How Net Billing Works, in Plain Words

Net billing sounds complicated, but the idea underneath it is simple: your utility buys the solar power you do not use, and sells you the power you need when the sun is down. The confusing part is that those two prices are not the same. Once you understand why, almost every other question about solar savings in San Diego starts to make sense, from battery sizing to which way your panels should face.

We explain net billing to homeowners at kitchen tables every week. This is the version we wish everyone could read before their first quote, written without the acronyms and rate-sheet jargon that make most explanations so hard to follow.

The two-way meter

When your system is switched on, the utility swaps your old meter for one that counts in both directions. One number tracks the electricity you pull from the grid. The other tracks the electricity your panels push back out when they make more than your home is using at that moment.

On a sunny April afternoon, a typical 7-kilowatt system in Clairemont might be making 5 kilowatts while the house is using 1. That extra 4 kilowatts does not get stored anywhere unless you have a battery. It flows out through the meter to your neighbors, and you get a credit for it. At 8:00 p.m., when the panels are dark and the dishwasher is running, you buy power back from the grid like any other customer.

Why export credits are worth less

Under older rules, many homeowners got roughly a one-for-one swap: a kilowatt-hour sent out in the afternoon was worth about the same as a kilowatt-hour bought back at night. Net billing changed that. Today, what you get for exported power is based on what that power is worth to the grid at that hour, and midday solar power is plentiful. So the export credit is usually a fraction of the retail price you pay.

Here are illustrative numbers, not a quote from any rate sheet. Say you pay around 45 cents per kilowatt-hour for evening power. The credit for power you export at 1:00 p.m. on a mild spring day might be closer to 5 to 8 cents. In late summer evenings, when the grid is stretched, export values can climb much higher for a few hours. The schedule changes by month and by hour, and it is updated over time.

The best kilowatt-hour is the one you use yourself. The second best is the one you save for later.

Priya Nair

What this means for your system design

Because exported power earns less, the way we size systems has shifted. A few years ago the goal was to cover 100 percent of yearly use on paper. Now the goal is to cover the power you will actually use, when you use it. That leads to some practical changes:

• Right-sized, not oversized. Adding panels to export more at midday rarely pays back the way it used to. We usually size to roughly match your daytime and evening use, then stop.
• West-facing panels earn their place. Panels facing west make more power from 3:00 to 6:00 p.m., when your home is using more and export values are higher. A split south-and-west layout often beats an all-south roof.
• Batteries matter more. A battery can soak up cheap midday power and release it in the evening, when buying from the grid is expensive. That shift is where much of the modern savings comes from.
• Timing your big loads helps. Running the pool pump, laundry and EV charger between 10:00 a.m. and 3:00 p.m. uses solar directly instead of exporting it for a small credit.

Reading your monthly statement

Most solar homeowners on net billing are billed on a twelve-month true-up cycle. Each month you see a statement showing your energy charges and the export credits you earned. Those charges and credits roll forward. Many months you will owe only a small fixed connection fee, and the energy balance waits until the end of the year.

At true-up, the utility totals the year. If your credits covered your charges, you pay little or nothing beyond fixed fees. If you used more than your credits covered, you pay the difference. Leftover credits at true-up are usually worth far less than they look, so building up a big surplus is not a great plan.

Two lines worth checking

When you open your statement, look for two things. First, the running balance of energy charges and credits so far this cycle, which tells you if you are on track. Second, the fixed monthly charge, which solar cannot erase. Knowing that the fixed charge is always there keeps expectations honest. We would rather you hear that from us than be surprised by a $15 to $25 bill in a month you expected zero.

A simple example from a real-looking household

Picture a family of four in Mira Mesa using 7,800 kWh a year, with a 6.8-kilowatt system split between south and west roof faces. Over a year the panels make about 11,000 kWh. Roughly 45 percent of that gets used directly in the home as it is made. The rest is exported at midday and earns credits. In the evening, the family buys power back at the higher rate.

Without a battery, the family might cut their energy charges by 55 to 65 percent. With a modest battery that stores afternoon power for the 4:00 to 9:00 p.m. window, that number can move closer to 80 or 90 percent, because fewer kilowatt-hours are bought back at the expensive evening rate. Your numbers will differ with your roof, your habits and the current rate schedule, which is why we model them one home at a time.

Questions we hear most

Can I go back to the old rules?

Homes that connected under earlier programs generally keep those terms for a set period. New systems connect under the current rules. We cannot change which program a home qualifies for, and we will never promise one.

Will the rules change again?

Rate schedules are reviewed and updated over time, and nobody can promise what they will look like in ten years. That is one more reason we design for self-use first. Power you use in your own home is worth the full retail price no matter how export rules shift.

Do I need to do anything each month?

Not really. Glance at your statement, check that your monitoring app shows normal production, and save big appliance runs for sunny hours when you can. The true-up handles the rest.

What if I add an EV or heat pump later?

Tell us before you buy, if you can. A new electric car can add 2,500 to 4,000 kWh a year, and a heat pump water heater adds another 1,000 or so. Under net billing, those new loads are a good thing for solar owners, because charging the car at midday turns low-value exports into full-value self-use. We can often add a few panels or adjust battery settings to match the new pattern.

Net billing rewards homeowners who think about timing, not just size. If you would like us to run your last twelve months of usage through a net billing model, send your bills to hello@sunlinesolar.example or call 555-0142, and Priya or someone on her design team will walk you through the results with no pressure to sign anything.

This post is general information, not financial advice. Rates, credits and savings vary by home and change over time.