Net metering
A billing arrangement in which electricity exported by a small generator, usually rooftop solar, offsets imports at the retail rate over a billing period.
Net metering (net energy metering, NEM) lets prosumers run their meter backwards: exported kWh are credited at the full retail price and netted against imported kWh over a billing period, often a month or a year. The grid effectively acts as a free battery.
Because retail tariffs include network charges, taxes and policy levies, which can be 40 to 60% of the price in Europe, net metering pays exports more than their wholesale value. That made rooftop PV highly attractive in its early years but shifts fixed grid costs onto non-solar customers as adoption grows.
Many jurisdictions have therefore moved to net billing, where exports are credited at a lower value (wholesale or avoided cost) while imports pay the retail rate. California's NEM 3.0 (April 2023) cut average export credits by about 75%, based on an avoided-cost calculator, which pushed new installations to include batteries. Belgium (Flanders) ended reverse-turning meters; the Netherlands has legislated the end of its "salderingsregeling" from January 2027. The EU Electricity Market Directive phases out netting schemes for new installations.
Under net billing, project economics depend on self-consumption: a household using 30 to 40% of its PV output directly saves much more than one exporting most of it.
Related terms
All terms →- Self-consumption
The share of on-site generation, typically rooftop solar, that is used directly by the producer rather than exported to the grid.
- Feed-in tariff
A policy that guarantees renewable generators a fixed price per kWh exported, usually for 15 to 20 years, independent of market prices.
- Smart meter
An electronic meter that records consumption in short intervals and communicates the data remotely to suppliers and network operators.
- Grid parity
The point at which electricity from a new source, usually solar or wind, costs the same as or less than power bought from the grid.
- Payback period
The time needed for the cumulative savings or revenues of an investment to equal its initial cost.
- Behind-the-meter
Equipment located on the customer's side of the utility meter, such as rooftop solar, home batteries or EV chargers, which primarily serves on-site load.