Net Metering vs Net Billing: What Plug-In Solar Owners Need to Know

Net metering (NEM) and net billing (NBT) sound similar. Economically, they're wildly different. This piece explains both, which US states use which, and why most plug-in solar owners fall outside both frameworks entirely.

Net metering (NEM)

Under classic net metering, every kWh you export to the grid earns a credit at your retail rate — the same 16–35¢/kWh you pay for import. Your utility bills you for the net consumption over the billing period. If you generate 500 kWh and consume 400, you owe nothing for energy and might carry forward a credit.

States that still use classic NEM (or close approximations): most of the East Coast and Midwest.

Net billing (NBT)

Under net billing, exports earn a wholesale rate — typically 3–8¢/kWh, vs 25–35¢/kWh retail for import. Suddenly, every kWh you export bleeds ~25¢ of value vs consuming it directly. California's NEM 3.0 (April 2023 onwards) is the highest-profile net billing environment.

States moving to NBT: California (implemented), Hawaii (implemented), Arizona (partial), Nevada (partial). More expected 2026–2028.

Why plug-in solar owners often fall outside both

To qualify for net metering or net billing, your utility typically requires:

• A formal interconnection agreement
• A bi-directional revenue-grade meter (some utilities install for free, others charge)
• Proof of UL 1741-listed inverter
• Sometimes: proof of licensed electrician install

Most small (200–800W) plug-in kits don't clear all four hurdles. The practical answer: focus on self-consumption (using solar as it generates) which captures the full retail-rate offset with no interconnection paperwork.

For NEC compliance details see the NEC 705 explainer and the California guide.