What "offset" actually means
Solar offset is the percentage of your annual electricity usage that your solar system is sized to produce. A 100% offset means the system is designed to produce the same number of kWh you used last year. It does not mean you'll pay $0 to the utility.
Why 100% offset still leaves a bill
Five reasons:
- Monthly fixed connection fees. Most utilities charge $10–$30/month regardless of net usage. That's $120–$360/year you'll still pay.
- Time-of-use mismatch. Your panels produce most during the day; you use most in the morning and evening. Without batteries, you're often selling cheap and buying expensive.
- Net metering rules. Some utilities credit exports at retail rate (best), some at wholesale (worst). California NEM 3.0 cut export credits by 75% in 2023.
- True-up timing. Many utilities settle annually. If you over-produce in summer and under-produce in winter, you may net out fine — or you may owe a balance at true-up.
- Year-to-year usage changes. Add an EV, a heat pump, or a baby? Your usage jumps and your fixed-size system suddenly only offsets 80%.
Net metering: the rule that changes everything
Net metering determines what your utility pays for excess solar production. There are three common structures:
| Structure | Export rate | Where it's used |
|---|---|---|
| Full retail net metering | Same as you pay (~$0.15/kWh) | Most states (NY, MA, NJ, IL, etc.) |
| Net billing | Wholesale rate (~$0.04–$0.08/kWh) | California (NEM 3.0), Hawaii, Arizona |
| Avoided cost | ~$0.02–$0.05/kWh | Some Southern states, rural co-ops |
The lower the export rate, the less valuable any excess production is — and the more important it becomes to size carefully or add a battery.
How to size for real savings
If your utility uses full retail net metering, sizing to 90–110% of usage usually works well. If your utility uses net billing or avoided cost, sizing to 70–85% of usage often produces better ROI because you avoid creating low-value exports. Add a battery if you want to bank daytime production for evening use. See our sizing guide for details.
What really affects your savings
Three factors matter more than offset percentage:
- Your utility's marginal rate — what you pay for the last kWh, not the average
- Net metering structure — retail vs wholesale changes lifetime savings by 30%+
- Self-consumption rate — how much production you use directly vs export
See your real savings, not the sales pitch
Upload your solar proposal — the analyzer calculates real bill savings using your utility's actual net metering structure, not just the "offset %" the salesperson showed.
Analyze My Bid →Frequently asked questions
What's a typical "minimum bill" with solar?
$10–$30/month in most states. California has a higher minimum bill structure under NEM 3.0. Hawaii has a $25/month minimum customer charge.
Can I size to 120% offset to over-produce?
You can, but most utilities won't pay you for net annual surplus — they zero out at true-up. Oversizing is usually wasted money unless you anticipate a big usage increase (EV, etc.).
Does battery storage solve the offset problem?
It helps. Batteries let you store daytime production for evening use, increasing self-consumption from ~30% to 70–80%. Doesn't eliminate the fixed connection fee.
What is NEM 3.0?
California's net billing successor to net metering, effective April 2023. Export credits dropped from retail to wholesale (~75% reduction). Made batteries near-essential for new California solar.