The solar buyback rate is the price per kilowatt-hour that a utility company pays for excess electricity generated by a solar system and fed back into the grid. This rate is typically lower than the retail electricity rate customers pay. Buyback rates vary significantly by location and utility provider, ranging from $0.03 to $0.15 per kWh depending on regional energy markets and state regulations.
Rate Structures
Most utilities use net metering or tiered rate structures. Net metering allows customers to offset consumption dollar-for-dollar, while other programs pay fixed rates for exported power. Time-of-use (TOU) rates can offer higher buyback rates during peak demand periods, potentially increasing returns by 20 to 40 percent compared to flat rates.
Financial Impact
Buyback rates directly affect solar system ROI and payback periods. Higher buyback rates can reduce payback periods from 8-10 years to 6-8 years. Customers should verify their utility’s specific buyback program before installation, as rates and programs change periodically and significantly influence long-term savings projections.