Solar panels produce electricity during the day. Homes use electricity around the clock. That mismatch is the fundamental challenge of residential solar, and net metering is how the electricity grid solves it.
Net metering is a billing arrangement that lets solar homeowners send excess electricity to the utility grid and receive bill credits in return. Those credits offset what the homeowner draws from the grid at night, on cloudy days, and any other time the panels are not producing enough. The result: daytime overproduction becomes a financial asset rather than wasted electricity.
This article explains exactly how net metering works, what it is worth, how the policy plays out across Solar Energy World's eight service jurisdictions, and why the timing of installation matters more in 2026 than it did a year ago.
The Mechanics: How Net Metering Actually Works
Net metering is a billing mechanism, not a payment program. The utility does not send a check; it adjusts the bill.
When a solar system is installed, the standard utility meter is replaced or upgraded with a bi-directional meter that measures electricity flow in both directions. When the panels produce more power than the home is using at a given moment, the excess flows to the grid and the meter runs backward, accumulating a kilowatt-hour credit. When the home draws more power than the panels produce, the meter runs forward, consuming credits first before any billable usage begins.
At the end of each billing period, the homeowner is billed only for their net consumption: total grid draws minus total solar exports. If exports exceeded draws for the month, the credit balance carries forward to the next cycle. According to the Solar Energy Industries Association, on average only 20 to 40% of a solar system's total output ever goes to the grid; the majority is consumed directly by the home in real time, which is where the largest savings come from.
The Seasonal Cycle
The system works in cycles across the year. In summer, long sunny days produce far more electricity than most homes can immediately use, and credits accumulate rapidly. In winter, shorter days and lower sun angles reduce production, and the accumulated credits offset higher grid draws. Spring and fall tend to roughly balance for well-sized systems.
Net metering is what makes the annual cycle financially viable: bank surplus credits during high-production months and spend them during low-production months. A system properly sized to a home's annual consumption can reduce the energy charge on a utility bill to near zero across the full year, even though the production never perfectly matches consumption on any given day.
The Annual True-Up
Most net metering programs run on a 12-month billing cycle with an annual true-up date. At that point, any remaining credit balance is handled per the state's policy. Some states allow indefinite carryforward. Some pay out unused credits at a lower generation rate. Some zero out the balance entirely. Understanding the true-up rule for your utility is important for sizing the system correctly: excess production that expires at true-up is wasted potential.
This is why Solar Energy World's approach of sizing systems to actual 12-month consumption history matters. Oversizing creates credits that accumulate beyond what the homeowner can use, while undersizing leaves utility bill savings on the table.
What a Net Metering Credit Is Actually Worth
Under full retail net metering, every kilowatt-hour exported to the grid earns a credit equal to what the homeowner pays to buy that same kilowatt-hour from the utility. The savings rate and the credit rate are identical.
A Maryland homeowner exporting electricity at a retail rate of approximately $0.16 per kWh earns a $0.16 credit for every kilowatt-hour sent to the grid. A New Jersey homeowner exporting at PSE&G's retail rate of approximately $0.26 per kWh earns $0.26 per kilowatt-hour. The higher the retail electricity rate, the more valuable each exported kilowatt-hour becomes.
For a typical 8 kW system exporting approximately 30% of its annual 9,600 kWh production, that is roughly 2,880 kWh exported per year. At Maryland's rate, those exports generate approximately $460 in annual net metering credits. At New Jersey's rate, approximately $750. These credits stack directly on top of the direct bill savings from electricity the home uses in real time.
Research from Solar Tech Online found that full retail net metering reduces solar payback periods by 2 to 4 years and increases 25-year lifetime savings by $8,000 to $15,000 compared to systems without it. In states where net metering pays at a reduced rate or wholesale price, the financial case for solar changes substantially. In all eight of Solar Energy World's service jurisdictions, some form of net metering is available; the strength of that policy varies by state.
Net Metering in Solar Energy World's Service States
Maryland: Full Retail Rate, Strongest Protections in the Region
Maryland offers full 1:1 retail rate net metering for all major utilities including BGE, Pepco, Delmarva Power, and Potomac Edison. Legislation passed in 2023 locked in full retail-rate net metering through at least 2028 for both new and existing residential customers. A 2025 policy update allows credits to carry forward indefinitely rather than expiring annually, which improves economics for homeowners with variable seasonal production. An April annual true-up gives homeowners the option to cash out remaining credits, though at a lower generation rate. Maryland consistently ranks among the top states nationally for net metering policy quality.
New Jersey: Full Retail Rate, No Cap, Best Combined Solar Economics in the Northeast
New Jersey offers full 1:1 retail rate net metering for all four investor-owned utilities (JCP&L, PSE&G, Atlantic City Electric, and Orange and Rockland) with no statewide capacity cap on residential systems. Credits roll forward monthly and reset at 12 months. With retail rates running $0.24 to $0.26 per kWh at the major utilities, each exported kilowatt-hour earns among the highest net metering credits in Solar Energy World's service area. Combined with the SuSI SREC-II fixed production payment of $85 per MWh for 15 years, New Jersey offers the strongest combined solar income of any Solar Energy World service state and one of the best solar economics of any state in the country.
Washington, D.C.: Full Retail Rate Plus the Highest-Value SREC Market in the U.S.
PEPCO credits DC solar homeowners at the full retail electricity rate for every kilowatt-hour exported, measured in kWh and rolling forward month to month. Credits reset at the end of each calendar year; unused credits are paid out at the generation rate of approximately $0.088 per kWh. Net metering in DC is valuable, but it is a secondary benefit to the SREC market where certificates sell at $300 to $400 each. A typical 8 kW DC system earns $2,700 to $3,600 per year from SRECs alone, which is what drives DC's 5 to 7-year payback periods even without a federal tax credit.
Virginia: Full Retail Rate With a Time-Sensitive Policy Risk
Virginia offers full 1:1 retail rate net metering through Dominion Energy and Appalachian Power for residential systems up to 25 kW. The policy is subject to aggregate caps per utility territory. The critical 2026 development: both Dominion Energy and Appalachian Power have proposed reducing net metering compensation rates for new customers. These proposals have not yet been implemented, and homeowners who interconnect before changes take effect are expected to be grandfathered under current full retail-rate terms for 20 years.
This is one of the most time-sensitive solar decisions in Solar Energy World's service area. A Virginia homeowner who interconnects under current terms and is later grandfathered locks in full retail-rate credits for two decades, regardless of what the utility changes afterward. A homeowner who waits risks locking in a lower rate for the same 20-year period.
Delaware: Full Retail Rate With a Hard Annual Reset
Delaware requires full 1:1 retail rate net metering from all utilities for residential systems up to 25 kW. Credits accumulate monthly. At the end of a 12-month period the homeowner selects, credits reset. Unlike Maryland, unused credits at the Delaware true-up date do not roll forward and are not paid out. Proper sizing in Delaware means targeting close to 100% annual offset with minimal excess; oversizing creates credits that expire with no financial return.
Pennsylvania: Full Retail Rate With Proposed Reform in One Territory
Pennsylvania's Public Utilities Commission requires all investor-owned utilities to provide 1:1 retail rate net metering for residential solar customers, at approximately $0.21 per kWh in PECO territory. An annual Percentage-of-Total-Consumption (PTC) true-up handles credits above annual consumption, paid out at approximately $0.11 per kWh.
The 2026 watch item for Pennsylvania: PPL Electric Utilities has proposed moving from 1:1 retail net metering to hourly market-based credits (LMP pricing), which would significantly reduce export value for customers in the Lehigh Valley, Harrisburg, Scranton, and northeastern Pennsylvania. If that change is implemented, customers who interconnected before it are expected to be grandfathered under current 1:1 terms. As with Virginia, the message for PPL territory homeowners is clear: earlier installation reduces the risk of locking in a weaker policy.
Florida: Stepped-Down Retail Rate With a 20-Year Lock-In
Florida's net metering story is the most time-sensitive of any Solar Energy World service state. Legislation passed in 2024 established a gradual step-down in the export credit rate for new solar customers. Homeowners who interconnected in 2024 to 2025 received 75% of the retail rate. Homeowners who interconnect in 2026 receive 60%. In 2027 the rate drops to 50%, with further reductions in subsequent years.
The critical protection: systems interconnected in a given year are grandfathered at that year's credit rate for 20 years. A Florida homeowner who interconnects in 2026 locks in 60% of the retail rate for two decades. A homeowner who waits until 2027 locks in 50%. The financial difference compounds over 20 years.
At 60% of FPL's current retail rate, exported electricity earns approximately $0.07 to $0.08 per kilowatt-hour. This is meaningfully lower than the full retail rates in Maryland or New Jersey. Florida's solar case rests primarily on the volume of behind-the-meter production from 237-plus average sunny days per year, which earns full bill savings regardless of the export rate. The export rate applies only to surplus electricity sent to the grid.
The Grandfathering Principle: Why Timing Matters in 2026
When a net metering policy changes, existing solar customers are typically grandfathered under the terms in effect at the time of their interconnection for 15 to 20 years.
California's experience is the clearest cautionary example. When California switched from NEM 2.0 to NEM 3.0 in 2023, export credit rates dropped approximately 75%. Homeowners who interconnected before the cutoff kept NEM 2.0 rates for 20 years. Homeowners who interconnected after the cutoff entered NEM 3.0, where battery storage is now essentially required to make solar financially viable.
In Solar Energy World's service states, three jurisdictions have active or near-term policy risk: Virginia, where utility reform proposals are pending; Pennsylvania's PPL territory, where LMP-based pricing has been proposed; and Florida, where the step-down is already in effect and worsens each calendar year. In each of these states, installing and interconnecting sooner is a hedge against future policy changes that cannot be predicted with certainty.
Maryland and New Jersey are the most policy-stable states in the service area. Maryland's net metering is protected through at least 2028. New Jersey has no active reform proposals.
Net Metering and Battery Storage
Net metering and battery storage address the same fundamental problem (panels produce when you are not home; you need power when they are not producing) through different mechanisms. Net metering uses the grid as a free virtual battery. Battery storage keeps excess production on-site.
In the full retail-rate states Solar Energy World serves (Maryland, Virginia, New Jersey, DC, Pennsylvania, Delaware), net metering alone is financially efficient. Every exported kilowatt-hour earns full retail credit, so the grid is as valuable as a physical battery for managing the day-night production mismatch. Battery storage in these states adds resilience value and backup power during outages, which is a meaningful benefit in hurricane-prone Florida and storm-affected Mid-Atlantic states, but it does not dramatically change the net metering economics.
In Florida at 60% export rates, battery storage makes stronger financial sense. Storing solar energy and using it at night avoids drawing from the grid at the full retail rate, while exporting it earns only 60% of that rate. Maximizing behind-the-meter self-consumption is worth more per kilowatt-hour than exporting under Florida's current policy. One important note regardless of state: panels automatically shut down when the grid fails, a safety requirement. Battery storage is required for outage protection no matter how favorable the net metering policy.
How Solar Energy World Handles Net Metering Enrollment
Net metering enrollment requires an application to the utility, proper metering, and in some states additional documentation. Solar Energy World handles the complete enrollment process on behalf of every customer in every service state. After the system activates, Solar Energy World live monitoring tracks real-time production, home consumption, grid exports, and credit accumulation, so homeowners can see exactly how their net metering credits are building against their utility bill at any time.
Get a Free Solar Estimate
Solar Energy World offers free in-home and virtual solar estimates for homeowners across Maryland, Virginia, Delaware, Pennsylvania, New Jersey, Washington D.C., and Florida. Every estimate includes a full breakdown of the net metering policy and applicable state incentives for the homeowner's specific utility territory. To see the full pricing and financing options available, start with a free estimate
