How Michigan pays you for solar you send to the grid

People still call it net metering. Michigan has not really had net metering for years, and the difference matters enough to change what size system you should buy.

Inflow and outflow, not spin the meter backward

Old-style net metering treated your meter like a bank. Every kilowatt-hour you exported offset a kilowatt-hour you later imported, at the same price. One kWh out, one kWh back.

Michigan’s Distributed Generation Program separates the two directions:

• Inflow is energy you pull from the grid. You pay the full retail rate for it, same as any other customer.
• Outflow is energy your array sends to the grid. You are credited for it at a rate set in your utility’s approved tariff, and that rate is lower than the retail rate you pay.

So a kilowatt-hour you export is worth less than a kilowatt-hour you import. The exact outflow rate depends on your utility and its current tariff, and it changes as rate cases are decided, so it is one of the numbers we confirm for your specific utility when we build your model rather than quoting a figure that may be stale by the time you read it.

The practical consequence: energy you use in your own house at the moment you generate it is worth full retail. Energy you export is worth less. That makes self-consumption valuable and makes oversizing counterproductive.

How large you are allowed to build

Under the program, your system is sized against your own consumption. You can build up to 110% of the electricity you used over the past twelve months. Residential projects are capped at 550 kW. Commercial projects can go larger.

That 110% figure is why we ask for a full year of usage before designing anything. It is not a nice-to-have for the model — it is the input that sets your legal ceiling.

The uncapped alternative

Sizing to your usage is not the only path. Both Consumers Energy and DTE run an alternative interconnection program with no size cap at all — Consumers calls theirs Simple Renewable. The trade-off is what they pay you: exported energy is compensated at a lower rate than under the distributed generation tariff.

So the question is not only “how big can I go,” it is which program the system is sized for. A site with a large roof and modest consumption is the case where the uncapped route is worth modelling. For most homes, sizing to consumption under the distributed generation program still wins, because the export rate is what carries the economics.

Either way, there is no version of this where you overbuild and sell power to the utility at a profit. Michigan does not work that way.

Program caps

Michigan utilities have historically operated the program under a capacity cap expressed as a percentage of peak load. Caps have been raised and, in at least one case, extended voluntarily past the original limit. Whether room remains in your utility’s program is a live question rather than a permanent fact, and it is one of the first things we check on a project, because it affects whether your interconnection application gets approved on the terms you are expecting.

Cooperatives and municipal utilities set their own terms

The Distributed Generation Program applies to rate-regulated utilities under Michigan Public Service Commission jurisdiction. Member-regulated electric cooperatives and municipal utilities are not required to participate, so their programs are formally their own rather than the state tariff.

In practice the shape is much the same: energy you export is worth less than energy you use, and the system is sized against your consumption. Assume the same structure and expect the specifics — the export rate, the size limit, the application process — to differ.

If your utility is	Then
Consumers Energy	MPSC-regulated. The state Distributed Generation Program tariff applies.
DTE Electric	MPSC-regulated. The state program applies.
Great Lakes Energy	A member-regulated cooperative. Sets its own terms, similar in shape to the state program.
A municipal utility	Sets its own terms.

Which is the long way of saying we confirm the current terms with your utility while designing your system, rather than quoting you someone else’s tariff. If you are on a cooperative or a municipal, that is a conversation we have with you before the design is fixed.

If you already have solar

Customers who enrolled under the older true net metering program were given a period during which their original terms continue to apply rather than being moved immediately onto the newer structure. If you have had an array for years and are considering adding to it, that is worth checking before you change anything, because modifying a system can affect which tariff you sit on.

That is a good conversation to have before you add panels, not after.

What this means for how we design

Three things, in order:

1. We start from your usage, because it sets both your ceiling and your economics.
2. We size toward self-consumption, since energy you use is worth more than energy you export.
3. We confirm your specific utility’s current terms rather than applying a general rule, because in this service area the general rule is wrong for a meaningful share of customers.

Tariffs and program terms change. Everything here should be confirmed against your utility’s current filing for your specific project, which is part of what we do before you sign anything.