If your solar panels produce more electricity than your home uses, you have five practical options for what to do with the excess solar power: send it to the utility grid for bill credits, store it in a home battery, shift your appliance use into daylight hours so you consume it directly, sell renewable energy certificates in states that have an SREC market, or share the output with other accounts through virtual net metering. The right mix depends on your utility’s export rate, your state’s incentive programs, and whether backup power during outages matters to you.
Export It to the Grid for Bill Credits
The most common path is to send surplus power to the utility and receive credits on your electricity bill. Under traditional net energy metering, your meter effectively runs backward when you export, and every exported kilowatt-hour earns a credit at the full retail rate. Those credits offset grid electricity you draw at night or on cloudy days, often pushing bills near zero during high-production months.
Many states have moved to a “net billing” structure instead. Exported solar earns the utility’s avoided cost, roughly 2 to 6 cents per kilowatt-hour, while you still pay 12 to 30 cents per kilowatt-hour for electricity you consume. That gap changes the math: a kilowatt-hour you use yourself is worth several times more than one you export.
Credits usually accumulate monthly and carry forward across a 12-month billing cycle. At the annual “true-up,” the utility reconciles your account. What happens to leftover credits varies: some utilities cash them out at a low wholesale rate, some roll them forward indefinitely, and some forfeit them entirely. Confirm your utility’s policy before the reset date, because losing a surplus balance can cost hundreds of dollars.
Store It in a Home Battery
A battery keeps surplus solar on-site rather than exporting it. Excess production charges the battery during the day, and the battery discharges after sunset to cover evening loads, reducing or eliminating what you buy from the grid during the most expensive hours.
Most residential batteries use lithium-ion chemistry and store 10 to 15 kilowatt-hours, enough for several hours of typical household use. DC-coupled systems capture energy from the panels before it reaches the main inverter and are more efficient because the power undergoes fewer conversions. AC-coupled systems connect to the home’s existing electrical panel and are easier to retrofit onto an older installation.
Installed systems generally run $700 to $1,300 per kilowatt-hour, putting a 10-kilowatt-hour setup in the $8,000 to $13,000 range before incentives. Lithium iron phosphate batteries, now the dominant residential chemistry, lose about 1 to 2 percent of capacity per year and are rated for 6,000 to 10,000 cycles, which works out to roughly 15 to 20 years of useful life.
One incentive to be aware of: the 30 percent federal Residential Clean Energy Credit for qualified battery storage with at least 3 kilowatt-hours of capacity is no longer available for systems placed in service after December 31, 2025.1Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit Some state and local battery incentives still exist; check your state energy office.
Batteries and Backup Power
A standard grid-tied solar system without a battery will not run your home during a utility outage, even in full sunshine. Grid-tied inverters must comply with IEEE Standard 1547, which requires them to disconnect within two seconds of detecting an outage so that solar power does not flow back into wires that line workers believe are dead.2U.S. Department of Energy. IEEE 1547.1 Overview
Backup power requires a battery paired with an inverter capable of “islanding,” which isolates your home from the grid through a transfer switch and runs it from the battery and panels. You can wire the battery to a critical-load panel covering only essential circuits like the refrigerator, lights, and medical equipment, or to the main panel for whole-home backup. Critical-load setups need less capacity and cost less; whole-home configurations need larger systems.
Shift Your Usage into Daylight Hours
The cheapest way to use more of your own solar is to run power-hungry appliances while the panels are producing. This is called load shifting, and it needs no hardware beyond a few timers or smart controls.
- Schedule electric vehicle charging for midday rather than overnight. Some smart energy managers can start charging automatically when a production surplus appears.
- Run a heat pump water heater during peak sun hours. The tank effectively stores solar energy as hot water for evening use.
- Use delay-start features on dishwashers and laundry machines to run them in the middle of the day.
Every kilowatt-hour you consume straight from your panels avoids the efficiency losses of battery storage and the reduced export rates under net billing. In areas where export credits are low, load shifting is often the single most effective way to improve your solar payback.
Sell Renewable Energy Certificates
In some states, your panels earn tradeable certificates on top of the electricity they generate. A Solar Renewable Energy Certificate, or SREC, represents the environmental attributes of one megawatt-hour of solar generation. The certificate is separate from the physical power, so you can sell the SREC while still using or exporting the actual electricity.3US EPA. State Solar Renewable Energy Certificate Markets
SREC markets exist in about a dozen states, including New Jersey, Massachusetts, Pennsylvania, Maryland, and the District of Columbia, where renewable portfolio standards require electricity suppliers to buy SRECs to prove they are meeting solar mandates.3US EPA. State Solar Renewable Energy Certificate Markets Prices vary dramatically: recent values have ranged from under $10 in oversupplied markets to over $380 in the District of Columbia. A residential system generating 8 to 10 megawatt-hours a year could earn anywhere from a few dozen dollars to several thousand dollars annually, depending on the state.
Most homeowners work with aggregators or brokers who track output, issue certificates once the one-megawatt-hour threshold is reached, and sell them in exchange for a percentage fee. SRECs have expiration windows, often two to three years from generation, after which they lose compliance value.
SREC revenue is generally considered taxable gross income, and you report the full amount received before deducting broker fees.4Energy.gov. Homeowners Guide to the Federal Tax Credit for Solar Photovoltaics Commissions and related costs may be deductible, but a tax professional can confirm the treatment for your situation. Net metering bill credits, by contrast, are generally not treated as taxable income because they function as a reduction of your utility bill rather than a payment for energy sold.
Share It Through Virtual Net Metering
If you consistently produce more than you can use, or if you own panels on a shared building, virtual net metering lets the credits flow to more than one account. Energy credits from a single installation are allocated across multiple utility accounts, which is common in apartment buildings and condominiums where panels sit on a shared roof and each unit receives a proportional share.
Community solar extends this idea to people who cannot install their own panels, including renters and homeowners with shaded roofs. Subscribers to a shared off-site project pay a monthly fee for their share of production and receive bill credits that typically exceed what they pay. As of 2024, more than 20 states and the District of Columbia had enacted specific community solar policies.5Energy.gov. Community Solar For Opportunity States
Virtual net metering is governed by utility-specific rules that define eligible property types, how credits divide among participants, and the geographic boundaries for the accounts involved. On a multi-unit property, you typically file a credit allocation form with the utility specifying how much generation goes to each meter.
Interconnection: The Step Before Any Export
Before you can send power to the grid under any of these arrangements, your utility requires an interconnection agreement confirming that your system meets safety and technical standards. The process involves an application, a one-time processing fee that varies by utility, and an inspection. Most utilities require an external disconnect switch near your meter so line workers can manually isolate your system, and your inverter must comply with IEEE 1547.
The agreement also specifies which compensation structure applies to your account, whether net metering, net billing, or something else, and may cap your system size based on your historical electricity use. Complete this step before activating the system, because exporting power without authorization can lead to disconnection or voided credits.