Commercial solar and your electricity bill: net metering, net billing, and demand charges

A facility installs behind-the-meter solar, watches the panels produce all summer, and then opens the first full electricity bill expecting it to fall in step with generation. It rarely does. The bill has several line items, and solar touches each of them differently. Understanding which charges solar reduces, which it barely moves, and how your exported energy is credited is the difference between an accurate payback model and an unpleasant surprise.

What net metering actually measures

A net meter records the difference between the energy you draw from the grid and the energy your system sends back. In Canada, Measurement Canada describes net metering as measuring delivered energy against received energy, and when received energy exceeds delivered energy, the excess is sent to the grid in exchange for credits measured in kilowatt-hours. That last point matters: the base model credits you in kWh, not dollars, and those kWh offset future consumption rather than paying you cash.

Net metering versus net billing

The single biggest variable in solar bill economics is how exports are valued. Under classic net metering, exported kWh are banked at the full retail rate, so a kWh you send out in June offsets a kWh you pull back in December one for one. Under net billing, exports are metered separately and credited at a lower predetermined sell rate, often closer to the utility's avoided cost than to retail. The same solar array can produce very different savings depending on which regime applies.

Alberta's micro-generation program shows both models coexisting by system size. The Government of Alberta explains that small micro-generators under 150 kW are credited on a monthly basis at their retail rates, the same rate they paid when buying from the grid, while larger systems at or above 150 kW are credited at the hourly wholesale market price. The regulation also caps a micro-generation system at five megawatts. So above a threshold, an Alberta facility is effectively on net billing, and its export value floats with the pool price.

Some jurisdictions have moved wholesale from net metering to net billing for new systems. In California, the CPUC adopted the Net Billing Tariff on December 15, 2022 as the successor to the previous net metering rules, applying it to customers who submit an interconnection application on or after April 15, 2023. Exports under that tariff are valued using avoided-cost export rates rather than the retail rate, which changes the payback math for any new commercial project. If you operate across provinces or states, you cannot assume one crediting model applies everywhere.

Banked credits and the annual true-up

Net metering credits do not roll forever. Most programs let a positive credit balance carry from month to month, then reconcile or expire it on an annual cycle. In Ontario, the Ontario Energy Board explains that credits can be carried to future bills for up to 12 months, after which the remaining credits are reduced to zero. The same page notes credits can only offset charges tied to the electricity you consumed. The practical lesson: sizing a system to bank huge summer surpluses that you cannot draw down within the true-up window donates that energy to the utility. Right-size to annual load, not to peak production.

Adoption is now large enough that these mechanics affect a lot of accounts. EIA data reported more than 5 million net metering customers in the United States in 2023, of which roughly 4.68 million were photovoltaic. Each of those accounts is running a running credit balance that someone should be checking.

Why demand charges usually survive solar

Here is where most commercial solar models overstate savings. Demand charges bill your highest power draw in the billing period, not your total consumption. The Clean Energy Group and NREL fact sheet defines demand charges as being for the highest level of electricity demand during a billing period, measured in kilowatts, usually captured as the highest average usage over a defined interval that is often 15 minutes. The same fact sheet notes demand charges can account for 30 to 70 percent of a commercial customer's monthly bill, and that nearly all medium and large commercial customers pay them.

The critical mechanism is in that same document: stand-alone solar is well suited to reducing consumption but is typically not very effective at reducing peak demand. If your peak 15-minute interval lands on a cloudy afternoon, an early winter evening, or after sunset, the panels are not producing then and your demand charge is unchanged. Winter-peaking and evening-peaking facilities in particular can see their kWh charges drop sharply while the demand component barely moves. This is why solar does not replace demand-side work: see demand charges explained and the tactics in reduce peak demand charges, which target the kW peak that solar leaves behind.

Why you need clean interval and bill data to verify credits

Verifying a solar bill is a reconciliation problem. You have interval export data on one side and a billed credit line and running balance on the other, and they have to agree. In practice they often do not: credits get applied to the wrong charge class, a rate change quietly moves you from retail to avoided-cost crediting, a meter swap resets a balance, or a true-up silently zeroes months of banked kWh. None of that is visible if you are reading PDF bills one at a time. Standardized interval and billing data, aligned by account and period, lets you confirm every exported kWh was credited at the rate you expected and that no banked balance expired unnoticed. That verification is the point of keeping bill and meter data clean.