When a rooftop solar installation generates more electricity than a household consumes at a given moment, that surplus flows outward through the meter and onto the local distribution grid. Net metering is the billing arrangement that tracks this flow and applies it as a credit against electricity drawn from the grid at other times — typically at night or during overcast periods.

The term "net metering" refers to the net difference between energy exported and energy imported during a billing period. If a household produces more than it consumes over a month, the net reading is negative, and the utility applies a credit. If the household draws more than it produces, the net reading is positive, and the normal rate applies to the difference.

How the Meter Tracks Generation and Consumption

Most Canadian utilities now require a bidirectional meter — sometimes called a smart meter or interval meter — that records electricity flowing in both directions. Older single-direction meters were replaced across much of the country through provincial smart meter programs, but the interconnection process still requires formal utility approval and, in many cases, a new meter installation coordinated between the homeowner, the solar installer, and the utility.

In practical terms, the meter tracks two figures: kilowatt-hours (kWh) consumed from the grid and kWh exported to the grid. At the end of the billing period, the utility calculates the net amount and applies the appropriate rate or credit.

Credit Rates: Retail vs. Wholesale

The rate at which exported electricity is credited varies considerably by province and utility. There are two broad approaches:

  • Retail-rate net metering: Credits are applied at the same rate the household pays for electricity. This is the more favourable arrangement for solar owners and is used in Ontario (for customers on time-of-use rates, credits follow that structure), British Columbia under BC Hydro, and several Atlantic utilities.
  • Below-retail or avoided-cost credit: Some utilities credit exports at a lower rate — often the wholesale or avoided-cost rate — which reduces the financial return from solar generation. This arrangement is more common where regulators have decided that retail-rate crediting shifts costs onto non-solar customers.

Alberta's electricity market, being deregulated, handles net metering differently from provincially regulated utilities. The Micro-generation Regulation under the Electricity Utilities Act governs systems up to 5 MW, and the credit rate is tied to the regulated rate option or the retailer's rate. Homeowners in Alberta should confirm terms directly with their retailer.

Annual Rollover and Excess Credits

A key variable in any net metering program is what happens to accumulated credits at year-end. Three common treatments exist:

  1. Annual rollover: Credits carry forward indefinitely or for a set period (often 12 months). Unused credits at the end of the year are either forfeited or paid out at a lower rate. BC Hydro, for instance, pays out net annual credits at the prevailing wholesale rate at year-end.
  2. Monthly reconciliation: Some utilities reconcile each month independently, meaning credits cannot carry forward. This is less common but worth verifying with your utility.
  3. Perpetual carry-forward: A small number of programs allow credits to accumulate without expiry, which benefits households with highly seasonal generation.

Ontario's Independent Electricity System Operator (IESO) maintains documentation on how net metering interacts with the province's time-of-use rate structure. The Ontario Energy Board also publishes a consumer guide on net metering for residential customers, available on its website.

System Size Limits Under Provincial Programs

Net metering eligibility typically comes with a system capacity cap. In most provinces, residential net metering programs cover systems sized to match a household's annual consumption — meaning an installer will not typically design a system that produces significantly more electricity than the household uses, as the excess would be credited at a lower rate or forfeited.

Common capacity limits in residential programs:

  • British Columbia: Up to 100 kW for BC Hydro customers.
  • Ontario: Systems up to 500 kW are eligible; residential installations are almost always well below this threshold.
  • Nova Scotia: Nova Scotia Power's net metering program covers systems up to 100 kW.
  • New Brunswick: NB Power's program covers systems up to 100 kW.
  • Quebec: Hydro-Québec's self-generation option covers systems up to 50 kW for residential customers.

These limits change over time as programs are updated by regulators. The Canadian Solar Industries Association (CanSIA) maintains a provincial program tracker at cansolara.ca that is updated as regulations evolve.

The Interconnection Process

Before a solar installation can be connected to the grid and net metering activated, the homeowner's installer must submit an interconnection application to the local distribution company (LDC). This process involves:

  • A technical review of the proposed system to ensure it meets safety and power quality standards.
  • A site visit or documentation review by the utility.
  • Installation of the required bidirectional meter.
  • Execution of a net metering agreement between the homeowner and the utility.

Interconnection timelines vary. In some jurisdictions, straightforward residential applications are processed within weeks. In areas where distribution infrastructure is congested, the review period can extend to several months. Discussing expected timelines with your installer and the local utility before finalising installation plans is advisable.

What Net Metering Does Not Cover

Net metering programs credit energy production but do not typically eliminate fixed monthly charges such as distribution charges, transmission charges, or the debt retirement charge (in Ontario). These fixed components of a utility bill remain regardless of how much electricity a household generates. Homeowners should review a sample bill from their utility and identify which line items would be reduced by solar generation and which would remain unchanged.

Natural Resources Canada publishes a guide to residential solar and net metering at natural-resources.canada.ca, which includes province-by-province program summaries.

Understanding the specific net metering rules in your province and with your utility is the most important step before commissioning a residential solar installation. Program terms, credit rates, and capacity limits have all changed in recent years and are likely to continue evolving as provincial energy regulators update their policies.

Last updated: June 12, 2026