How net metering works
- Residential solar system produces more electricity than the home consumes at certain hours (typically midday with high sun).
- The excess kWh flows back to the utility grid through a bi-directional meter.
- The utility credits the homeowner's bill for the exported kWh — at the full retail rate, a reduced rate, or wholesale, depending on the jurisdiction's NEM framework.
- At hours when the home draws more than the system produces (typically evening + overnight), the homeowner consumes grid electricity at the standard rate.
- The monthly bill reconciles imports vs exports based on the NEM rules.
NEM regulatory variation by state
- Full-retail-rate NEM — homeowner credited at the same rate they pay. Best economics for solar-only systems.
- Reduced-rate NEM (e.g., California NEM 3.0) — exported kWh credited at wholesale or below-retail rates. Compresses solar-only payback; lifts value of paired battery for self-consumption.
- Net billing — separate import/export pricing with no kWh-to-kWh credit.
- Avoided-cost or buy-all/sell-all — homeowner sells all production to the utility at a fixed rate, buys all consumption at standard rate.
Why NEM matters for installer pricing
Net metering structure is the single biggest variable in solar savings projections. A 25-year savings number under full-retail NEM can be 50-100% higher than the same system under reduced-rate NEM. Installers in jurisdictions with recent NEM compression typically migrate proposals toward solar + battery to optimize the post-NEM-change economics.
Solar Launch's customer portal calculates projected savings using the homeowner's specific utility's NEM rate where available, so the 25-year number on the postcard reflects actual local economics — not generic full-retail assumptions.
Customer portal shows real-NEM savings projections.
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