In the process of evaluating commercial solar for your business, you’ve likely come across two terms:
- Net metering
- Net billing
This leads many businesses to ask: What is the difference between net metering and net billing, and how does it impact my bottom line?
The Reader’s Digest version: Solar systems often produce more power than you use at certain times of day. Net metering and net billing determine how your utility credits that excess energy.
Keep reading for a breakdown of these differences and how each credit structure shapes your payback period, monthly electric bill, and your overall solar system design.
How Does Solar Energy Enter the Grid?
First, a look at the basics of solar.
When a company like Artisun Solar designs a solar system for a commercial facility, our in-house NABCEP-certified engineers look at all aspects of your facility and business, including:
- Annual energy usage, especially during peak seasons
- Facility design
- Roof and surrounding area design and conditions
- Expansion and improvement plans
The primary goal is to design a system that efficiently offsets your energy usage without oversizing your needs.
As with most businesses, energy use is highly seasonal. In warmer climates, businesses will typically generate the highest energy demand during the summer months with winter months requiring less energy.
The result: while your solar system is operating throughout the year, you may produce more solar energy than your facility can use. This surplus of energy can be sent to the grid.
This is where net metering and net billing come into play.
What Is Net Metering?
When utility companies offer net metering, the surplus of solar energy is sent back to the grid. You’re credited for this additional energy, and these credits can be at the same retail rate you would normally pay for electricity.
Think of net metering like your company’s vacation policy. At the end of the year, many companies allow employees to roll over unused vacation hours to the following year.
Like the roll-over PTO policy for energy, if your solar system overproduces during low-usage hours, the extra kilowatt-hours (kWh) roll forward as credits.
Later, during higher usage months where solar may not fully offset your energy needs, those credits can offset your bill.
Net metering can vary among utility providers. Some may settle it monthly, and others provide annual true-up credits. The outcome remains the same: a 1-to-1 value exchange that can significantly reduce a future utility bill.
What Is Net Billing?
While net billing can look similar to net metering, the equation is different. Excess energy can still be exported, but the retail rate credit you earn is lower. Instead of getting the full retail-rate credit, you’re instead paid at a wholesale or avoided cost rate.
Energy is also shown as a dollar-value credit, not a kWh credit. When you buy electricity during your higher-usage months, you’re paying full price, and those earlier exports of extra energy cover less of your cost.
Net billing is like trading in items for credit at a used book store. While you may have paid $700 for a college textbook, you aren’t trading it in for a 1-for-1 value. You’re trading it based on the monetary value set by the store, meaning you could earn a $10 credit for that same textbook.
More utilities are shifting toward net billing as they move away from traditional net metering.
If your utility company only provides net billing, solar still remains an effective method to control energy costs. The model is still in your favor but demands a more focused design strategy to keep your ROI in check.
Side-by-Side: Net Metering vs. Net Billing
| Feature | Net Metering | Net Billing |
| Credit Type | kWh credit | Dollar-value credit |
| Credit Rate | Retail | Wholesale / avoided cost |
| Billing Method | Use/production | Full use billed, credits subtracted |
| Savings Potential | Higher, if sized right | Depends on timing and usage match |
| Design Strategy | Match/exceed usage | Prioritize on-site usage |
| Utility Trend | Supported in some states | Becoming standard in many regions |
Why Net Metering & Net Billing Matter to Your Solar ROI
The billing structure your utility provider uses directly impacts:
- How your solar system should be designed
- How quickly it can be paid off
- How your business manages energy during peak- and lower-usage seasons
Each business, whether you’re in agriculture or manufacturing, has a unique situation that requires a custom approach.
Some businesses benefit from a solar system that slightly overproduces energy for additional credits. Other businesses require a smaller solar system that produces just energy for the facility to utilize.
If your head is swimming with details, this is where your commercial solar partner comes in. You don’t need to be an energy expert, utilities specialist, or a solar guru. That’s where your solar partner makes the difference.
The Artisun Solar Approach
At the beginning of every Artisun Solar partnership, our team digs into your annual usage reports to identify seasonal trends. Your design is customized based on your facility’s unique design, roof structure, and utility’s billing methodology.
There are no assumptions.
After 900 projects over the last 15 years, we have working relationships with utility providers across the country. Your solar system is engineered based on real numbers from your actual utility bill.
If your utility provider uses net billing, we plan for it.
If you qualify for full-retail net metering, we optimize for that. Either way, the strategy is built into the design. You are walked through the design with opportunities to ask questions and make changes as needed.
Get started on your free solar analysis here.
How Net Metering Continues to Evolve
State and utility providers are constantly evaluating and adjusting how they handle solar energy and billing.
In 2017, Indiana began to phase out net metering. By July 2022, new rooftop solar systems were no longer eligible for net metering at retail rates. It was replaced with excess distributed generation (EDG), which is Indiana’s version of net billing.
In Iowa, MidAmerican Energy and Alliant Energy both offer net metering, but their programs are in the middle of a transition. For example, MidAmerican Energy offered traditional 1-to-1 net metering to new customers who applied before Jan. 1, 2025.
After that date, new customers can still get 1-to-1 net metering credits for the energy supply of their bill, but there will be additional delivery charges based on the total amount of energy used from the grid.
It’s okay if you don’t follow the news; we do. What’s consistent is the need to understand your utility’s current policy before moving forward.
What to Know Before You Invest in Solar
Before you approve a solar project design or sign a contract with a commercial solar partner, make sure you know how your utility provider handles solar energy exports. These aren’t details to figure out after the install; they are critical to resolve earlier in the process.
Questions to ask:
- Does my utility provider use net metering, net billing, or a version of either?
- What rates apply?
- Are there system size caps or other restrictions?
- How often are credits rolled over?
- How will solar offset my energy demand over the course of the year?
- Does solar offset demand charges?
- Are there any penalties or other fees I should be aware of?
Your commercial solar partner should be able to tell you all of these answers and clearly walk you through how your design accommodates your utility provider’s net metering or net billing practices.
Net Metering & Net Billing FAQs
What is the primary difference between net metering and net billing?
Net metering provides a 1-to-1 credit for excess solar energy based on kilowatt-hours (kWh). When your business produces more power than it needs, those units of energy roll over to offset future electricity use, often at the full retail rate. In contrast, net billing credits surplus energy at a lower monetary value, typically the wholesale or avoided cost rate, rather than the retail price.
How does net metering impact a commercial solar payback period?
Because net metering offers a higher credit value for every kWh sent back to the grid, it often results in a shorter payback period. Businesses can use summer overproduction to cancel out winter energy costs at the same rate they would pay the utility.
This 1-to-1 exchange maximizes the financial return on the solar investment.
Can a business still save money with net billing?
Yes. While net billing offers lower credit rates for exported energy, solar remains a powerful tool to reduce monthly overhead. Success with net billing depends on a design strategy that prioritizes on-site consumption.
By using as much solar power as possible the moment it is generated, a business avoids buying expensive electricity from the grid.
Why are utility companies moving away from net metering?
Many states and utility providers are transitioning to net billing or “excess distributed generation” models to better manage grid costs.
As solar adoption grows, utilities often adjust their credit structures to reflect the wholesale market price of energy rather than the retail price, which includes the cost of maintaining the power lines and infrastructure.
Does net metering or net billing change solar system design?
The billing structure dictates the ideal size of your array.
Under net metering, engineers might design a system to offset 100% of your annual usage, knowing the extra summer energy will provide full-value credits for winter.
With net billing, the focus shifts to “right-sizing” the system to match your facility’s real-time demand to minimize the amount of energy sold back at lower wholesale rates.
What happens to unused solar credits at the end of the month?
Under net metering, unused kWh credits usually roll over to the next billing cycle. Some utilities offer an annual “true-up” where they settle the balance once a year.
With net billing, your account receives a dollar-value credit that is subtracted from your current or future bills, though the specific expiration rules for these credits vary by provider.
