Net Billing
Net billing is a solar compensation policy that prices exported energy and imported grid electricity at separate rates, unlike net metering's one-to-one credit. Because export rates sit below retail import rates, net billing favors self-consumption over generation volume and raises the value of battery storage.
Net billing is the successor regime to net metering that a growing number of grids are adopting as rooftop solar penetration rises. Where net metering uses a single rate to settle the difference between generation and consumption, net billing splits the transaction into two separate flows: energy imported from the grid is priced at the retail tariff, while energy exported to the grid is priced at a lower export rate, typically the utility's avoided cost or a separately defined feed-in rate. The result is that a kilowatt-hour exported at midday is worth materially less than the kilowatt-hour the customer buys back in the evening.
The policy shift is most visible in California, where the California Public Utilities Commission replaced NEM 2.0 with a net billing tariff (NEM 3.0) effective April 2023. Average export rates fell from near-retail to roughly 5 cents per kWh, while import rates stayed close to retail. Hawaii's Customer Self-Supply program had already moved in a similar direction years earlier. Australia's state-based feed-in tariffs have declined steadily as solar penetration has grown, moving toward similar avoided-cost export values. The European Union increasingly distinguishes between self-consumed generation (which avoids the full retail tariff) and grid-exported generation (which earns only a wholesale or capacity-based rate).
The practical consequence for solar installers is a fundamental shift in how system performance is valued. Under net billing, each kilowatt-hour consumed onsite saves the full retail tariff, while each kilowatt-hour exported earns only the lower export rate. This gap changes the optimal system size, the business case for battery storage, and the payback period calculation. Systems that maximize self-consumption, through accurate load modeling, time-of-use awareness, and storage dispatch, deliver better returns than systems sized purely for generation volume.
Why it matters for solar installers
Net billing changes the fundamental question in a proposal from "how much will this system generate?" to "how much of that generation will the customer actually consume?" A system oversized for export under a net billing regime will have a longer payback than a correctly sized one, and a customer who is not told about the export-rate differential before signing may challenge the numbers after they see their first bill. solarVis models both net metering and net billing tariff structures inside the feasibility workflow, applies the correct export and import rates for each market, and shows the customer an ROI projection that reflects what their utility will actually settle.
Common questions
- How is net billing different from net metering?
- Net metering credits every exported kWh at the full retail rate, effectively running your meter backward at the same rate you pay. Net billing applies two separate rates, a lower export rate and a higher import rate, so each exported unit is worth less than the electricity you buy back later.
- Why did California switch from net metering to net billing in 2023?
- California's NEM 3.0, which took effect in April 2023, moved to a net billing structure to address grid costs and to encourage battery storage over midday solar export. Export rates dropped sharply, averaging around 5 cents per kWh, while import rates remained near retail. The policy is designed to make self-consumption and storage more attractive than exporting surplus.
- Does net billing always hurt the economics of a solar project?
- Not necessarily. A well-designed system under net billing, sized for high self-consumption with appropriately specified storage, can still achieve strong returns. The key is accurate modeling of the export rate, self-consumption ratio, and battery dispatch before quoting payback to the customer.
