Two houses, identical roofs, identical arrays, forty miles apart. One pays back in nine years and the other in seventeen. The difference is not the equipment. It is what each utility does with the surplus.
Three regimes, and why the labels get abused
Full retail net metering
Your meter runs backwards. A kilowatt-hour you export at noon offsets a kilowatt-hour you import at midnight, one-for-one, at the same retail rate. This is the regime that made solar famous, and it is disappearing across the country.
Reduced export rate / net billing
You are credited for exports at a rate below retail, sometimes an avoided-cost rate, sometimes a published export price that varies by hour. Arizona's utilities work roughly this way. Under this regime, electricity you consume the moment you produce it is worth far more than electricity you export.
Time-differentiated net billing (NEM 3.0 and relatives)
California's current regime is the aggressive version: exports are valued at hourly avoided-cost rates that are very low midday, when solar produces most, and high in the early evening, when it produces little. The practical effect is that a solar-only system's economics collapsed and a solar-plus-storage system's economics did not.
What this means for your design
Under full retail net metering, size to your annual consumption and stop thinking about it. The grid is a perfect battery.
Under any reduced export regime, the design question changes from “how much can I produce?” to “how much can I consume at the moment I produce it?” That pushes design in three directions at once: slightly smaller arrays, more west-facing modules to shift production later in the day, and storage to move midday surplus into the evening peak.
The questions to ask your utility, or your installer
- What rate schedule will I be on after interconnection? It is frequently not the one I am on now.
- What is the export credit rate, and is it fixed, indexed, or hourly?
- How long is that rate locked in for? Fifteen and twenty year lock-ins exist in some territories.
- Is there a grid access charge, minimum bill, or demand component for solar customers?
- What happens to accumulated credits at the annual true-up, rolled over, paid out, or forfeited?
That last one surprises people. In several territories, credits accumulated over a year are cashed out at a wholesale rate far below what you were credited during the year, or simply expire. It is a strong argument against oversizing.
Why we model the tariff rather than the average rate
A savings estimate built on “you pay 14 cents a kilowatt-hour” is arithmetic, not analysis. Your actual bill is a structure: fixed charges, tiered or time-of-use energy rates, possibly a demand component, plus riders. Solar interacts with each differently.
Every Mr. Legit Solar proposal states the specific rate schedule we modelled by name, and if we think you will be better off switching schedules after interconnection, we say so and show both. If a proposal you have received does not name your tariff, ask why not.