Net metering is the single most important policy that makes residential solar financially viable. It is the mechanism that allows you to get full value from every kilowatt-hour your solar panels produce – even when you are not home to use the electricity in real time.
Despite its importance, net metering is one of the least understood aspects of going solar. This guide explains exactly how it works, how credits appear on your bill, what happens at night and in winter, and what the current net metering policies look like in Ohio, Kentucky, and South Carolina.
How Does Net Metering Work?
Net Metering Explained Simply
Net metering works like a bank account for electricity:
- During the day, your solar panels often produce more electricity than your home uses at that moment – especially during midday when production peaks and you may be at work.
- The excess electricity flows to the grid through your utility meter. Your meter records this exported energy.
- Your utility gives you a credit for each kilowatt-hour (kWh) you export – typically at or near the full retail rate you would pay for electricity.
- At night or on cloudy days, when your panels produce less than you need, you draw electricity from the grid as usual.
- Your credits offset your grid usage. At the end of each billing cycle, you only pay for your net consumption – the difference between what you drew from the grid and what you exported to it.
This is where the name comes from: you are billed on the net difference between what you consumed and what you produced.
A Real-World Example
Say your home uses 1,000 kWh in a month. Your solar system produces 1,100 kWh that month. Here is how net metering works:
- During peak sun hours, you export 500 kWh of excess production to the grid.
- At night and on cloudy periods, you draw 400 kWh from the grid.
- Your net usage: 400 kWh consumed − 500 kWh exported = −100 kWh (net surplus)
- You owe nothing for electricity. The 100 kWh surplus carries forward as a credit to next month.
Without net metering, that 500 kWh of excess daytime production would either be wasted or credited at a fraction of its value – dramatically reducing your savings and extending your payback period.
What Happens to Net Metering Credits?
Do Net Metering Credits Roll Over?
Yes, in most cases. When you produce more than you consume in a given month, the surplus credits roll forward to the next billing cycle. This is essential because solar production is seasonal – you will overproduce in summer and underproduce in winter. Monthly credit rollover allows your summer surplus to cover your winter deficit.
What Happens at the End of the Year?
Most utilities have an annual true-up period – a date (often in March or April) when they reconcile your cumulative credits and consumption. The specifics depend on your utility:
- Some utilities pay you for any remaining surplus credits, often at a lower “avoided cost” rate rather than full retail.
- Others reset your credit balance to zero.
- Some roll credits over indefinitely.
A well-designed solar system (like those Gold Path Solar designs) is sized to closely match your annual usage, minimizing any wasted surplus at true-up while maximizing your savings throughout the year.
What Do You Need for Net Metering?
Do I Need a Special Meter?
Net metering requires a bidirectional meter (also called a net meter or smart meter) that can measure electricity flowing in both directions – from the grid to your home, and from your home to the grid. Most modern digital meters are already bidirectional. If yours is not, your utility will replace it as part of the interconnection process, typically at no cost to you.
How Do I Get Set Up for Net Metering?
Net metering activation is part of the standard solar installation process:
- Your installer applies for utility interconnection on your behalf.
- The utility reviews the application and approves the connection.
- A bidirectional meter is installed or confirmed.
- After your system passes inspection, the utility grants Permission to Operate (PTO).
- Net metering begins automatically once PTO is granted.
Gold Path Solar handles the entire interconnection process – application, paperwork, utility communication, and PTO – as part of every installation. You never need to contact your utility directly. Learn more about the full process in our solar installation process guide.
[INSERT IMAGE: Utility bill example showing net metering credits, grid consumption, and net charges]
Net Metering Policies by State
Net Metering in Ohio
Ohio requires investor-owned utilities (AEP Ohio, Duke Energy Ohio, AES Ohio/Dayton Power and Light) to offer net metering for residential solar systems. Key details:
- Credits are applied at or near retail rate for excess generation.
- Credits roll over month to month.
- System size limits apply (typically no larger than needed to offset the customer’s usage).
- Ohio’s net metering rules are governed by the Public Utilities Commission of Ohio (PUCO).
For utility-specific details, see our Ohio solar guide.
Net Metering in Kentucky
Kentucky Utilities (KU) and Louisville Gas and Electric (LG&E) offer net metering for residential solar customers under Kentucky Public Service Commission rules:
- Excess generation earns bill credits applied to subsequent months.
- Residential systems up to 45 kW are eligible.
- Net metering policies have been subject to regulatory review, making it important to lock in current terms by going solar sooner.
For more details, see our Kentucky solar guide.
Net Metering in South Carolina
Duke Energy Carolinas and Duke Energy Progress offer net metering in South Carolina:
- Excess solar production earns bill credits.
- Credits roll over monthly.
- Combined with SC’s 25% state tax credit and 30% federal ITC, net metering helps create some of the shortest payback periods in Gold Path Solar’s service territory.
For full details, see our South Carolina solar guide.
Net Metering vs. Net Billing: What Is the Difference?
Some states and utilities are shifting from traditional net metering to net billing (sometimes called “net metering 2.0” or “successor tariffs”). The key difference:
- Net metering: Your excess production is credited at the full retail rate – the same price you pay to buy electricity. This gives solar maximum value.
- Net billing: Your excess production is credited at a lower rate (often the utility’s “avoided cost” or wholesale rate), which can be 30–70% less than the retail rate.
Net billing reduces the financial value of solar but does not eliminate it. However, the difference is significant enough that homeowners in states with full retail net metering should strongly consider going solar while those policies are in place. Once you are interconnected under a net metering policy, you are typically grandfathered into those terms for a set period (often 15–25 years), even if the policy changes for new customers.
This grandfathering protection is one of the most compelling reasons to act now rather than wait. Read more about why in the case for net metering.
Can Solar Work Without Net Metering?
Yes, but the economics change. Without net metering, you benefit only from electricity you consume in real time (called “self-consumption”). Any excess production during the day is either wasted, exported at minimal value, or stored in a battery for later use.
Options for maximizing solar value without net metering include:
- Battery storage: Store excess daytime production and use it at night. This maximizes self-consumption but adds cost. See our solar battery guide.
- Load shifting: Run high-consumption appliances (dishwasher, laundry, EV charging, pool pump) during peak solar production hours to use more electricity in real time.
- System right-sizing: Design a smaller system that produces only what you can consume during the day, avoiding excess production altogether.
Fortunately, all of Gold Path Solar’s service areas currently have net metering available, making it the standard approach for our customers.
Frequently Asked Questions About Net Metering
Does net metering eliminate my electric bill entirely?
It can reduce your bill to near zero for electricity consumption. However, most utilities charge a small fixed monthly fee (sometimes called a “customer charge” or “meter fee”) of $5–$15/month regardless of how much electricity you use. Net metering credits offset your usage charges but typically not this fixed fee.
Do I get paid for excess solar electricity?
In most cases, excess production earns bill credits, not cash payments. These credits offset future electricity charges. If you have remaining credits at annual true-up, some utilities pay out the surplus at a lower rate, while others reset the balance. A well-sized system minimizes this issue by matching production to your annual usage.
What happens to net metering credits when I sell my home?
Net metering credits typically do not transfer to the new owner. Accumulated credits on your account are usually settled at the time of the final bill. The new owner starts fresh with their own net metering account. Timing your sale strategically (after winter, when credits may be depleted) can minimize any lost value.
Does net metering work with battery storage?
Yes, and the two complement each other well. With a battery, you can store excess production for use during peak-rate hours or outages, while net metering credits handle any remaining surplus beyond what the battery captures. See our battery storage guide for details.
Can my utility cancel my net metering?
Utilities cannot unilaterally cancel net metering for existing customers who were approved under current policies. If policies change, existing customers are typically grandfathered into the terms that were active when they interconnected. This is a key reason to go solar while current favorable net metering policies are in place.
Is net metering available in my area?
If you live in Gold Path Solar’s service areas – Columbus, Dayton, Cincinnati, Lexington, Louisville, or Greenville – yes. All major utilities in these markets offer net metering for residential solar. Your Gold Path Solar Advocate can confirm the specific terms for your utility.