What Is Net Metering?
Net metering is a utility billing mechanism that allows homeowners with solar installations to receive credit for electricity they generate in excess of their home's immediate demand. When a solar system produces more power than the home is using at any given moment, the surplus is exported to the utility grid. The homeowner's meter records this exported energy, and the utility credits the account accordingly.
During periods when the home draws power from the grid — at night, during overcast conditions, or at times of high demand — the homeowner uses accumulated credits to offset the cost of that consumption. The "net" billing amount reflects the difference between total electricity imported from the grid and total electricity exported over a billing period.
Net Metering by Utility in Texas
Texas does not have a statewide mandatory net metering law; however, major distribution utilities have adopted interconnection and compensation policies that function similarly:
- AEP Texas (Rio Grande Valley and West Texas): Provides bill credits for net excess solar generation. Credits that accumulate over the year may expire at the end of the 12-month billing period.
- Oncor (North Texas and surrounding areas): Offers a comparable net metering structure with annual credit reconciliation.
The specific rate at which exported energy is credited, and the terms of credit expiration, vary by utility and are subject to change. We review current net metering terms with each homeowner during the system design process to optimize production relative to consumption.
An Illustrative Example
Consider a home that generates 22 kWh of solar energy on a sunny day while consuming 13 kWh. The 9 kWh of excess generation is exported to the grid and credited at the applicable rate. On a subsequent cloudy day, when the home consumes 18 kWh but solar produces only 5 kWh, the 13 kWh shortfall is drawn from the grid and offset against accumulated credits. Over the billing cycle, the homeowner pays only for any net consumption that exceeds their accumulated credit balance.
Net Metering vs. Battery Storage
Net metering and battery storage represent different strategies for managing excess solar production. Net metering converts surplus energy into utility credits that reduce future bills. Battery storage captures surplus energy for direct use — at night, during peak rate periods, or during grid outages when net metering is unavailable. Many homeowners benefit from both: a solar system sized to maximize annual net metering credits, paired with a battery for outage protection and nighttime energy self-sufficiency.
Optimizing Your Solar System for Net Metering
Effective net metering depends on accurate system sizing relative to your annual consumption. An oversized system generates excess credits that may expire without being used; an undersized system leaves bill savings on the table. Solergy's design process incorporates your 12-month usage history to size your system for optimal performance under your utility's specific net metering terms.