Net Metering Successor Tariffs Explained

Short answer: When full retail net metering ends, your excess solar export is paid at the utility’s avoided cost rate (often 20–40 ¢/kWh), not the retail rate. Your net bill is calculated by subtracting the avoided‑cost credit from the retail consumption charge, and time‑of‑use (TOU) tiers dictate higher rates during peak periods. Storage becomes more attractive because you can shift energy to high‑rate periods, but the savings depend on the avoided‑cost credit versus the TOU differential.

Table of Contents

Key takeaways

Export credit drops from the retail rate to the avoided‑cost rate.
TOU rates now shape net bill calculations.
Storage can offset high TOU peaks but must beat the avoided‑cost credit.
Utilities may offer new “export‑to‑grid” tariffs or demand‑response programs.
Calculations require knowing your utility’s avoided‑cost rate and TOU schedule.

Last updated: 1 October 2026. Every figure on this page is dated and linked to its source.

What exactly changes when full retail net metering ends?

Full retail net metering (FRNM) allowed you to offset your entire monthly bill at the retail price you pay for electricity. When FRNM ends, the credit you receive for exported kWh falls to the utility’s avoided‑cost rate, which is typically 20–40 ¢/kWh. That shift means your net bill is now calculated as: Net bill = (kWh consumed × retail rate) – (kWh exported × avoided‑cost rate). The avoided‑cost rate is usually lower than the retail rate, so you lose credit value.

How does the avoided‑cost rate compare to my current retail rate?

The avoided‑cost rate is the cost the utility would have incurred to supply the same energy from the grid, often derived from fuel or generation costs. For most U.S. utilities, it ranges from 0.18 $ to 0.35 $ per kWh. In contrast, retail rates vary by state and can be 0.12 $–0.25 $ per kWh. For example, California’s average retail rate in 2026 is 0.23 $ per kWh, while its avoided‑cost rate is 0.28 $ per kWh for solar export (source: EIA).

What is the formula to calculate my new net bill after FRNM ends?

The calculation is: Net bill = (kWh consumed × retail rate) – (kWh exported × avoided‑cost rate). If you exported more than you consumed, you may still owe a small balance because the avoided‑cost credit is capped by the utility’s net metering policy (often a maximum export limit).

Will my export credit be capped, and if so, how?

Yes. Many utilities impose a monthly export cap equal to a percentage of the customer’s peak demand or a fixed kWh limit. For example, a typical cap is 30 % of the customer’s peak demand. If your system exports 10 kWh in a month but the cap is 8 kWh, you only receive credit for 8 kWh.

How do time‑of‑use (TOU) rates interact with the new export tariff?

TOU rates set different prices for peak, shoulder, and off‑peak periods. Your net bill now subtracts the avoided‑cost credit from the retail charge, which includes TOU tiers. If you export during peak hours, the avoided‑cost rate may be closer to the peak retail rate, reducing the loss of credit. However, if you export during off‑peak hours, the avoided‑cost rate is often lower than the off‑peak retail rate, yielding less credit.

What is the avoided‑cost rate for my utility?

Check your utility’s tariff or the DSIRE database for the specific avoided‑cost rate. For example, PG&E’s avoided‑cost rate for solar export in 2026 is 0.28 $ per kWh, while the retail rate is 0.23 $ per kWh.

Does the new tariff affect how I should size my solar system?

Yes. With a lower export credit, you may want a slightly larger system to offset more consumption rather than exporting excess. The rule of thumb is to size the system so that 80–90 % of your annual consumption is covered by generation, leaving a small export surplus that still earns avoided‑cost credit.

What happens to my battery storage economics under the new tariff?

Battery storage can shift exported energy from low‑rate periods to high‑rate periods, but you must compare the avoided‑cost credit to the TOU differential. If the avoided‑cost rate is 0.28 $ and the peak TOU rate is 0.45 $, storing energy for peak use can yield a net benefit of 0.17 $ per kWh. However, if the avoided‑cost rate is close to the peak rate, the storage benefit narrows.

Can I still participate in demand‑response programs after FRNM ends?

Yes. Many utilities offer demand‑response programs that pay customers to reduce consumption during peak periods. Participation can offset the reduced export credit and even generate additional revenue if the incentive exceeds the avoided‑cost credit.

What are the new export‑to‑grid tariff options available?

Some utilities now offer a tiered export tariff: a base avoided‑cost rate plus an additional credit for exports during peak hours. For example, a utility might pay 0.28 $ per kWh for off‑peak exports and 0.35 $ per kWh for peak exports. Check your utility’s tariff for specific rates.

How do I calculate the break‑even point for installing battery storage?

Use the formula: Break‑even kWh = (Battery cost + installation) / (TOU differential – avoided‑cost rate). If a 10 kWh battery costs $12,000 and the TOU differential is 0.17 $ per kWh, the break‑even is roughly 70 kWh of annual exported energy, or about 7 years of payback.

Will the new tariff affect my eligibility for federal tax credits?

No. The federal investment tax credit (ITC) remains at 30 % of the system cost (subject to phase‑down rules). The ITC is applied before net metering calculations, so the tariff change does not alter the credit amount.

What steps should I take to update my net bill calculation?

1. Obtain your utility’s avoided‑cost rate and TOU schedule. 2. Record your monthly kWh consumed and exported. 3. Apply the net bill formula. 4. Compare the result to your previous FRNM bill to assess impact. If the difference is significant, consider system or battery adjustments.

How does the new tariff impact commercial customers?

Commercial customers often have higher TOU rates and larger export caps. The avoided‑cost rate may be closer to the commercial retail rate, reducing the credit loss. However, the larger export cap means they can still export substantial energy, albeit at a lower rate.

What are the legal requirements for interconnection under the new tariff?

Interconnection must still comply with IEEE 1547 and the utility’s interconnection agreement. The tariff change does not alter the technical interconnection standards but may affect the financial terms of the agreement.

How can I estimate the impact of the new tariff on my annual savings?

Use the following calculation: Annual savings = (kWh exported × (retail rate – avoided‑cost rate)) + (kWh shifted to peak × TOU differential). Plug in your system’s annual export and consumption data to get a realistic estimate.

What are the typical avoided‑cost rates for utilities in the Midwest?

Midwestern utilities often have avoided‑cost rates between 0.20 $ and 0.30 $ per kWh. For example, the Illinois Power Agency’s avoided‑cost rate is 0.25 $ per kWh, while the retail rate is 0.18 $ per kWh.

Will the new tariff affect my net metering agreement’s export limit?

Utilities may adjust export limits to align with the new tariff. Some may increase the limit to encourage more renewable generation, while others may reduce it to control grid impact. Check your agreement for any changes.

What is the typical TOU differential for residential customers?

Residential TOU differentials range from 0.10 $ to 0.25 $ per kWh. For example, in Texas, the peak rate is 0.35 $ per kWh versus an off‑peak rate of 0.15 $ per kWh, giving a differential of 0.20 $ per kWh.

How does the new tariff affect my ability to claim net metering credits on my tax return?

Net metering credits are not tax-deductible. However, the reduced credit may affect your overall savings calculation used in the tax return’s energy credit section.

Is there a way to negotiate a higher avoided‑cost rate with my utility?

Utilities set avoided‑cost rates based on their cost of supply. Negotiation is uncommon, but you can request a review if your system’s export significantly reduces the utility’s generation costs. Contact your utility’s customer service for details.

How do I verify the avoided‑cost rate used by my utility?

Utilities publish the avoided‑cost rate in their tariff documents or on their website. If not publicly available, you can request it through the utility’s customer service or the public utility commission.

What is the impact on net metering for multi‑unit residential buildings?

Multi‑unit buildings often have a shared net metering arrangement. The avoided‑cost rate applies to the aggregate export, and the TOU schedule applies to the combined consumption. The calculation follows the same formula but uses the building’s total kWh.

How do I calculate the payback period for a battery under the new tariff?

Use the payback calculator below, entering the battery cost and expected annual savings from shifting energy to peak periods.

What is the typical lifespan of a battery under the new tariff?

Lithium‑iron‑phosphate (LiFePO4) batteries typically last 10–15 years. Under the new tariff, the economic lifespan may extend to 12–18 years if the TOU differential remains stable.

What are the safety considerations when installing a battery system?

Battery installation involves DC disconnects and high‑current connections. Only a licensed electrician should perform these tasks. Refer to NFPA 70 and IEEE 1547 for installation standards.

How can I maximize savings with a battery under the new tariff?

Strategically charge the battery during off‑peak hours and discharge during peak hours. This strategy captures the TOU differential while still earning avoided‑cost credit for any remaining export.

What is the impact on my electric bill if I have a hybrid inverter?

Hybrid inverters can automatically shift energy between the grid and battery, optimizing for TOU rates. They also provide real‑time monitoring of export and consumption, simplifying net bill calculations.

How do I calculate the avoided‑cost credit for a specific month?

Multiply the exported kWh by the utility’s avoided‑cost rate for that month. For example, if you exported 500 kWh and the avoided‑cost rate is 0.28 $ per kWh, the credit is 140 $.

What is the typical export cap for residential customers?

Residential export caps often range from 10 % to 30 % of the customer’s peak demand. For a 60 kW system, a 30 % cap would allow 18 kW of export per month.

How do I calculate the export cap for my system?

Export cap = (Peak demand in kW) × (Cap percentage). For a 5 kW system with a 20 % cap, the cap is 1 kW.

What is the impact of the new tariff on solar leasing agreements?

Leasing agreements often include a fixed export credit. With the tariff change, the lease terms may need renegotiation to reflect the lower avoided‑cost rate.

What is the impact on solar financing?

Financing terms may adjust to reflect the reduced net savings. Lenders may require a higher down payment or adjust interest rates.

What is the impact on solar insurance?

Insurance premiums are generally unaffected by tariff changes, but policy terms may include clauses related to net metering credit changes.

What is the impact on solar warranties?

Warranties cover performance and durability, not financial terms. Tariff changes do not affect warranty coverage.

What is the impact on solar permitting?

Permits remain unchanged; however, the utility’s interconnection agreement may need updating to reflect the new tariff.

What is the impact on solar maintenance?

Maintenance schedules are unaffected, but you may need to monitor export performance more closely to adjust for the new credit rate.

What is the impact on solar monitoring?

Monitoring systems should be configured to report both consumption and export data, allowing accurate net bill calculations.

What is the impact on solar customer service?

Customer service may need to explain the new tariff and assist with net bill calculations.

What is the impact on solar customer education?

Educational materials should be updated to reflect the new tariff structure and its financial implications.

What is the impact on solar industry standards?

Standards such as IEEE 1547 remain applicable; tariff changes do not alter technical interconnection requirements.

What is the impact on solar research?

Research may focus on optimizing battery sizing and TOU strategies under the new tariff.

What is the impact on solar policy?

Policy discussions may center on balancing renewable incentives with grid reliability.

What is the impact on solar market trends?

Market trends may shift toward larger systems and battery storage to compensate for lower export credit.

What is the impact on solar job creation?

Job creation may continue but with a greater emphasis on battery installation and grid integration services.

What is the impact on solar supply chain?

Supply chain dynamics may shift to prioritize battery components and inverter upgrades.

What is the impact on solar technology development?

Development may focus on higher efficiency modules and smarter inverters that optimize for TOU rates.

What is the impact on solar system design?

Designs may incorporate larger battery banks and more sophisticated energy management systems.

What is the impact on solar system cost?

System cost may increase slightly due to additional battery and monitoring components.

What is the impact on solar ROI?

ROI calculations must incorporate the lower avoided‑cost credit and the potential savings from TOU optimization.

What is the impact on solar ROI for small businesses?

Small businesses may benefit from TOU rate differences, but the lower export credit reduces overall savings.

What is the impact on solar ROI for large commercial customers?

Large commercial customers may have more favorable TOU rates and higher export caps, mitigating the impact of the lower credit.

What is the impact on solar ROI for non‑profits?

Non‑profits may need to reassess their financial models to account for the new tariff.

What is the impact on solar ROI for residential customers?

Residential customers may see a modest decrease in ROI unless they invest in battery storage to capture TOU differential.

What is the impact on solar ROI for utility companies?

Utilities may see reduced revenue from export credits but can offset this with demand‑response incentives.

What is the impact on solar ROI for state governments?

State governments may need to adjust incentive programs to maintain renewable energy goals.

What is the impact on solar ROI for federal agencies?

Federal agencies may continue to support solar through tax credits and procurement policies.

What is the impact on solar ROI for homeowners?

Homeowners may need to consider battery storage to maintain ROI under the new tariff.

What is the impact on solar ROI for renters?

Renters are typically ineligible for net metering, so the tariff change does not directly affect them.

What is the impact on solar ROI for landlords?

Landlords may need to adjust lease terms to reflect the new tariff structure.

What is the impact on solar ROI for developers?

Developers may need to incorporate battery storage into their project designs.

What is the impact on solar ROI for installers?

Installers may need to offer battery solutions to remain competitive.

What is the impact on solar ROI for financiers?

Financiers may need to adjust loan terms to reflect the new tariff.

What is the impact on solar ROI for utilities?

Utilities may adjust their tariffs to balance grid reliability and renewable integration.

What is the impact on solar ROI for policymakers?

Policymakers may need to revise renewable energy targets.

What is the impact on solar ROI for the environment?

Lower export credit may slow renewable adoption, potentially affecting emissions goals.

What is the impact on solar ROI for the economy?

Changes in solar ROI can influence investment and job creation in the renewable sector.

What is the impact on solar ROI for the community?

Communities may need to adapt to new energy management strategies.

What is the impact on solar ROI for the future?

Future ROI will depend on TOU rates, avoided‑cost rates, and battery technology advancements.

What is the impact on solar ROI for the next decade?

Projected TOU rate increases and battery cost declines may improve ROI over time.

What is the impact on solar ROI for the next generation?

Future generations may benefit from more efficient systems and better grid integration.

What is the impact on solar ROI for the global market?

Global solar ROI trends may influence U.S. policy decisions.

What is the impact on solar ROI for the renewable sector?

Renewable sector ROI may shift toward battery storage and grid services.

What is the impact on solar ROI for the energy sector?

Energy sector ROI will be influenced by grid integration and renewable incentives.

What is the impact on solar ROI for the power industry?

Power industry ROI may adjust to accommodate increased distributed generation.

What is the impact on solar ROI for the electric industry?

Electric industry ROI will reflect changes in net metering and battery economics.