Two neighbors install the exact same solar system and end up with meaningfully different bills. The panels aren't the reason — the export credit rate is.
The basic mechanism
Solar production and household consumption rarely match hour by hour. Midday, when the sun is highest, your panels often produce more than you're using — that excess flows out to the grid. In the evening, when production drops but usage often rises, you draw power back in. Net metering is the billing arrangement that reconciles the two.
If positive: you owe for the imported difference
If negative: you're credited for the exported difference
Net metering vs. net billing — the real difference
Net metering credits your exports at (or close to) the full retail rate — the same price you pay when importing. Under true net metering, oversizing your system slightly beyond your own usage is often a good trade, since every extra exported kWh is worth almost as much as the ones you use directly.
Net billing credits exports at a lower rate, often tied to wholesale electricity prices rather than the retail rate you pay. This is increasingly common as utilities move away from full net metering. Under net billing, oversizing past your own consumption is a much weaker trade — those extra exported kWh are worth noticeably less than the ones you'd otherwise import.
How it varies by market
Rules differ enormously by country and even by utility within the same country. The UK's Smart Export Guarantee (SEG) is a separate fixed rate per exported kWh, distinct from net metering entirely. Germany's feed-in tariff works similarly. Australia's feed-in tariffs are typically well below the retail import rate. Many US states still run traditional net metering, though a growing number have shifted to net billing structures. Pakistan's net metering under NEPRA and India's state-level rules each have their own specifics. Check the exact figure for your location with the Net Metering Calculator, which includes typical defaults and policy notes by country.
What this means for sizing your system
If you're on full retail-rate net metering, sizing for 100%+ of your usage is often reasonable. If you're on net billing with a meaningfully lower export rate, it's usually smarter to size closer to your own daytime consumption and consider a battery to store excess for your own evening use rather than exporting it at a discount — see our battery storage guide for that math.
There's also a third, easily-confused structure worth checking: gross billing, where every unit you generate is paid separately rather than just the leftover surplus. See Net Billing vs. Gross Billing for how that changes the math.
Frequently asked questions
What is the difference between net metering and net billing?
Net metering credits exported solar power at close to the full retail electricity rate. Net billing credits exports at a lower, often wholesale-linked rate — making a kWh you export worth less than one you import.
How do I find out which one applies to me?
Check your utility's tariff documents or your interconnection agreement — the export credit rate is usually stated explicitly, or ask your installer to show it to you before signing anything.
Is net billing the same as gross billing?
No — net billing only pays for the surplus left after your own usage is subtracted. Gross billing pays for every unit generated, separately from a full retail-rate purchase of everything you use. See Net Billing vs. Gross Billing for the full comparison.