80-90% of your annual consumption rather than 100-120%.
- Add battery storage. A battery lets you store midday surplus for evening use instead of exporting it for pennies.
- Shift loads to solar hours. Run your dishwasher, laundry, and pool pump during peak solar production. Smart plugs and timers help.
- Shop your REP. Switch to a plan with a solar buy-back provision. This alone can be worth $300-$800 per year.
| TX Net Metering Detail | Status |
|---|---|
| Statewide mandate | None |
| Export credit rate | $0.00-$0.12/kWh (depends on REP) |
| Best REPs for solar | TXU, Green Mountain, Chariot (verify current plans) |
| System size limit | None (interconnection limits vary by TDU) |
| Battery value | High — essential for maximizing ROI |
Arizona
Current status: Net billing at reduced export rates.
Arizona was one of the earliest and most contentious net metering battlegrounds. APS (Arizona Public Service) and TEP (Tucson Electric Power) both transitioned from full retail net metering to net billing several years ago. The current export credit rates are among the lowest in the country.
APS export credit rates: Approximately $0.03-$0.05/kWh, depending on rate plan and time of export. Peak export credits (during APS’s on-peak hours) are slightly higher, but most solar production occurs during shoulder or off-peak hours.
TEP export credit rates: Similar to APS — $0.04-$0.06/kWh for most residential customers.
Compare that to retail rates of $0.12-$0.16/kWh (and higher during APS peak hours of 4-7 PM, which can reach $0.20+/kWh). You’re selling electricity at a quarter of what you’re buying it for.
What this means for you:
Arizona has the best solar resource in the country but some of the worst net metering economics. The combination demands a specific system design approach:
- Battery storage is almost mandatory. The spread between your buy rate ($0.14-$0.20/kWh during peak) and your sell rate ($0.04/kWh) means every kWh you store and use yourself instead of exporting saves you $0.10-$0.16. Over a year, a 10 kWh battery doing daily cycling saves $500-$700 in avoided export losses.
- West-facing panels help. While south-facing panels maximize total production, west-facing panels shift production later in the day — closer to the 4-7 PM peak period when electricity is most expensive. A split array (some south, some west) can improve economics even if total production drops slightly.
- TOU rate plan selection matters. APS and TEP offer multiple TOU plans. Some have wider peak/off-peak spreads than others. Match your rate plan to your solar-plus-battery system for maximum savings.
| AZ Net Metering Detail | APS | TEP |
|---|---|---|
| Export credit rate | $0.03-$0.05/kWh | $0.04-$0.06/kWh |
| Retail rate | $0.12-$0.16/kWh | $0.11-$0.14/kWh |
| Peak rate | $0.20+/kWh (4-7 PM) | $0.15-$0.18/kWh (varies) |
| Battery value | Very high | High |
| Best panel orientation | South + West split | South + West split |
How Net Metering Changes Affect Your ROI
Let’s put real numbers to this. Same 10 kW system, same $15,000 semi-DIY cost, three different net metering scenarios.
Scenario 1: Full Retail Net Metering
| Detail | Value |
|---|---|
| Annual production | 14,000 kWh |
| Self-consumed | 5,600 kWh (40%) |
| Exported | 8,400 kWh (60%) |
| Self-consumption savings (@ $0.14/kWh) | $784 |
| Export credits (@ $0.14/kWh) | $1,176 |
| Total annual savings | $1,960 |
| Payback period | 7.7 years |
Scenario 2: Net Billing at $0.05/kWh
| Detail | Value |
|---|---|
| Annual production | 14,000 kWh |
| Self-consumed | 5,600 kWh (40%) |
| Exported | 8,400 kWh (60%) |
| Self-consumption savings (@ $0.14/kWh) | $784 |
| Export credits (@ $0.05/kWh) | $420 |
| Total annual savings | $1,204 |
| Payback period | 12.5 years |
Scenario 3: Net Billing + Battery (Increasing Self-Consumption to 75%)
| Detail | Value |
|---|---|
| Annual production | 14,000 kWh |
| Self-consumed (with battery) | 10,500 kWh (75%) |
| Exported | 3,500 kWh (25%) |
| Self-consumption savings (@ $0.14/kWh) | $1,470 |
| Export credits (@ $0.05/kWh) | $175 |
| Total annual savings | $1,645 |
| Battery cost | $3,200 (EG4 LL-S x2) |
| Total system cost | $18,200 |
| Payback period | 11.1 years |
The battery costs $3,200 extra but reduces the payback period by 1.4 years compared to Scenario 2 (no battery, net billing). It also provides backup power, which has value beyond pure economics.
The real takeaway: in a net billing world, increasing self-consumption from 40% to 75% adds $441 per year in savings. Over 25 years, that’s $11,025 — well above the $3,200 battery cost.
Why Batteries Become Essential Without Net Metering
The math above tells the story. When export credits drop below 50% of retail rate, every kWh you export instead of storing represents lost value. Batteries recover that value by shifting solar production from midday (when you’re exporting) to evening (when you’re consuming).
But the battery value goes beyond simple arbitrage:
1. Load Shifting
Without a battery, your solar production and your consumption are mismatched. Peak solar production: 10 AM - 2 PM. Peak consumption: 5 PM - 9 PM. That mismatch means high exports during the day and high grid purchases in the evening.
A battery bridges that gap. Charge during peak production, discharge during peak consumption. Simple.
2. TOU Rate Arbitrage
In states with time-of-use rates (Arizona, increasingly others), the spread between peak and off-peak rates can be $0.10-$0.15/kWh or more. A battery lets you buy cheap off-peak electricity at night, or better yet, charge from free solar during the day, and avoid expensive peak purchases.
3. Demand Charge Avoidance
Some utilities are introducing residential demand charges — a fee based on your highest 15-minute power draw in a billing period. Batteries can shave peak demand by supplementing grid power during high-draw moments (AC startup, EV charging, cooking).
4. Future-Proofing
Net metering rules will continue to erode. If you install solar without a battery today, you may find your export credits reduced further in a few years. A battery-ready system (hybrid inverter like the EG4 18kPV) lets you add storage later without replacing your inverter.
Designing Your System Around Current Rules
Here’s our framework for system sizing based on your net metering situation.
If You Have Full Retail Net Metering
- Size your system to offset 100-110% of annual consumption. Every kWh produced has the same value whether you use it or export it, so maximize production.
- Skip the battery unless you need backup power. It adds cost without improving economics.
- Panel orientation doesn’t matter much. South-facing maximizes total production, which is all that matters with full retail credits.
- Apply for grandfathering. If your state has an announced net metering sunset, install before the deadline and lock in current rates.
If You Have Net Billing (Reduced Export Credits)
- Size your system to offset 80-90% of annual consumption. Oversizing means more exports at reduced value. Right-sizing means more of your production offsets full-retail purchases.
- Add battery storage. The break-even point depends on your buy/sell rate spread, but batteries generally pay for themselves when the spread exceeds $0.06/kWh.
- Consider west-facing panels. Shifting production later captures more self-consumption during late-afternoon loads and, in TOU markets, produces during higher-rate periods.
- Shift loads to solar hours. Program your EV to charge at noon. Run your pool pump during peak solar. Use smart plugs to time high-draw appliances to production hours.
If You Have No Net Metering
- Size your system to offset 70-80% of annual consumption. Without any export value, oversizing just wastes production.
- Battery storage is essential. Every exported kWh is worth nothing. Every stored kWh offsets a full-retail purchase.
- Maximize self-consumption aggressively. Smart home automation, load scheduling, and consumption awareness are as valuable as the panels themselves.
- Consider a smaller, more efficient system. Sometimes 8 kW with a battery produces better economics than 12 kW without one.
The Grandfathering Opportunity
If you’re in a state with full retail net metering that has an announced or expected sunset — and North Carolina is the biggest example right now — the grandfathering window is the most valuable incentive available.
A homeowner who installs solar in North Carolina before December 2026 and gets grandfathered into full retail net metering for 20 years locks in roughly $0.08-$0.10/kWh more value per exported kWh than a homeowner who installs in January 2027 under net billing.
For a system exporting 8,000 kWh per year, that’s $640-$800 per year in additional value. Over 20 years, that’s $12,800-$16,000. On a $15,000 system, grandfathered net metering alone nearly pays for the entire installation.
This is not marketing. This is arithmetic. And the window is closing.
Bottom Line
Net metering rules define the economic landscape for solar. Full retail net metering is the best case and makes the decision easy. Net billing and no-net-metering require more thoughtful system design — smaller systems, battery storage, and load management.
The trend is clear: net metering credits are declining nationwide. But solar still makes financial sense in all three of our target markets if you design the system correctly for your local rules.
The worst mistake you can make is designing a system for yesterday’s net metering rules. Build for what exists today, prepare for what’s coming tomorrow, and if you’re in a grandfathering window, move fast.
Next steps:
- Design your system — our configurator accounts for your local net metering rules
- Read the battery guide — how to size and choose storage for your net metering situation
- NC solar cost guide — state-specific economics including net metering
- Solar financing options — how to pay for your system without the ITC
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