Net metering is a billing method that lets a customer's on-site solar offset the electricity they buy from the utility, with exported power credited against later consumption. Interconnection is the separate utility approval and agreement that allows the system to run in parallel with the grid. Net metering terms are set state by state, and in Florida the PSC rule has not changed since 2008. Before a system can export a single kWh, the contractor needs an executed interconnection agreement, a passed local inspection and the utility's permission to operate.
Key takeaways
- Net metering is set by state regulators and utilities, not by federal law, so the credit for exports varies by state and sometimes by utility.
- Florida's net-metering rule, PSC Rule 25-6.065, has not changed since it took effect April 7, 2008, and full-retail net metering continues.
- California's Net Billing Tariff has applied to interconnection applications filed since April 15, 2023, so it is the current rule there, not a future one.
- Interconnection needs an application, a utility review, a signed agreement and a passed inspection before the system operates in parallel with the grid.
- Adding a battery can change both the interconnection review and the value of exports, so tell the utility early.
- The safest design assumes the export credit could change: size to the load, keep room for storage and choose inverters with grid-support functions.
How does net metering work?
A net-metered customer uses their own solar production first, sends the surplus to the grid, and gets credit for it against what they draw from the grid later. A bidirectional meter records both flows, and the bill reflects the net. At night or on cloudy days the customer pulls from the grid, so the grid acts as a storage medium on the bill even though no energy is physically stored.
Florida's rule shows the pattern. Under Rule 25-6.065, excess generation is credited to the next month's bill, credits can accumulate for not more than twelve months, and unused credits at calendar year-end are paid out at an average annual rate tied to the utility's as-available energy tariff. Other states use different carryover windows and payout rules.
What to tell a customer: net metering reduces the bill, not the fixed charges. Customers still pay minimum bills, customer charges and any demand or time-of-use charges that apply to their rate class.
How does net metering vary from state to state?
States differ in how they credit exports, how large a system they allow, how long credits last, and whether the program has a cap. The main structures are below.
| Structure | How exports are valued | Design implication |
|---|---|---|
| Full-retail net metering | Each exported kWh offsets a kWh bought at the retail rate | Exports are worth as much as self-consumed power, so storage is less important for the bill |
| Net billing | Exports are credited at a rate set separately from the retail rate, often lower | Self-consumption and storage matter more |
| Time-of-use crediting | Credit depends on when the power is exported or consumed | Orientation, storage and load shifting change the value |
| Program caps or size limits | Participation or system size is capped by rule or tariff | Check the cap before sizing |
California shows the net-billing model. The CPUC's Net Billing Tariff, adopted in D.22-12-056 as the successor to NEM 2, applies to customers who submit an interconnection application on or after April 15, 2023. The application date decides which tariff a customer gets, which is why timing of the interconnection application matters in any state that changes its rules.
Florida's municipal utilities and rural electric cooperatives adopt their own interconnection and net-metering programs under §366.91, with requirements set by their governing authorities. Always confirm which utility serves the site, because the investor-owned utility rules do not automatically apply to a city utility or a co-op.
What is Florida's net metering rule today?
Florida's net-metering rule, PSC Rule 25-6.065, was last amended effective April 7, 2008, and no 2025 or 2026 rulemaking was found. Full-retail net metering continues. The rule page on flrules.org shows the history, including the 2002 predecessor for small PV systems.
The rule was not changed by the Legislature either. HB 741 (2022) would have reduced net-metering rate designs for new applications, and the Governor vetoed it on April 27, 2022. We can say that Florida's net-metering rule has not changed since 2008. We cannot say what a future legislature or PSC will do.
Under §366.91(5), each public utility had to create a standardized interconnection agreement and net-metering program for customer-owned renewable generation, and the PSC sets the requirements for expedited interconnection. That is the legal basis for the Standard Interconnection Agreement discussed below.
Are there new regulations that could change net metering?
Net metering changes through state commissions, legislatures and utility rate cases, not through one federal rule. Here is what to watch:
- State rulemakings and legislation. Any change in a state's credit structure usually starts as a bill or a commission docket, so contractors can see it coming.
- Utility rate cases. Fixed charges, minimum bills, demand charges and time-of-use rates can change the value of solar without touching the net-metering rule.
- Grandfathering rules. Some states let existing customers stay on their original terms for a set period, so the application date can lock in a better tariff.
- Federal tax credits. These do not set net-metering terms, but they change what a project is worth. No federal law enacted in 2026 restores the solar credits, and our tax credits guide covers what applies.
Older articles that said "net metering will change by 2025" were forecasts, not facts. In Florida the rule has not moved, and in California the change already happened. Check the current docket for the state in question before quoting.
What interconnection agreements and approvals does a solar system need?
A grid-tied system needs an interconnection application, a signed interconnection agreement with the utility, a passed local inspection and the utility's permission to operate. Each utility publishes its own forms and technical requirements, so read its interconnection manual before the design is final.
| Approval | What it is | Who issues it |
|---|---|---|
| Building and electrical permit | Authorizes construction under the adopted codes | Local building department |
| Interconnection application | Describes the system and requests approval to connect | Utility |
| Interconnection agreement | Sets the technical, safety and billing terms for parallel operation | Utility and customer |
| Utility studies (larger systems) | Review of grid impact and any required upgrades | Utility |
| Inspection | Confirms the installation matches the permit and code | Local authority having jurisdiction |
| Permission to operate | Final utility approval to energize and export | Utility |
In Florida, the NEC edition in force matters for the design. The Florida Building Code, 8th Edition uses the 2020 NEC until December 30, 2026, and the 9th Edition with the 2023 NEC is scheduled to take effect December 31, 2026. For other states, design to the NEC edition your jurisdiction has adopted. Our code compliance guide covers permits and inspections.
Under Rule 25-6.065, each investor-owned utility must file a Standard Interconnection Agreement for expedited interconnection of customer-owned renewable generation up to 2 MW. The agreement must require local code inspection and approval before parallel operation. Larger systems and systems that need a study take a longer path, and other states set their own size tiers.
What does the interconnection process look like step by step?
The sequence is similar everywhere, but the timing and forms differ by utility.
- Design the system. Produce the single-line diagram, site plan and equipment data sheets. Our PV plan sets cover this package.
- Submit the application. Use the utility's current form and include the documents it lists. In Florida, the utility must tell the customer within 10 business days whether the application is complete.
- Utility review. For small systems this is a screening. Larger systems can require feasibility, impact or system studies to find any grid upgrades, and the agreement says who pays for them.
- Sign the agreement. Under Rule 25-6.065 the utility must execute the Standard Interconnection Agreement within 30 calendar days of a completed application, or within 90 days for Tier 3 systems that need an interconnection study.
- Build and pass inspection. The local authority having jurisdiction inspects against the permit.
- Notice and permission to operate. The customer gives the utility at least 10 days' notice before placing the equipment in service, and the utility issues permission to operate.
If the customer later increases the system's gross power rating, Rule 25-6.065 calls for a new application at least 30 days beforehand. Tell customers that adding panels is not a field decision.
The grid-support functions of modern inverters, including ride-through and voltage and frequency response, are part of how interconnection requirements get met. The DOE overview of inverter grid services explains them. Equipment is generally required to meet the interconnection standards the utility specifies, such as IEEE 1547 and UL 1741, so confirm listings before ordering.
How does adding batteries change net metering and interconnection?
A battery changes the value of exports and can change the utility review. Under full-retail net metering, a battery mostly adds resilience. Under net billing or time-of-use rates, shifting solar production into the evening can raise the value of each kWh.
On the interconnection side, tell the utility at application that storage is included and how it will operate (charging from solar only, charging from the grid, or exporting). Some utilities review storage separately, and the answer affects the single-line diagram and settings. Our battery storage design guide covers coupling types and sizing, and our energy storage engineering work includes the plan set for them.
How can installers future-proof systems against rate and policy changes?
Design so the system still works if the export credit gets worse, the rate structure changes or the customer adds storage later. Specific steps:
- Size to the load, not the export. A system sized to the customer's own consumption depends less on the credit for exports. Our sizing and production guide shows the method.
- Leave room for storage. Reserve space, breaker capacity and conduit paths, and choose an architecture that can accept a battery later.
- Choose inverters with grid-support functions. Smart inverters can meet changing utility requirements through settings updates, which is cheaper than replacing hardware.
- Use modular components. Module-level electronics and expandable racking make additions easier, but check the utility's rules on increasing system size first.
- Model more than one case. Show the customer the economics under today's tariff and under a lower export credit. Our cost and payback guide walks through the method.
- Document the tariff in force on the application date. This record matters if the utility or regulator later changes terms.
- Educate the customer. Explain that net-metering terms, rates and fees can change, and that the contract should say what is fixed and what is not.
FAQ
Does net metering pay cash for extra production?
Not usually month to month. Under Florida's Rule 25-6.065, excess generation is credited to the next month's bill, and any unused credits at calendar year-end are paid out at an average annual rate. Other states handle payouts differently.
Is interconnection the same as a building permit?
No. The building permit is issued by the local authority for construction, while interconnection is the utility's approval to connect and operate. A system needs both, and the utility's permission to operate usually comes after a passed inspection.
Does a Florida homeowner still have net metering?
Yes. Full-retail net metering continues under PSC Rule 25-6.065. Customers of municipal utilities and rural electric cooperatives should confirm their utility's own program.
Is NEM 3.0 coming to California?
No, it already applies. The Net Billing Tariff covers customers who submitted interconnection applications on or after April 15, 2023.
Do I need a new application to add panels later?
Usually yes. In Florida, Rule 25-6.065 requires a new application at least 30 days before increasing a system's gross power rating. Other utilities have their own rules, so check before quoting an expansion.
Bottom line
Net metering decides how exported solar is credited, and interconnection decides whether and when the system can run. Florida's net-metering rule has not changed since 2008, California's Net Billing Tariff has applied since April 15, 2023, and other states differ, so confirm the state and the utility before sizing or quoting. A complete application, an executed agreement, a passed inspection and permission to operate are all required before a system exports. SunSmart Engineering designs and stamps PV plan sets for contractors in all 50 states, and our energy storage engineering covers the battery side.
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