Is This Your Problem?
Updated utility policies drastically cut compensation for excess solar energy exported to the grid, forcing owners to invest in batteries or increase real-time self-consumption.
Get Matched With a Local ProMy Excess Solar Is Worth Less Than It Used To Be
You generated more power than your house used, the grid took it, and the credit on your bill covers only a fraction of what those kilowatt-hours would have cost you to buy. This is the single biggest change in the economics of rooftop solar in a generation, and it is not a billing error. It is the difference between net metering and net billing.
Updated utility policies drastically cut compensation for excess solar energy exported to the grid, forcing owners to invest in batteries or increase real-time self-consumption. The math is blunt: a kilowatt-hour you use yourself is worth the full retail rate you avoided paying, while a kilowatt-hour you export is worth whatever the utility's export credit happens to be. When those two numbers diverge, the design priority shifts from exporting to self-consuming.
Net Metering Versus Net Billing
Under traditional net metering, the meter effectively ran in both directions at the same price. A kilowatt-hour you exported canceled out a kilowatt-hour you later imported, and any surplus typically carried forward as an energy credit. The value of your solar production did not depend on when you used it.
Under net billing, exports and imports are settled at different rates. Your exports earn a utility-set export credit that is based on wholesale or avoided-cost energy, and your imports are billed at the retail rate. Credits are usually financial, applied within the billing period, rather than kilowatt-hours carried forward indefinitely. The moment those two prices separate, timing becomes everything.
| Feature | Traditional net metering | Net billing |
|---|---|---|
| Value of an exported kWh | Offset at the full retail rate | Paid at a lower, utility-set export credit |
| Value of a self-consumed kWh | Full retail rate avoided | Full retail rate avoided |
| Credit type | Energy (kilowatt-hour) credits, generally carried forward | Financial credits, generally applied within the billing cycle |
| Effect of timing | Minimal — export any hour, offset any hour | Large — the hour you use power decides its value |
| Best system design | Maximize total production | Maximize self-consumption and shift energy to when it is worth most |
| Role of batteries | Optional convenience and backup | Central to capturing value that would otherwise be exported cheaply |
Nothing about that table is unusual anymore. It describes the structure most rooftop solar owners are now billed under.
What Changed in the Tucson Market
For customers of Tucson Electric Power, the change has a specific history and a specific name. In October 2018 the Arizona Corporation Commission voted to phase out net metering in favor of compensation more closely aligned with the price utilities pay for large-scale solar. Customers who already had systems were allowed to keep net metering for 20 years from the date their system was connected, which is why two neighbors on the same street can be on completely different rules.
Newer systems are compensated through the Resource Comparison Proxy, or RCP, export rate. The RCP is based on the average market cost of solar energy over a recent five-year period and is reviewed annually, with rules that let it fall by no more than about 10 percent each year. A customer is compensated at the RCP rate in place when they requested interconnection for up to 10 years, which makes the timing of an interconnection application more financially important than most homeowners realize.
There is a second structural change that matters as much as the rate. The RCP provides financial credits within the same billing cycle rather than kilowatt-hour credits carried forward. In practice that means you can no longer bank summer surpluses to draw on in winter, and it also means customers transitioning to the RCP take service on a time-of-use pricing plan, where the price of power depends on the hour it is used.
| Rate period in effect | TEP RCP export credit | What it tells you |
|---|---|---|
| October 2023 – September 2024 | $0.0633 per kWh | The export credit paid for surplus rooftop generation |
| October 2024 – September 2025 | $0.0570 per kWh | A step down of roughly a tenth, consistent with the annual reset rule |
| Retail power you buy instead | Roughly 15 cents per kWh on average in this region | The gap between these two numbers is the cost of exporting instead of using your own power |
The important relationship is not the exact figure in any single year. It is that the export credit has been running at roughly a third of the retail price of power, and the rules allow it to keep stepping down each year. A kilowatt-hour exported is worth far less than a kilowatt-hour consumed on site.
What It Costs the Homeowner
The most obvious cost is a longer payback period than the sales quote assumed. Systems were once justified by exporting heavily and banking the credits; when export compensation drops, the same array produces the same energy but earns less for the portion that leaves the property. Homeowners who were shown a payback based on net metering are frequently surprised by the first full year of net billing.
The second cost is a forced capital expense. The math now pushes owners toward batteries, because a battery lets you keep midday energy for the evening instead of exporting it at the low credit and buying it back at the retail rate. Turnkey residential battery backup systems typically run between $15,000 and $35,000 per project, which is a substantial addition to a project that was supposed to reduce bills on its own.
The third cost is subtler: exported energy is produced at the wrong time of day. Solar peaks around midday, while most households use the most power in the evening. Under net metering that mismatch did not matter. Under net billing it is the whole game.
| Where the kilowatt-hour goes | What it is worth | Why |
|---|---|---|
| Used in your home the moment it is generated | Full retail value | You avoid buying that kilowatt-hour at the retail rate |
| Stored in a battery and used in the evening | Near full retail value | You avoid evening imports, though round-trip storage loses some energy |
| Exported to the grid | The utility's export credit | Paid at a rate based on wholesale or avoided cost, well below retail |
| Exported, then imported later on a time-of-use plan | Least valuable arrangement | You sell low, buy back at a higher on-peak price |
Read that table top to bottom and the strategy writes itself: the further down the list your energy goes, the less it is worth, and the fix is to move energy upward through the list.
How to Tell How Much It Is Costing You
- Find the export line on your bill. It may be labeled as an excess generation credit rather than net metering, and the rate applied to your exported kilowatt-hours is usually shown separately from the retail rate.
- Compare the export credit rate against the retail rate you pay. The size of that gap is the per-kilowatt-hour penalty for exporting.
- Check whether your credits expire within the billing cycle. If they do, winter surpluses are not available to offset future months.
- Read your time-of-use schedule and note the on-peak windows. Exporting at a low credit and importing during a high on-peak price is the worst combination on the page.
- Confirm when your system was interconnected, since compensation terms and the length of any rate lock depend on that date.
What to Do About It
The first and cheapest answer is to consume more of your own midday production. Shift flexible loads — pool pumps, electric vehicle charging, laundry, dishwasher, and air conditioning pre-cooling — into the middle of the day when the array is producing. Every kilowatt-hour you move from export to self-consumption moves from the low credit to the full retail rate.
The second answer is storage. A battery absorbs the midday surplus that would otherwise be exported at the low credit and discharges it in the evening, when the alternative is buying power at retail or on-peak rates. That is the economics that make batteries pencil out in a net-billing market, even at $15,000 to $35,000 per project.
The third answer is to design for self-consumption from the start rather than for maximum export. An array sized so that most of its output is consumed on site, paired with storage and a sensible time-of-use plan, produces less total energy than a larger array built to export — and often delivers more value. Finally, understand your lock-in: compensation terms are typically fixed at interconnection for a set number of years, so it is worth knowing what you are signing up for before you apply.
| Strategy | How it works | Best fit |
|---|---|---|
| Shift loads into the midday window | Uses surplus on site at full retail value instead of exporting it cheaply | Homes with a pool, an EV, or flexible appliances |
| Add a battery | Stores midday surplus for evening use, avoiding on-peak imports | Owners who export heavily or face high evening rates |
| Adopt a time-of-use plan deliberately | Uses off-peak power and discharges storage when prices are highest | Households willing to watch when they use power |
| Right-size the array for self-consumption | Reduces energy that would only earn the low export credit | New systems, and anyone re-sizing after a rate change |
| Know your interconnection terms | Locks compensation for a set period from the application date | Before you apply, not after |
Net billing does not make solar a bad investment. It changes what the good investment looks like, and it rewards homeowners who plan for self-consumption rather than maximum export.
Services That Fix This
Solar Repair
Battery sizing to capture midday value instead of exporting it.
Solar Maintenance
Consumption review and load-shifting plan for your time-of-use rates.