Net Metering vs Feed-in Tariff

How Feed-in Tariffs Work — and Where They Pay More

A feed-in tariff (FiT) pays a fixed rate for every kilowatt-hour your solar system exports to the grid, regardless of what you pay for the electricity you import. The two figures are completely decoupled. You buy electricity at one rate and sell it at another, and the export rate is set by a government policy or utility contract rather than by the retail market.

Feed-in tariffs dominated solar policy in Germany, the UK and Australia throughout the 2000s and 2010s, and some of those early contracts were extraordinarily generous. Homeowners who locked into the UK’s original Feed-in Tariff scheme in 2010 received 41.3p per kWh — a rate that made solar panels financially compelling even when hardware costs were still high. Those contracts ran for 20 years, meaning some UK households are still receiving that rate today.

Current FiT export rates are far more modest. Australia’s Smart Export programs (which replaced the old premium FiTs) now pay between 2 cents and 10 cents per kWh depending on the retailer and state, well below the 28–35 cents per kWh Australians pay to import power. The UK’s Smart Export Guarantee (SEG), launched in 2020, requires licensed electricity suppliers to offer an export tariff but sets no minimum rate above zero — the best available offers in early 2026 sit around 15p per kWh for those who shop actively. In the US, true feed-in tariff programs are rare; Hawaii had a FiT program that was largely phased out, and Vermont operates a standard-offer program paying around 10 cents per kWh for small solar installations.

Because the import and export rates are decoupled, FiT households have a clearer incentive to maximise export volume — but only when the export rate genuinely exceeds the marginal value of self-consumption. When it does not, which is the case in most markets today, self-consumption remains the priority. That reality has fundamentally changed how solar installers in Australia and the UK now size residential systems — moving away from maximum generation toward matching array output to daytime household consumption patterns.

Net Metering vs Feed-in Tariff: Key Structural Differences

The single most important structural difference is how the export rate is determined. Under net metering, your export credit is tied to the retail rate — which fluctuates over time as utility rates rise. That linkage is actually a long-term advantage for homeowners, because US retail electricity prices have risen at an average rate of 2.7% per year over the past two decades according to EIA data. Every time your utility raises its rates, your implicit net metering credit rises with it, improving your solar economics automatically without any action on your part.

Under a feed-in tariff, the export rate is fixed by contract or regulation, often for 10 to 20 years. Early adopters who locked in high rates — like the UK’s 41.3p scheme or Australia’s Queensland Solar Bonus Scheme at 44 cents per kWh — did extremely well. Late adopters who enter FiT programs today at 5–8 cents do not benefit from future retail rate increases on their exported power, which is a structural disadvantage over a 20-year system life.

A second important difference is administrative simplicity. Net metering requires only a single bidirectional meter and no separate export metering contract. Feed-in tariffs often require a dedicated export meter and a separate payment arrangement with a licensed supplier, which adds administrative friction and occasionally delays payments by several billing cycles.

There is also a meaningful self-consumption incentive difference. Net metering does not particularly reward or penalise shifting consumption to daytime; the credit rate is the same regardless of when you self-consume versus export. Feed-in tariffs at rates below retail, by contrast, create a strong incentive to shift loads — running dishwashers, washing machines and EV charging — to solar generation hours. Oregon and several other states with time-of-use net metering programs are beginning to hybridise the two models, paying higher credits during peak demand hours and lower credits during off-peak periods, blending the demand-management signals of a FiT with the administrative simplicity of net metering.

Understanding how your time-of-use rate structure interacts with solar export timing can uncover meaningful hidden savings. A time-of-use savings calculator lets you model exactly which consumption pattern maximises your bill reduction under whichever export policy applies in your state.