NJ Net Metering 2026: What Changed and What’s Coming

Net metering is the unsexy plumbing that makes residential solar work financially. Most homeowners don’t think about it until they’re three months into ownership and start asking why their bill is now $11 a month instead of $300. The answer is net metering, and New Jersey’s version of it is — quietly — one of the strongest in the country. Here’s the version of the rules I walk every client through, plus what changes when PSE&G’s RS-TOU-3P time-of-use rate launches June 1, 2026.

The mechanism, in plain English

When the sun is up and your panels are producing more electricity than your home is consuming, the excess flows back into the grid. NJ utilities are required to credit you for that exported electricity at the full retail rate — the same per-kWh rate you’d pay to consume. (Source: NJ Board of Public Utilities — Net Metering, NJ A.A.C. 14:8-4.)

This is called “1:1 retail” net metering. Other states do not do this:

• California, under NEM 3.0 (April 2023), credits exported solar at about 25% of the retail rate.
• Many Midwest states credit at “avoided cost” (utility wholesale), which is typically 40–60% of retail.
• Some Southeast states credit at a fixed buyback rate well below retail.

NJ’s 1:1 rule is the single most important variable in why solar still pays back in 7–9 years here, even after the federal Residential Clean Energy Credit (Section 25D) was repealed effective January 1, 2026.

What “monthly rollover” means in practice

Each month, your utility calculates:

• Consumption: kWh you pulled from the grid.
• Generation export: kWh your panels sent to the grid.
• Net: the difference.

If you net out positive (consumed more than you exported), you pay the utility for the net consumption at the standard retail rate.

If you net out negative (exported more than you consumed), the utility carries the credit forward to next month. That credit is denominated in kWh, not dollars — so if you bank 200 kWh in May, you can use 200 kWh free in November, when your panels are producing less and your usage is higher.

This is the mechanism that makes summer-heavy production line up with winter-heavy consumption. Most NJ homes I work with bank credits May–September, then draw them down October–April.

The annual true-up

Each utility runs an annual settlement period (most run May to April). At the end of the period, any net credit balance you still have left over is paid out at the PJM hourly wholesale rate for the relevant exporting hours — typically $0.03–$0.05 per kWh. That’s far below the retail $0.21–$0.26 you’ve been earning all year, so the lesson is: don’t oversize your system to bank credits for the true-up. It doesn’t pay.

The right system size for NJ is one that produces roughly equal to your annual consumption — maybe a hair under. That way the monthly rollover does its job and you end the year close to net-zero on credits.

What about PSE&G’s TOU rate?

PSE&G’s voluntary RS-TOU-3P launches June 1, 2026. Under TOU, the per-kWh rate changes depending on the time of day:

• Peak (weekdays 4–9 PM): ~$0.31/kWh
• Mid-peak: ~$0.25/kWh
• Off-peak (overnight): ~$0.21/kWh

The net metering math under TOU follows the rate that’s in effect when the export happens. So if you have:

• Solar only, no battery: most of your exports happen midday, when the sun’s strongest and the rate is mid-peak. Net positive vs the flat rate, but not dramatically.
• Solar + battery: you can store midday production and discharge to the grid during the 4–9 PM peak, exporting at $0.31/kWh. This is where TOU dramatically improves the math.
• No solar: TOU is a slight loss compared to the flat rate, unless you can shift dishwasher / laundry / EV charging to overnight.

I run both the flat-rate and TOU scenarios on every PSE&G client’s quote. Most clients without battery come out roughly even. Most clients with battery come out 12–18% better lifetime savings under TOU.

NJ vs California (NEM 3.0): the math

Two takeaways: (1) NJ is meaningfully better than CA for residential solar in 2026; (2) NJ does not have CA-style hostile NEM rules in front of us as far as anyone can see in the BPU’s published agenda.

What’s the SREC-II connection?

Net metering and SREC-II are two different programs. They both pay you for solar, but through different mechanisms:

• Net metering: kWh-for-kWh utility bill offset. You feel it in a lower monthly bill.
• SREC-II / ADI: cash payments per MWh produced. You feel it as quarterly checks.

(I wrote up the full SREC-II mechanic in a separate post.)

An 8.4 kW NJ system in average sun generates about 10 MWh per year. Under net metering, that’s roughly $2,100–$2,600 in avoided utility bill (at $0.21–$0.26/kWh). Under SREC-II, that’s an additional $760–$950 in cash. Stacked, that’s the heart of why solar still works in NJ economy after the federal ITC repeal.

Is anything changing in NJ net metering?

Quick honest read on what’s coming, from the BPU’s published docket activity:

• No retail-rate cut announced. The BPU has not opened a docket to revisit the 1:1 rule. The Successor Solar Incentive (SREC-II) program was already the major structural reform; the BPU has signaled net metering is paired with that program for the foreseeable future.
• Interconnection rule modernization (BPU Docket QO21010085) took effect January 5, 2026 — covers application portal, pre-application feasibility checks, dispute resolution. See the BPU order.
• Time-of-use rates are being rolled out utility by utility. PSE&G’s RS-TOU-3P launches June 2026. JCP&L and ACE have not announced firm TOU dates as of May 2026.

If a CA-style NEM revision ever did come to NJ, I’d expect 12–18 months of BPU stakeholder process before it landed. The agenda doesn’t show it.

Bottom line, in plain English

NJ net metering in 2026 still works the same way it has for the last decade — 1:1 retail, monthly kWh rollover, annual true-up at PJM wholesale. PSE&G’s TOU rate adds nuance for that one utility but doesn’t change the core mechanism. NJ remains one of the strongest net-metering states in the U.S. The single biggest threat to your net-metering economics isn’t a future policy change — it’s oversizing your system to bank credits that the true-up will pay out at a discount. Size to annual consumption, not to a fantasy of perpetual credit growth.