Net Metering in 2026: Which States Pay You the Most for Your Solar Power
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Net Metering Is the Policy That Makes or Breaks Solar ROI
You can have the most efficient solar panels on the market and a perfect south-facing roof, but if your state's net metering policy pays you wholesale rates for excess power instead of retail rates, your payback period can double. Net metering — or its absence — is often the single biggest variable in whether residential solar makes strong financial sense in a given state. Yet most homeowners shopping for solar barely ask about it.
In 2026, net metering policy is in active flux across the US. Some states are expanding it; others are dismantling retail-rate compensation entirely. Here's what you need to know about how the policies work, which states are best, and what to do if yours has rolled back net metering.
Net Metering vs Net Billing vs Avoided Cost: The Definitions
Net Metering
Traditional net metering is a 1:1 credit system. Every kilowatt-hour your solar panels export to the grid earns you a credit equal to what you'd pay to buy that same kilowatt-hour back. If electricity costs $0.20/kWh, exporting 1 kWh earns you a $0.20 credit. The grid functions as a virtual battery — you "deposit" excess solar power during the day, "withdraw" grid power at night, and the net exchange is settled on your bill. This full retail credit is the most homeowner-favorable arrangement.
Net Billing
Net billing is increasingly common as utilities and regulators push back against retail-rate net metering. Under net billing, you receive a different (lower) rate for exported power than the retail rate you pay for imported power. California's NEM 3.0 is the most prominent example: new solar customers receive export credits at roughly $0.04–$0.08/kWh (the "Avoided Cost Calculator" rate) instead of the retail rate of $0.30–$0.45/kWh. The rate they're credited is 75–85% less than what they pay when drawing from the grid.
Avoided Cost / Wholesale Rate
Some utilities pay only the wholesale or "avoided cost" rate for exported solar power — what the utility would have paid on the wholesale electricity market. Avoided cost rates typically run $0.03–$0.06/kWh, compared to retail rates of $0.12–$0.45/kWh. This is the least favorable arrangement for solar owners: exporting a kilowatt-hour earns you 5–15 cents while buying one back costs 12–45 cents.
Best States for Net Metering in 2026
New Jersey
New Jersey maintains full 1:1 retail net metering through its Net Metering and Interconnection Standards. With average electricity rates of $0.17–$0.19/kWh plus Solar Renewable Energy Certificate (SREC) income of $220–$250 per MWh generated, New Jersey solar owners earn on two streams. SREC income alone adds roughly $1,300–$1,500 per year for a 6kW system that generates 7,000 kWh annually. Solar payback periods of 5–7 years are common.
Massachusetts
Massachusetts uses full retail net metering under its Electric Utility Net Metering regulations. The SMART (Solar Massachusetts Renewable Target) program adds per-kWh compensation above and beyond net metering credits for 10 years. Average electricity rates of $0.28–$0.32/kWh make every kWh of solar self-consumed extremely valuable. Combined payback periods of 5–7 years are achievable. Massachusetts also has strong protections for existing solar customers if policy changes — 25-year grandfather protection for current subscribers.
Maine
Maine's net metering policy credits exports at the full retail rate and has been explicitly expanded by the Maine Public Utilities Commission. Average rates of $0.22–$0.26/kWh and relatively high solar irradiance for a northern state (better than many people expect) make Maine one of the more attractive New England solar markets.
Maryland
Maryland's net metering law requires utilities to credit exported power at the retail rate. Electricity rates of $0.15–$0.18/kWh are below the New England states but still high enough for solar to pencil out well, particularly with the 30% federal ITC. Maryland's CleanEnergy Rewards program offers additional state incentives.
New York
New York's net metering structure provides retail rate credits for systems up to 750 kW. The state has a 25% state income tax credit (up to $5,000) on top of the federal 30%. Con Edison and National Grid customers in the New York City metro area face some of the highest residential electricity rates in the country ($0.25–$0.35/kWh), making solar savings especially large.
States Rolling Back Net Metering
California: NEM 3.0
California's NEM 3.0, effective April 2023 for new solar customers, fundamentally changed the solar economics in the state. Export rates dropped from roughly retail ($0.30–$0.45/kWh for many customers) to "Avoided Cost Calculator" rates averaging $0.04–$0.08/kWh. The practical effect: a solar system that exports significant power to the grid during the day now earns only a fraction of what it cost to generate that electricity. The solution California regulators implicitly endorse is battery storage — specifically the Tesla Powerwall or similar systems — that shifts solar generation to evening consumption rather than exporting. California solar with battery storage remains financially viable; California solar without storage is significantly less attractive for new customers than it was before NEM 3.0.
Hawaii: Virtual Net Metering and Beyond
Hawaii ended traditional net metering for new customers in 2015 — earlier than most states. The state has moved through several successor programs. The current Customer Grid-Supply Plus program pays $0.10–$0.15/kWh for exported power, below retail rates of $0.35–$0.40/kWh on Oahu. Hawaii's lesson is instructive: even in a state with extremely expensive grid electricity and abundant sunshine, unfavorable export rates severely limit the economics of grid-tied solar without significant battery storage.
Arizona
Arizona shifted from full retail net metering to "net billing" in 2017. Arizona Public Service (APS) and Salt River Project customers receive export credits at rates below retail — typically $0.09–$0.12/kWh versus retail rates of $0.13–$0.16/kWh. The gap is smaller than California's NEM 3.0, but it still means self-consuming solar power is worth significantly more than exporting it. Systems are now sized to minimize export rather than maximize generation.
The Connecticut Case: A New Fee Structure
Connecticut introduced a $0.0325/kWh non-bypassable charge effective January 2026 that applies to net metering customers' total usage, including self-consumed solar. This "grid participation charge" is calculated on gross electricity consumption, not just imported grid power, which means solar customers pay the fee on electricity they generated themselves. The practical impact: a 6kW system generating 7,500 kWh/year adds roughly $244 annually in grid fees. This partially offsets electricity savings and lengthens payback periods by 6–12 months in Connecticut.
Grandfather Protections: How Long Are You Protected?
Most states that change net metering policy protect existing solar customers under the rules in effect when their system was installed. Protection periods vary:
| State | Grandfather Protection Period |
|---|---|
| California | 20 years from installation |
| Massachusetts | 25 years under SMART program |
| New Jersey | 10 years (Legacy Net Metering) |
| Hawaii | 15 years from original enrollment |
| Arizona | 10 years for retail rate credits |
What to Do If Your State Has Weak Net Metering
If you live in a state with below-retail export rates, the solar design strategy shifts from maximizing generation to maximizing self-consumption:
- Right-size the system: Rather than building a system to cover 100–120% of your annual usage, design for 70–90% to minimize excess exports that earn low export rates.
- Add battery storage: A Tesla Powerwall 3 or Enphase IQ Battery stores excess midday solar for evening consumption rather than exporting it at low rates. The battery effectively earns you retail rate on solar power you'd otherwise export at wholesale.
- Shift loads to daytime: Run your dishwasher, washing machine, and EV charger during peak solar hours when you can self-consume solar power directly rather than buying grid electricity.
- Time-of-Use arbitrage: In states with TOU rates, check whether evening peak rates (when you'd draw from the grid) are higher than export rates. If so, battery storage that shifts solar from midday to evening peaks can save more than simple net metering arithmetic suggests.
For a full picture of how net metering policy interacts with solar financial returns, see Does Rooftop Solar Actually Pay Off. For those in states with weak net metering who are considering community solar instead, see Community Solar Explained.
Frequently Asked Questions
What is net metering for solar panels?
Net metering is a utility billing arrangement where excess electricity your solar panels produce flows to the grid, and you receive a credit on your bill. Under full retail net metering, each kilowatt-hour you export earns the same credit as a kilowatt-hour you'd pay to buy from the grid. If your rate is $0.20/kWh, exporting 1 kWh earns you a $0.20 credit. Policy varies significantly by state — some pay retail rates, others pay wholesale or avoided cost rates that are 75–85% lower.
Which states have the best net metering for solar?
The best states for solar net metering in 2026 are New Jersey, Massachusetts, Maine, Maryland, and New York — all of which offer full 1:1 retail rate credits for exported solar power. New Jersey and Massachusetts also have SREC or SMART programs that pay additional income per kilowatt-hour generated. These states combine high electricity rates with favorable net metering for the strongest solar ROI in the country.
What happened to California's net metering?
California's NEM 3.0 (effective April 2023 for new customers) cut export rates for solar power by roughly 75%. New customers receive export credits at $0.04–$0.08/kWh under the Avoided Cost Calculator rate, compared to retail rates of $0.30–$0.45/kWh. Existing customers installed before April 2023 are grandfathered for 20 years. New solar installations in California are now designed around battery storage to minimize grid exports and maximize self-consumption.
Does net metering affect solar payback period?
Yes, substantially. Under full retail net metering in Massachusetts ($0.30/kWh), a 6kW system saves roughly $2,000–$2,500/year — payback in 5–7 years. The same system in California under NEM 3.0, where exports earn $0.06/kWh and self-consumed power offsets $0.35/kWh, requires battery storage to be economically competitive, adding $10,000+ to system cost and extending payback to 9–13 years. Net metering policy is often the single biggest factor in solar payback calculation.
What is net billing vs net metering?
Net metering credits exported power at the full retail rate — the same rate you pay to buy electricity. Net billing credits exported power at a different (lower) rate — typically a wholesale, avoided cost, or utility-set export rate that's below retail. Net billing systems export credits are worth less than the retail electricity you'd need to buy to replace them, making self-consumption more valuable than export.
If net metering changes, does it affect existing solar customers?
Most states offer grandfather protection for existing solar customers when they change net metering rules. Protection periods range from 10 years (New Jersey, Arizona) to 25 years (Massachusetts SMART program participants) to 20 years (California). This means if you install solar now under current rules, you're protected from adverse policy changes for a defined period — though the protection period and terms vary by state and may not cover all aspects of compensation.
Is solar worth it in states with poor net metering?
Solar can still be financially worthwhile in states with poor net metering, but the design strategy changes. Systems should be sized to minimize excess export — typically 70–90% of annual usage rather than 100–120%. Battery storage (Tesla Powerwall, Enphase IQ Battery) lets you self-consume solar power at retail rates rather than export it at low rates, recovering much of the lost value. In states with both low net metering rates and cheap electricity (under $0.12/kWh), solar ROI is genuinely weak.
