Net Metering Calculator
Calculate solar net metering savings from surplus generation and utility buyback rates. Enter values for instant results with step-by-step formulas.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Net Metering Calculator
Calculator
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Formula: Monthly Savings = (SelfConsumed x RetailRate) + (Surplus x BuybackRate) - (GridPurchase x RetailRate)
Worked example — Monthly savings: $112.50 | Annual: $1,350 | 25-year: ~$46,000 with rate escalation
Formula
Monthly Savings = (SelfConsumed x RetailRate) + (Surplus x BuybackRate) - (GridPurchase x RetailRate)
Self-consumed solar saves at the full retail rate, surplus exports earn credits at the buyback rate, and any remaining grid purchases are charged at retail. Fixed charges apply regardless of generation.
Worked Examples
Example 1: Full Retail Net Metering
Problem:A 6 kW solar system generates 900 kWh/month. The home consumes 750 kWh/month. Retail rate is $0.15/kWh with full retail buyback. Fixed monthly charge is $12.
Solution:Self-consumed: 750 kWh x $0.15 = $112.50 savings Surplus: 150 kWh x $0.15 = $22.50 in credits Bill without solar: 750 x $0.15 + $12 = $124.50 Bill with solar: $12.00 (fixed only, credits cover grid use) Monthly savings: $112.50 Annual savings: $1,350
Result:Monthly savings: $112.50 | Annual: $1,350 | 25-year: ~$46,000 with rate escalation
Example 2: Reduced Buyback Rate (NEM 3.0 Style)
Problem:Same 900 kWh generation and 750 kWh consumption, but buyback rate is only $0.05/kWh versus $0.15 retail rate. Fixed charge $12.
Solution:Self-consumed: 750 kWh x $0.15 = $112.50 savings Surplus: 150 kWh x $0.05 = $7.50 in credits Bill without solar: 750 x $0.15 + $12 = $124.50 Bill with solar: $12.00 + $0 grid - $7.50 = $12.00 Monthly savings: $112.50 (self-consumption dominates) Lost value vs full NEM: $15/month on surplus
Result:Monthly savings: $112.50 | Surplus credit: only $7.50 vs $22.50 at full retail
Frequently Asked Questions
What is net metering and how does it work?
Net metering is a billing arrangement where your utility credits you for surplus electricity that your solar panels send back to the grid. When your solar system generates more power than you consume, the excess flows to the grid and your meter effectively runs backward, earning you credits. During times when your solar is not producing (nighttime or cloudy days), you draw power from the grid and use those credits to offset your bill. The net result is that you only pay for the net difference between what you consumed and what you generated. Over 40 states have some form of net metering policy, though specific rules and credit rates vary significantly by utility and jurisdiction.
What is the difference between retail rate and buyback rate?
The retail rate is what you pay your utility for each kilowatt-hour of electricity you consume from the grid. The buyback rate (also called the export rate or avoided cost rate) is what your utility credits you for each kilowatt-hour of surplus solar electricity you send back. Under traditional one-to-one net metering, these rates are equal, meaning every kWh you export earns a full retail credit. However, many utilities have moved to net billing or reduced buyback rates, where exports are credited at a lower wholesale or avoided-cost rate. For example, California NEM 3.0 credits exports at roughly 25-35% of retail rates. This difference makes self-consumption much more valuable than exporting.
How does solar panel degradation affect net metering savings?
Solar panels gradually lose generating efficiency over time, typically degrading at 0.3-0.7% per year. Most manufacturers guarantee at least 80-85% of original output after 25 years. This means a system producing 900 kWh per month in year one will produce approximately 855 kWh per month by year ten and 810 kWh by year twenty at 0.5% annual degradation. The impact on net metering savings is twofold: you generate less free electricity for self-consumption, and you have less surplus to export for credits. However, rising utility rates typically more than compensate for degradation, so total dollar savings usually increase over time despite declining production.
What happens to unused net metering credits?
The treatment of unused net metering credits varies by utility and state. Many utilities allow month-to-month credit rollover, so excess credits generated in sunny summer months can offset higher winter bills. At the end of a 12-month billing cycle (the true-up period), most utilities either pay out remaining credits at an avoided-cost rate, forfeit them entirely, or roll them into the next year indefinitely. Some states like Massachusetts allow indefinite credit banking with no expiration. Understanding your utility specific credit rollover and true-up policies is essential for optimizing your solar system size and maximizing financial returns from net metering.
Should I size my solar system for 100% offset?
Sizing for exactly 100% offset means your annual solar generation equals your annual consumption, which is often the sweet spot for net metering economics. Over-sizing beyond 100% is usually not financially optimal because surplus credits are often compensated at lower rates or forfeited at true-up. Under-sizing below 80% means you are leaving potential savings on the table. However, the optimal size depends on your specific buyback rate structure. If your utility offers full retail credits, slight over-sizing provides a buffer against panel degradation. If buyback rates are low, sizing for 80-90% offset with high self-consumption is usually more profitable.
How does time-of-use pricing interact with net metering?
Time-of-use (TOU) pricing can significantly impact net metering economics because electricity rates vary by time of day. Under TOU net metering, credits earned during peak afternoon hours when solar production is highest are worth more than off-peak consumption. This means solar exports during peak periods ($0.30-0.50 per kWh) offset consumption during cheaper off-peak periods ($0.10-0.15 per kWh), amplifying savings beyond what flat-rate analysis would suggest. However, if your utility requires TOU for solar customers, evening peak rates when solar is not producing can increase costs. Battery storage paired with TOU net metering can maximize this arbitrage opportunity.
What is the self-consumption ratio and why does it matter?
The self-consumption ratio is the percentage of your solar generation that you use directly in your home rather than exporting to the grid. It matters because self-consumed electricity saves you the full retail rate, while exported electricity typically earns a lower buyback rate. A self-consumption ratio of 30-40% is typical for residential solar without batteries, meaning 60-70% of generation gets exported. Adding a battery can increase self-consumption to 60-80%. Simple behavioral changes like running dishwashers and laundry during solar production hours can also improve your ratio. In markets where buyback rates are much lower than retail rates, maximizing self-consumption is the key to solar profitability.
Are net metering policies changing?
Net metering policies are actively evolving across the United States and globally. The trend is generally toward less generous compensation for solar exports as utilities argue that net metering shifts grid maintenance costs to non-solar customers. California transitioned from NEM 2.0 to NEM 3.0 in April 2023, cutting export credit values by roughly 75%. Other states including Florida, Arizona, and Nevada have also reduced net metering benefits. Some states are considering or implementing net billing, value-of-solar tariffs, or capacity-based rates. However, several states maintain strong net metering protections. It is critical to understand your current and likely future net metering terms before investing in solar.
How do fixed charges affect net metering bill savings?
Fixed charges (also called service charges, customer charges, or grid access fees) are monthly fees that appear on your electricity bill regardless of how much power you use or generate. These charges typically range from $8 to $25 per month and cannot be offset by net metering credits. Some utilities have introduced higher fixed charges specifically for solar customers to recover lost revenue. This means even with a perfectly sized solar system that generates 100% of your electricity, you will still owe the monthly fixed charge. When evaluating net metering economics, always account for these unavoidable costs in your savings calculations.
Can I combine net metering with battery storage?
Combining net metering with battery storage can optimize your electricity savings in several ways. The battery stores excess solar generation during peak production hours and releases it during evening or nighttime consumption, increasing your self-consumption ratio. This is particularly valuable when buyback rates are low because you avoid exporting cheap and buying back expensive. In TOU rate structures, batteries can shift solar energy use to the most expensive rate periods. However, adding a battery means additional upfront cost of $8,000 to $15,000, which extends payback time. The financial case for combining batteries with net metering depends heavily on your local buyback rate versus retail rate spread.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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