How Net Metering Works in Ontario
What Is Net Metering?
Net metering is a billing arrangement offered by Ontario's local distribution companies (LDCs) that allows homeowners and businesses with grid-connected solar panels to send surplus electricity back to the grid in exchange for kilowatt-hour (kWh) credits. Instead of letting excess solar energy go to waste on a sunny afternoon, your bi-directional meter tracks what you export, and those credits are applied against the electricity you draw from the grid at night or on cloudy days.
The program was introduced by the Ontario Energy Board (OEB) under Ontario Regulation 541/05 and is available to systems up to 500 kW. For most residential installations in the 5 kW to 15 kW range, net metering is the standard path to monetizing your solar investment. It replaced the microFIT program, which closed to new applicants in 2017.
How kWh Credits Work
Under net metering, credits are tracked in kilowatt-hours, not dollars. When your solar panels produce more electricity than your home consumes in a given hour, the excess flows to the grid and your meter effectively runs backward. At the end of each billing period, your LDC calculates the net difference between what you imported and what you exported.
If you exported more than you imported, you receive a kWh credit that rolls forward to the next billing period. These credits accumulate over time and can carry forward for up to 12 months. At your annual anniversary date, any remaining credits are forfeited. This means the goal is to size your system so that over the course of a full year, your generation roughly matches your consumption.
One important detail: credits offset the electricity commodity charge on your bill (the per-kWh rate you pay for power), but they do not offset delivery charges, regulatory charges, or the debt retirement charge. This means even if your generation perfectly matches your consumption, you will still owe the fixed and volumetric delivery portions of your hydro bill.
What Do You Actually Get Paid?
Technically, you do not get paid cash under net metering. The value of your credits equals the commodity rate you would have paid for that electricity. Under time-of-use (TOU) pricing as of late 2025, the rates are 9.8 cents/kWh off-peak, 15.7 cents/kWh mid-peak, and 20.3 cents/kWh on-peak. Since solar panels generate most of their power during mid-peak and on-peak hours, the effective value of your credits tends to be higher than the blended average.
If you are on tiered pricing instead of TOU, the first 1,000 kWh per month (in non-winter months) cost 10.3 cents/kWh, and everything above that costs 12.5 cents/kWh. Solar credits reduce your consumption from the top tier down, so they offset the more expensive electricity first. Either way, the financial benefit is real, but it comes as a reduction on your bill rather than a cheque in the mail.
How It Shows on Your Bill
Your hydro bill will include a line showing your total grid imports and total grid exports for the billing period. If you exported more than you imported, the electricity commodity charge will show zero, and the surplus will appear as a credit balance carried forward. Delivery charges, regulatory charges, and HST still apply to the electricity you consumed from the grid.
Most LDCs, including Hydro One, Toronto Hydro, and Alectra, display net metering credits clearly on the bill. You can also track your generation and exports through your inverter's monitoring app, which gives you real-time data on system performance.
Who Qualifies for Net Metering?
To qualify for net metering in Ontario, you must own or lease a renewable energy generation system (solar, wind, or hydro) connected to the grid. The system must be 500 kW or smaller, and it must be located on the same property as the meter it is connected to. You need to enter into a net metering agreement with your LDC, and your system must meet all Electrical Safety Authority (ESA) requirements and pass inspection.
The application process involves submitting a net metering application to your LDC, getting your system installed by a licensed contractor, having the ESA inspect and approve the installation, and then having your LDC install a bi-directional meter. Most LDCs process net metering applications within a few weeks, and there is typically no application fee.
Pros and Cons of Net Metering
The advantages of net metering are significant. You can offset a large portion of your annual electricity costs without needing battery storage. The program is straightforward to apply for and available province-wide. Your surplus generation is not wasted, and the 12-month credit rollover means summer overproduction can offset higher winter consumption. Combined with the Home Renovation Savings Program (HRSP) rebate of up to $5,000, net metering makes solar financially attractive for most Ontario homeowners.
On the downside, credits expire annually, so oversizing your system provides no additional benefit. You do not receive cash for surplus generation, only bill credits. Delivery and regulatory charges still apply, so your bill will never reach zero. And if you move, your credits do not transfer to the new owner. Despite these limitations, net metering remains the most practical and cost-effective way for Ontario homeowners to benefit from solar energy.
Is Net Metering Right for You?
For most Ontario homeowners with a suitable roof and annual electricity consumption between 8,000 and 15,000 kWh, net metering combined with a properly sized solar system offers an excellent return on investment. The key is to right-size your system so that annual generation closely matches annual consumption, maximizing the value of your credits without wasting surplus at your anniversary date.
Ready to find out how much you could save with net metering in Ontario? SolarQuote connects you with vetted local installers who can assess your home, design a system optimized for your consumption patterns, and walk you through the net metering application process. Get your free personalized quote today and start turning sunshine into savings.