The export-rate cliff
There’s a homeowner in California who installed 10 kW of solar in 2022 under the state’s old net-metering rules (NEM 2.0). She was getting paid full retail rate (~$0.30/kWh) for every kWh she exported to the grid. In April 2023, California implemented NEM 3.0, which cut export rates to wholesale (~$0.05/kWh). Existing customers were grandfathered for 20 years, but new installs in 2024 onwards are getting paid 1/6th of what they used to.
This is the kind of cliff that turns a 7-year solar payback into a 14-year one overnight. Solar policy is changing fast, in different directions in different countries, and the economics of “what to do with the electricity you don’t use” is the central question. There are three real options: net metering, feed-in tariffs, and battery storage. Let’s get into which one works where, and what to do when policy changes underneath you.
TL;DR
Net metering credits you 1-for-1 retail rate when you export to the grid — the grid is your “battery.” Best deal economically but increasingly being replaced by less generous policies. Feed-in tariffs (FiT) pay you a fixed rate for every kWh you export, separate from what you pay for kWh you use. Common in EU. Battery storage lets you use your own excess instead of sending it anywhere — immune to policy changes but expensive upfront. Best modern strategy is usually a mix: solar + smart inverter + small battery, optimized for self-consumption with grid as backup.
What’s actually being compared
Net metering: Your utility credits you for kWh you export at retail rate. At the end of a billing period, you pay only for net consumption (what you used minus what you exported). The grid effectively acts as a free battery. Common in US (variants exist state-by-state).
Feed-in tariff (FiT): Your utility pays you a fixed price per kWh exported, often higher than retail in early years and lowering over time. You still pay retail for kWh you consume. Common in Germany, UK, parts of Australia.
Battery storage: You store excess production in your own battery for later use. No grid export, no policy dependency. Higher upfront cost.
The side-by-side
| Approach | Net metering | Feed-in tariff | Battery storage |
|---|---|---|---|
| How it works | 1-for-1 credit at retail rate | Fixed payment per kWh exported | Store your own excess |
| Economic value per excess kWh | Equals retail rate (~$0.10–0.30) | Fixed rate (variable by country/year) | Equals retail rate minus battery round-trip loss |
| Upfront equipment cost | Smart meter only | Smart meter + sometimes specific inverter | $8,000–15,000 for 10–15 kWh battery |
| Policy risk | High (NEM 3.0 example) | Medium (fixed contract terms) | None |
| Grid resilience | None (grid down = no power) | None (grid down = no power) | High (with off-grid mode) |
| Common markets 2026 | US (variable by state) | EU, UK, Australia | Universal where solar exists |
| Best for | Areas still with full net metering | Areas with strong FiT | Areas with weak/no export rules, or want backup power |
Round 1: Energy economics
Under full retail net metering (rare and shrinking), the economics are unbeatable: every excess kWh is worth the same as a consumed kWh. A 10 kW solar system in California pre-NEM-3.0 could effectively zero out an entire electric bill for under $25,000 installed.
Under feed-in tariffs, math depends on the rate. Germany’s current FiT for new residential solar (2025) is ~€0.08/kWh for exports. Retail electricity is ~€0.35/kWh. So self-consumption is worth ~4x export. The system should be sized closer to your daytime consumption, not your total annual production.
With battery storage, the math is about timing. Your panels produce midday; your house consumes morning and evening. A battery shifts excess from midday to evening so you avoid buying expensive evening grid electricity. A 10-15 kWh battery typically shifts 80–90% of daily excess to evening use. Effective value: retail rate minus battery degradation cost (about $0.05–0.10/kWh over the battery’s life).
Round 2: Predictability
Net metering is the most exposed to policy change. California, Florida, Nevada, and others have all gutted net metering in the last 5 years. New installs lose access to favorable rates; existing installs are grandfathered (usually 10–20 years).
Feed-in tariffs are typically locked for the contract term (often 15–25 years). More predictable.
Battery storage is policy-immune. You own the equipment; it doesn’t matter what the utility decides.
Round 3: When policy changes
If you’re shopping solar now and net metering is generous in your state, lock in. Many states grandfather existing customers for 10–20 years at favorable rates even when they change the policy for new installs.
If net metering is weak or being phased out, size your system smaller (match consumption rather than maximize production) and add a battery. The combination of self-consumption + battery storage is policy-immune and increasingly the dominant residential setup.
If you have an existing system under good net metering and the utility changes policy, check grandfathering rules carefully. The 20-year grandfather is typical but not guaranteed.
The honest verdict by use case
Full net metering: ride it out. It’s the best deal in solar and it’s being killed off. If your area still has it, the math is unbeatable and grandfather provisions usually protect you.
Feed-in tariff country (EU, UK, parts of Australia): size for self-consumption + add a small battery (5–10 kWh) to maximize the high-value retail offset and benefit modestly from the FiT.
Weak or no export compensation (much of US 2024 onwards, parts of Australia): add a battery sized to your daily excess. Solar economics still work, just through self-consumption rather than grid export.
Want backup power during outages: battery, no matter what your export policy is. Net metering doesn’t power your house during a blackout; only off-grid-capable batteries do.
The general direction: utilities are shifting from “your solar offsets retail consumption” to “your solar produces commodity electricity at wholesale rates.” Batteries are the homeowner’s response that puts the value back in self-consumption.
FAQs
What is “true-up” in net metering?
Annual reconciliation: utility totals your imports and exports across the year. If you exported more than imported, some utilities pay you (at reduced rate); others zero out the credit. Check your utility’s specific rules.
Are there hybrid net metering / battery setups?
Yes — “net billing” is increasingly common. You buy electricity at retail and sell at wholesale. Adding a battery lets you self-consume during expensive hours and export during cheap hours (and avoid buying during expensive hours).
What’s “time of use” pricing?
Variable retail rates by time of day. Common across US and EU. Expensive evenings (peak hours), cheaper midday. Solar + battery combination wins big here: produce midday, store, use during expensive evening.
Will FiT rates keep falling?
Yes. Most countries phase down FiT rates as solar gets cheaper and capacity grows. Lock in current rates if available.
How long do solar batteries last under daily cycling?
LiFePO4 batteries are warranted 10 years and typically last 15–20 years under daily cycling. See our battery chemistry article for details.
Can I have a battery without solar?
Yes — for grid backup or time-of-use arbitrage. Less common but viable in markets with high peak/off-peak spreads.