One of the first things Michigan homeowners want to know about solar is simple: what happens to the extra power my panels make? It’s a great question, and the answer is where a lot of outdated information floats around online. Michigan replaced traditional one-to-one net metering years ago with something called the Distributed Generation program. Understanding how it credits you — and where a battery fits — is the difference between a system that’s designed well for the current rules and one that’s designed for rules that no longer exist. Let’s break it down in plain English.
From net metering to “inflow / outflow”
Under old-school net metering, every kilowatt-hour you sent to the grid offset one you pulled back later, at the same retail price. The grid basically acted as a free battery. Michigan moved away from that under state law — Public Act 342 of 2016, later updated by Public Act 235 of 2023. Today, DTE and Consumers Energy customers with solar are on a Distributed Generation tariff built around an inflow / outflow mechanism.
Here’s what that means in practice. A smart meter tracks two separate flows instead of just netting them together:
- Inflow — the power you pull from the grid when your panels aren’t covering your use (at night, early mornings, cloudy stretches). You pay the normal retail rate for this, the same as any customer.
- Outflow — the excess power you send to the grid when your panels make more than you’re using at that moment. You’re credited for this at the utility’s outflow rate, which is lower than the retail rate.
So the crucial change is this: the power you export is worth less than the power you buy. At DTE, for example, the newer Distributed Generation rider (which replaced the old net metering rules) credits exports meaningfully below what the previous program paid — a reduction of roughly 45% compared to the old net metering credit, by most accounts.
Why this changes the game plan
Under 1:1 net metering, the round trip was free — export at noon, pull it back for free at night. Under inflow/outflow, that round trip isn’t free anymore: you export at the lower outflow rate and buy back at the higher retail rate, and you eat the difference.
That has a clear, practical design implication: the more of your own solar you use directly (or store), the better. Every kilowatt-hour you consume the moment your panels make it — or bank in a battery for later — is worth full retail value to you. Every kilowatt-hour you export and buy back later loses the spread between the retail and outflow rates. Designing a system as if the grid were still a free battery leaves money on the table under today’s rules.
Where a battery comes in
This is exactly why batteries and the DG program go hand in hand in Michigan. Instead of sending your midday surplus to the grid for a lower outflow credit, you store it and use it in the evening — avoiding buying that power back at retail. The battery captures the value that the inflow/outflow spread would otherwise cost you.
And it does double duty. The same battery that improves your day-to-day economics also gives you backup during Michigan’s frequent outages — so it addresses two of the biggest reasons Michiganders go solar at once. You don’t need a battery to benefit from solar under the DG program, but the economics increasingly favor self-consumption, and storage is the tool that maximizes it.
A few other things worth knowing
- System size is capped. Qualifying systems are generally sized to generate up to 110% of your annual usage — you design to your own consumption, not beyond it. There’s no benefit to massively oversizing under these rules.
- Legacy customers are grandfathered. Homeowners who enrolled under the old net metering tariff keep those terms for 10 years from their enrollment date before moving to the newer program. If you’re a legacy customer, know when your window ends.
- The details differ by utility. DTE and Consumers each have their own version of the tariff and their own outflow rates, so the exact credit depends on who serves you. The principles are the same; the numbers vary.
- There’s a program cap. The DG program has an overall enrollment cap tied to each utility’s peak load, which is one more reason not to wait indefinitely.
How to make the rules work for you
Put simply, the winning strategy under Michigan’s DG program is to shift your solar from “export and buy back” to “use and store.” That means:
- Size to your actual usage (up to that 110% ceiling), not beyond it.
- Consider a battery so your midday surplus powers your evening instead of being sold low and bought back high.
- Know your utility’s specific outflow rate, since DTE and Consumers differ.
- Check your legacy status if you already have solar under the old tariff.
None of this makes solar a worse deal in Michigan — rising DTE and Consumers rates keep the core value strong. It just means the design should match the current rules to squeeze out the most value.
A few quick questions
Does Michigan still have net metering? Not the classic 1:1 version. It’s been replaced by the Distributed Generation program’s inflow/outflow structure.
Why is my export credited less than what I pay? Because inflow (what you buy) is at retail and outflow (what you export) is at a lower rate. That spread is the reason self-consumption and storage matter.
Do I need a battery? No, but it improves the economics under inflow/outflow and adds outage backup — which is why many Michigan homeowners choose one.
How big should my system be? Generally up to about 110% of your annual usage. Designing to your consumption is the sweet spot under these rules.
The bottom line
Michigan doesn’t do 1:1 net metering anymore. Under the Distributed Generation program’s inflow/outflow structure, you buy grid power at retail and get credited for exports at a lower outflow rate — which means the smartest systems are designed to use and store as much of your own solar as possible rather than lean on the grid as a bank. Size to your usage, understand your utility’s specific rates, check your legacy status, and consider a battery to keep more of your production’s value at home.
Ready to take control of your energy costs and protect your home from Michigan’s frequent outages? Request a free, no-obligation quote from Stellar Solar Michigan — serving Michigan homeowners with solar and battery storage since 1998, A+ rated with the BBB — or call 858-395-6905.