Feed-in Tariffs and Export Payments: How They Work
Understand feed-in tariffs vs export payments, how solar export compensation works, and key differences from net metering. Check local rules.
When a photovoltaic system produces more electricity than the building consumes, the surplus flows back to the grid. How that surplus is compensated depends on the regulatory framework in place. This page explains the main mechanisms—feed-in tariffs, export payments, and net metering—and how they differ. Because these arrangements are set by state and utility and change over time, the specifics must be checked for a given location and date.
What Is a Feed-in Tariff?
A feed-in tariff (FIT) is a policy mechanism that guarantees a fixed payment per unit of electricity generated by a qualifying renewable energy system. The payment is typically set for a fixed term (e.g., 20 years) and is often higher than the retail electricity rate. FITs are designed to encourage deployment of renewable energy by providing a predictable revenue stream.
In the context of residential solar, a FIT may apply to all generation or only to the surplus exported to the grid. The payment is usually a separate line on the electricity bill, either as a credit or a direct payment.
What Is an Export Payment?
An export payment is a payment for electricity that is sent to the grid. It is distinct from a FIT in that it may not be guaranteed for a long term and is often set at a rate that reflects the wholesale or avoided cost of electricity. Export payments are common in jurisdictions that do not have net metering or that have replaced it with a different compensation structure.
Net Metering vs. Feed-in Tariff vs. Export Payment
Net metering and feed-in tariffs are often confused, but they are fundamentally different. Net metering offsets the customer’s consumption with the generation, effectively using the grid as a battery. The customer is billed only for the net energy used. In contrast, a feed-in tariff pays for generation (or export) at a set rate, independent of the customer’s own consumption. An export payment is similar to a FIT but is usually not a guaranteed long-term contract and may be lower.
The table below summarizes the key differences:
| Feature | Net Metering | Feed-in Tariff | Export Payment |
|---|---|---|---|
| Compensation basis | Retail rate (credit for excess) | Fixed rate per kWh generated or exported | Fixed or variable rate per kWh exported |
| Term | Ongoing, subject to policy | Fixed (e.g., 20 years) | Often short-term or subject to change |
| Applicability | Typically for systems sized to offset consumption | Can be for all generation or export only | Usually for export only |
| When it does NOT apply | When utility has changed to net billing | When there is no FIT program | When net metering is available and more favorable |
How Export Compensation Works
In many places, the compensation for exported solar is a credit on the electricity bill. The credit may be applied to future charges or paid out at the end of the year. Some utilities pay a wholesale rate, which is lower than the retail rate. Others pay a time-of-use rate that varies by hour.
The actual rate and terms are determined by the state’s public utility commission and the utility’s tariff. These are not universal; they vary widely. For example, a utility in one state may offer a net metering program, while a neighboring state may have a net billing arrangement where exports are compensated at a lower rate.
What to Check
Because the rules are set by state and utility, the following must be verified for a specific situation:
- The current net metering or net billing policy.
- Whether a feed-in tariff is available and its terms.
- The export rate and whether it is fixed or variable.
- The duration of any guaranteed rate.
- Any caps on system size or total program capacity.
These details are often found on the state’s public utility commission website or the utility’s tariff sheets.
Common Misunderstandings
One common mistake is assuming that a feed-in tariff is the same as net metering. They are not. A feed-in tariff pays for generation, while net metering offsets consumption. Another is believing that exporting to the grid always results in a payment. In some net metering arrangements, the excess is credited at the retail rate, but if the annual credit is not used, it may be forfeited or paid at a lower rate. Also, some people think that a solar system can be sized to generate more than consumption and earn a profit. Many policies limit system size to estimated consumption, and the export rate is often lower than the retail rate, making over-sizing uneconomical.
These misconceptions are natural because the terminology is similar and policies are not intuitive. The key is to read the specific tariff and policy documents.
Conclusion
This page has outlined the differences between feed-in tariffs, export payments, and net metering. The specific rules for a given location are set by the state and utility and are subject to change. Before making decisions, check the current policies and understand the compensation structure for exported solar.
Common questions
What is a feed-in tariff for solar?
A feed-in tariff is a policy that pays solar system owners a fixed rate for the electricity they generate or export to the grid. The rate is usually guaranteed for a set number of years, providing a predictable income. It is different from net metering, which offsets your bill rather than paying you.
How does selling solar back to the grid work?
When your solar system produces more electricity than you use, the surplus goes to the grid. Depending on your utility and state policy, you may receive a credit on your bill (net metering) or a payment (feed-in tariff or export payment). The rate and terms vary, so check with your utility.
What is the difference between net metering and a feed-in tariff?
Net metering credits you at the retail rate for excess generation, offsetting your consumption. A feed-in tariff pays you a fixed rate for generation or export, regardless of your own use. Net metering is more common but is being replaced in some areas with net billing or export payments.
Is a feed-in tariff better than net metering?
It depends on the rates and terms. A feed-in tariff may offer a higher rate for exported electricity, but net metering can be more valuable if you use most of your solar power on-site. Compare the rates and how long they are guaranteed.
Do I get paid for solar if I don't have net metering?
Yes, many utilities offer export payments or feed-in tariffs even without net metering. The rate may be lower than the retail rate, and the terms vary. Check your utility's tariff or contact them to see what options are available.
Read next
- Grid-Tied Solar: How It Works and What Happens in an Outage Understand grid-tied solar systems: how they connect to the utility, why they shut off during outages (anti-islanding), and what rules vary by state.
- Net Metering: How It Works and What to Check Understand net metering: how the meter runs backward, buy-all vs. sell-all, and why credit rates matter more than panel count. Rules vary by state.