Net Metering Explained: How Homeowners Get Credit for Solar Energy

One of the most common questions we hear from homeowners considering solar is: "What happens to the extra electricity my panels produce?" The answer is net metering — and it is one of the most powerful financial benefits of going solar. Let us break down exactly how it works.

Net metering is a billing arrangement between you and your utility company. When your solar panels produce more electricity than your home is using at a given moment, the excess power flows back into the utility grid. In exchange, your utility company credits your account for that energy.

Think of it like a bank account for electricity:

• Deposit — When your panels overproduce, you send energy to the grid
• Withdrawal — When your panels are not producing (at night, cloudy days), you pull energy from the grid
• Net balance — At the end of the billing period, you only pay for the difference

If your credits exceed your usage in a given month, many utilities carry those credits forward to future months.

Pennsylvania has a strong net metering policy that applies to all investor-owned utilities, including PECO (serving the Philadelphia region) and PPL Electric (serving central and eastern PA).

Here is the basic process:

When you go solar, your utility company replaces your standard meter with a bidirectional (or smart) meter that can measure electricity flowing both into and out of your home.

On a sunny afternoon, your 9 kW solar system might be producing 7–8 kW of power. If your home is only using 2–3 kW at that moment, the remaining 4–5 kW flows back to the grid.

Your utility company credits you for the exported energy at the retail rate — the same rate you pay when you buy electricity. This is a key distinction: you are not getting paid wholesale rates, you are getting full retail credit.

At night, on cloudy days, or during high-usage periods, your home draws electricity from the grid as normal. Your accumulated credits offset this usage.

At the end of each billing cycle, your utility calculates the net difference between what you produced and what you consumed. You only pay for the net amount — hence the name "net metering."

Let us say you are a PECO customer in the Philadelphia suburbs:

June (peak solar month):

• Solar production: 1,100 kWh
• Home usage: 800 kWh
• Exported to grid: 300 kWh
• Net bill: $0 (plus a small fixed connection fee of ~$10–$15)
• Credits carried forward: 300 kWh

December (low solar month):

• Solar production: 400 kWh
• Home usage: 900 kWh
• Grid usage: 500 kWh
• Credits applied: 300 kWh (from summer)
• Net bill: 200 kWh × rate = ~$30–$40

Over the full year, a well-sized system can bring your annual electricity cost down by 70–100%.

This is an important question. If you own your solar system (purchased outright or financed), you receive the net metering credits directly on your utility bill.

If you have a solar lease, the arrangement works slightly differently. The solar company owns the panels and receives the net metering credits. However, your lease payment is structured to be lower than your previous electric bill, so you still save money — the economics are built into the lease pricing.

During your free consultation, we will walk you through exactly how net metering applies to your specific situation and show you projected monthly bills for every season of the year.

Some utilities offer an annual true-up option, where credits accumulate over the entire year and are settled once annually. This can be advantageous for homeowners who produce a lot in summer and consume more in winter — the summer surplus offsets the winter deficit.

Ask your utility about their specific net metering policy and whether annual true-up is available.

Net metering policies are set by state regulators and can change over time. Pennsylvania currently has strong net metering protections, but it is worth noting that locking in solar now means you benefit from current policies. Many states grandfather existing solar customers into favorable net metering terms even if policies change later.

Here are a few tips to get the most out of net metering:

1. Size your system correctly — A system that produces roughly 100–110% of your annual usage maximizes credits without significant waste
2. Shift high-usage activities to daytime — Running your dishwasher, laundry, or EV charger during peak solar hours reduces grid draw
3. Consider battery storage — A home battery lets you use your own solar power at night instead of drawing from the grid, reducing your reliance on net metering
4. Monitor your production — Most solar systems come with monitoring apps so you can track production and usage in real time

Net metering is what makes solar financially powerful for grid-connected homeowners. It turns your roof into a mini power plant that earns you credits during sunny hours and uses those credits to offset your nighttime and cloudy-day usage. The result is a dramatically lower — or even zero — monthly electric bill.

Want to see exactly how net metering would work for your home and utility? Schedule your free solar consultation and we will show you projected monthly bills, credit estimates, and your total annual savings.