Financial advantage of net metering over feed-in tariff for solar exports

Net Metering vs Feed-In Tariff

Solar owners export excess generation to the grid. Two common compensation structures: net metering credits exports at the retail electricity rate (the rate you pay to buy power), while feed-in tariffs pay a lower wholesale or agreed rate. A system exporting 400 kWh monthly to a grid with 0.30 retail and 0.12 feed-in rate sees 120 monthly value under net metering versus 48 under feed-in — a 72 monthly advantage, 864 annually, over 20,000 across a 25-year system lifespan. Net metering policies typically triple or quadruple the financial benefit of solar export.

Why the Rate Gap Exists

Retail electricity rates include generation, transmission, distribution, and utility overhead. Wholesale prices (what utilities pay generators) are typically 30-40% of retail. Net metering effectively lets solar owners avoid the entire retail rate on exports — treating their exports as direct substitutes for retail purchases. Feed-in tariffs treat solar owners more like small-scale wholesale generators, paying only wholesale-equivalent rates. Utility lobbying has pushed many jurisdictions toward feed-in structures as solar adoption has grown because net metering is highly favorable to solar owners.

Worked Example for Typical Installation

Monthly export 400 kWh. Retail 0.30. Feed-in 0.12. Years 25. Net metering monthly value 120. Feed-in monthly value 48. Monthly advantage 72. Annual advantage 864. Lifetime advantage 21,600. The solar owner receives over 21,000 more value across the system lifespan under net metering rules than under feed-in tariff rules for identical export volume. This advantage often determines whether solar is a strong or marginal financial decision in a given jurisdiction.

What the Calculator Does Not Model

Rate inflation over 25 years — both retail and feed-in rates will change. Policy risk — net metering rules are changing in many jurisdictions, often reducing or phasing out the retail-rate credit. Time-of-use pricing variations. Demand charges that may offset net metering benefits in some utilities. Specific jurisdiction rules like true-up periods and rollover handling. The calculator shows the clean rate-gap math; specific policy environments add complexity.

Common Net Metering Analysis Mistakes

Assuming net metering will persist for full system lifespan when many jurisdictions are phasing it out. Using net metering economics when installing under a feed-in regime. Forgetting that self-consumption (using own solar directly) is worth retail rate regardless of export compensation structure — reducing export dependency often wins. The calculator shows the specific rate advantage; broader solar economics depend on consumption patterns too.