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Solar Self-Consumption, Explained

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Net metering no longer pays retail for every exported kilowatt. Here's how to use rooftop solar on site, dispatch a battery, and shift loads into the sun.

Solar Self-Consumption, Explained

Prices and rates in this article were checked October 2026.

Section 1: Why is the meter not a bank? (Introduction)

Solar self-consumption means using your own generation instead of exporting it, because exported power is usually worth less than imported power. Shift loads to daylight, add a battery only if the maths works, and measure first, because export rates vary by utility and hour.

For a decade, the rooftop solar pitch was simple: the meter runs backward, the utility credits every exported kilowatt at the retail rate, and the system pays for itself. That arrangement still exists for some customers, but it is no longer the default. Utilities have moved to export compensation that varies by hour and is usually below retail, and the difference changes how a solar house should operate.

The new logic is self-consumption: use the electricity on site while the sun is up, store what you cannot use, and export as little as possible at the least valuable times. Every kilowatt consumed on site avoids the full retail rate; every kilowatt exported earns whatever the tariff pays, which may be a fraction of that.

This guide covers how net metering and net billing differ, the order of operations for self-consumption, how a battery should dispatch, and what to ask an installer before signing. For the wider picture, start with the Automation hub.

Section 2: How do net metering and net billing differ?

The terms are often used interchangeably, and they should not be.

Net metering

Under classic net metering, the meter nets imports and exports over a billing period, and exported energy is credited at or near the retail rate. The DOE’s homeowner guide describes the origin: the meter simply ran backward when power was exported. Modern versions add credits, true-ups, and caps, but the principle is that an exported kilowatt is worth roughly what an imported one costs.

Net billing

Under net billing, imports and exports are priced separately. You pay the retail rate for what you import, and you are paid an export compensation rate for what you send to the grid. That export rate is often based on the utility’s avoided cost and varies by month and hour.

PG&E’s Net Billing Tariff is a concrete example. Its export compensation rate is calculated from the California Avoided Cost Calculator, varies by month and hour, and differs between weekdays and weekends. The tariff also states that customers are billed with no netting of imports and exports: charges for what you use are separate from credits for what you send.

The practical result: a solar-only house that exports most of its production at midday earns the low midday export rate, then buys power at the expensive evening rate. At the U.S. average residential price of 18.16 cents per kWh in August 2026, the spread between a retail import and a low export credit is the money the battery or the schedule is trying to capture. A house that stores or uses that midday production avoids the expensive purchase. The hardware is similar; the operating strategy is not.

The true-up and the fixed charges

Net billing is not only a per-kilowatt-hour story. The tariff has a true-up period, monthly or annual, and it may carry credits forward rather than paying them out. It also has fixed charges and non-bypassable charges that apply to imports regardless of how much you export. Read those lines before assuming a zero bill; a solar house with a battery can still owe a monthly connection charge, and a big export credit in May does not necessarily pay for December.

Why the export rate is low at noon

Solar production peaks in the middle of the day, and so does solar production on the whole grid. When everyone is exporting at once, the grid does not need the power, and the avoided-cost value drops. In the evening, when solar falls off and demand rises, the value of a kilowatt is higher. A battery moves energy from the low-value hour to the high-value hour, which is the entire economic case for pairing storage with solar under net billing.

Section 3: In what order should you use your solar power?

The order of operations matters, because the cheapest kilowatt is the one you use directly.

1. Use it directly

Run the loads that can run in daylight while the sun is up: the dishwasher, the laundry, the pool pump, the dehumidifier, the heat-pump water heater. A smart plug or an appliance schedule is enough for most of these. The goal is to move flexible load into the production window, not to run everything at once. If you do not have solar yet, the home energy monitoring guide covers the panel-level view.

2. Charge the car in the sun

An EV is the largest flexible load in most houses. If the car is home during the day, charging it from solar is the highest-value use of production after the battery is full. If the car is away, schedule charging for the weekend or for the sunniest hours of a home day. The smart EV charger roundup covers which models can follow surplus production.

3. Heat water in the sun

A heat-pump water heater is a thermal battery. Schedule it to heat during the production window, and the tank holds the hot water for the evening. The same logic applies to a pool pump, a dehumidifier, or any appliance with a tank or a thermal mass. These loads are large enough to absorb a meaningful share of midday production without any battery at all.

4. Pre-cool or pre-heat

A heat pump can store thermal energy in the building. Cool the house a degree or two before the solar window closes, then let the setpoint drift during the evening peak. This is the same pre-cooling logic as the time-of-use article, with solar production as the trigger instead of the clock.

4. Store the surplus

A battery absorbs the midday surplus that would otherwise be exported at the low rate and discharges it in the evening. That is the bridge between production and consumption, and it is why batteries became more attractive as export compensation fell.

5. Export the rest

Export is the last resort, not the first. It still has value, and on a sunny spring day with a full battery and no loads, it is the only place for the electrons.

Section 4: How should a battery dispatch?

A home battery is not a single mode; it is a set of priorities that the controller executes.

  • Self-consumption. Charge from solar surplus, discharge to the house when production falls below consumption. This is the default for most systems and the one that captures the retail-versus-export spread.
  • Time-of-use arbitrage. If the tariff pays more at peak than the battery costs to charge, discharge during the peak window and recharge off-peak or from solar. Under net billing, this is often the same behavior as self-consumption.
  • Backup reserve. Hold a percentage of capacity for outages. The reserve is a comfort and safety decision, not an economic one; a battery that is always empty at 5 p.m. is a battery that cannot run the fridge at 6 p.m.
  • Grid services. Some utilities can call the battery during an event in exchange for a payment. That is demand response, and it is covered separately.

Sizing the battery

Size for the evening, not for the day. A battery that covers the 4 to 9 p.m. load plus a reserve is usually a better investment than one large enough to run the whole house for 24 hours. The evening load is the expensive load, and the battery’s job is to move the cheap midday kilowatt into that window.

Battery capacity also degrades. A warranty that promises a percentage of original capacity after a number of cycles is telling you the pack is a wear item. Plan the reserve and the economics at the warranted end-of-life capacity, not the day-one number.

The losses

Round-trip efficiency is not 100 percent. Charging and discharging lose energy to heat and conversion, typically in the high 80s to low 90s for a lithium system. A battery that stores 10 kWh and returns 8.7 kWh has done well. The spread between the charging cost and the discharge value has to be wider than the loss to be worth the cycle, which is why the battery should charge from surplus solar first and from the grid only when the arbitrage is clear.

The controls

The inverter or battery controller needs to know three things: the tariff, the solar forecast, and the reserve. Most systems ship with an app that handles the first two and a slider for the third. A local integration (Home Assistant, for example) can add rules the vendor app does not, but it also adds a failure point. Start with the vendor’s self-consumption mode and only customize if the bill shows it is necessary.

Section 5: What should you ask an installer before you sign?

The sales proposal is optimistic by design. These are the questions that separate a model from a plan.

  1. What export rate did you assume, and for which hours? A proposal that credits every exported kilowatt at retail is using the wrong tariff.
  2. What is the self-consumption percentage? Ask for the modeled share of production used on site, before and after the battery.
  3. What is the battery’s usable capacity and warranty? Usable kWh is lower than nameplate, and the warranty specifies the cycles and the end-of-life capacity.
  4. What happens during an outage? A battery that is not configured for backup, or an inverter that cannot form a grid, will not run the house when the grid is down.
  5. How will I see the data? A monitoring app that separates solar production, home consumption, battery flow, and grid import/export is the tool you need to tune the system.
  6. Who handles the interconnection and permits? The utility approval is part of the project, not an afterthought.

Sizing

The old advice was to size for annual usage. Under net billing, that is still a reasonable starting point, but oversizing is worse than it used to be: the extra production is exported at the low rate. A slightly smaller array with a battery often beats a larger array without one, because the battery converts low-value exports into high-value evening supply. Model both before deciding.

Section 6: What is the plan, and who should not chase self-consumption? (Conclusion)

  1. Read the tariff. Find the export compensation rate, the peak window, and whether imports and exports are netted.
  2. Measure the solar window. Note when production starts, peaks, and ends, and which loads can move into it.
  3. Move the flexible loads first. Dishwasher, laundry, pool, water heater, EV. These are cheaper than a battery and capture the retail rate immediately.
  4. Add storage for the evening. Size the battery for the evening load and the backup reserve, not for the whole day.
  5. Set the reserve and leave it. A backup reserve that is too small is a battery that cannot help in an outage; too large and the economics weaken.
  6. Review the first year of data. Compare modeled self-consumption with actual, and adjust schedules before adding hardware.

The first year is a calibration exercise. Compare the installer’s modeled self-consumption with the monitoring data, note which days export at midday, and adjust the appliance schedules before adding hardware. Most houses find one or two loads — the water heater and the car — that absorb more surplus than expected.

Some houses should not chase self-consumption. A north-facing roof with heavy shade, a utility that still offers full retail net metering, or a household that is away all day and exports most of its production may be better served by the simpler tariff. And a battery is not a moral obligation; it is an economic tool that depends on the spread.

The sun does not send a bill. The tariff decides what the electrons are worth, and the smart home’s job is to use them at the valuable hour.

Where to buy

Home batteries on Amazon

Opens an Amazon search. As an Amazon Associate, we earn from qualifying purchases. No product in this guide was supplied or tested by a manufacturer.

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