What Is Behind-the-Meter (BTM)? Definition & Guide

Key Takeaways

Behind-the-meter refers to any energy asset installed on the customer’s side of the utility meter, including rooftop solar, batteries, and EV chargers
BTM systems prioritize self-consumption — electricity is used on-site first, reducing the volume purchased from the grid
Surplus generation can be exported to the grid for credits under net metering or feed-in tariff programs
Commercial BTM systems can reduce demand charges by shaving peak load, often saving $5–$15/kW per month
Pairing BTM solar with battery storage maximizes value by shifting energy use to high-rate periods and providing backup power
Front-of-meter (FTM) systems feed directly into the grid as wholesale generators — BTM systems serve the building first

What Is Behind-the-Meter?

Behind-the-meter (BTM) describes the location and function of energy systems installed on the customer’s side of the electric utility meter. Any solar array, battery, generator, or load management device that sits between the utility meter and the building’s electrical loads is considered behind-the-meter. The meter itself is the dividing line: everything on the utility’s side is “front-of-meter,” and everything on the customer’s side is “behind-the-meter.”

The distinction matters because it determines how electricity is valued, regulated, and compensated. BTM generation offsets retail electricity purchases at the full rate the customer would otherwise pay. Front-of-meter generation, by contrast, sells into the wholesale market at significantly lower prices. This retail-rate advantage is the core economic driver behind rooftop solar and on-site storage.

Behind-the-meter is not just a location — it’s an economic classification. BTM energy displaces retail-rate electricity, which in most U.S. markets is 3 to 5 times the wholesale rate. That spread is why distributed solar remains financially attractive even as utility-scale costs drop.

Types of Behind-the-Meter Systems

BTM configurations vary by building type, rate structure, and whether storage is included. Each type targets different value streams.

Most Common

Residential BTM Solar

Rooftop solar arrays sized to offset 80–120% of annual household consumption. The system feeds the home’s loads directly, and any surplus exports to the grid for net metering credits. Typical systems range from 5–12 kW and are valued primarily through avoided retail electricity costs.

Highest Value

Commercial BTM Solar+Storage

Solar arrays paired with battery storage on commercial buildings. The battery shaves peak demand to reduce demand charges, stores midday solar for evening use, and can provide backup power. Systems typically range from 50 kW to 1 MW solar with 100–500 kWh of storage.

Grid Credit

BTM with Net Metering

BTM solar systems in jurisdictions with net metering export surplus electricity for bill credits. The value of exports depends on the credit rate — full retail, avoided cost, or a time-of-use schedule. System sizing targets annual production near 100% of consumption to maximize credit value.

Peak Reduction

BTM with Demand Charge Management

Commercial BTM systems designed to reduce peak demand measured by the utility meter. Batteries discharge during high-load periods to flatten the demand curve. Savings of $5–$15/kW/month are common in markets with demand charges above $10/kW. Requires accurate load profiling and control logic.

Behind-the-Meter vs. Front-of-Meter vs. Virtual Net Metering

The meter location determines how generation is compensated and regulated. Here’s how the three main configurations compare:

Feature	Behind-the-Meter	Front-of-Meter	Virtual Net Metering
Location	Customer side of meter	Utility side of meter	Remote generation, credits applied to subscriber meters
Typical scale	5 kW – 1 MW	1 MW – 500+ MW	1 MW – 10 MW (community solar)
Compensation rate	Retail rate (avoided cost)	Wholesale rate or PPA price	Varies — typically 5–15% discount on retail
Primary value	Self-consumption + net metering credits	Energy sales + capacity payments	Bill credits for subscribers without suitable rooftops
Permitting	Local building + electrical permits	Utility interconnection + environmental review	State community solar program rules
Who owns the system	Building owner or third-party (lease/PPA)	Developer or utility	Developer; subscribers buy credits
Grid impact	Reduces local load; can cause voltage rise on feeders	Feeds directly into transmission/distribution	Reduces net load for multiple meters
Battery pairing	Common for demand charge reduction and backup	Grid-scale storage for arbitrage and ancillary services	Uncommon; credits are financial, not physical

Calculating Behind-the-Meter Value

The financial value of a BTM system depends on how much electricity is consumed on-site versus exported, and the rate differential between those two streams.

BTM Value Formula

BTM Value ($) = Avoided Retail Rate ($/kWh) × Self-Consumed Energy (kWh)
+ Export Rate ($/kWh) × Exported Energy (kWh)
+ Demand Charge Savings ($/kW × Peak kW Reduced)

Example — Commercial building in California:

Annual solar production: 150,000 kWh
Self-consumed on-site: 105,000 kWh (70% self-consumption ratio)
Exported to grid: 45,000 kWh
Retail rate: $0.28/kWh
Export rate (NEM 3.0): $0.08/kWh
Peak demand reduced by battery: 40 kW at $18/kW/month

Annual BTM value:

Self-consumption: 105,000 × $0.28 = $29,400
Export credits: 45,000 × $0.08 = $3,600
Demand charge savings: 40 × $18 × 12 = $8,640
Total: $41,640/year

Use a generation and financial tool to model these value streams accurately for each project, accounting for hourly load profiles and time-of-use rate schedules.

NEM 3.0 and the Shift Toward Self-Consumption

California’s NEM 3.0 (Net Billing Tariff), effective April 2023, reduced export compensation by 75% compared to NEM 2.0. This policy shift makes self-consumption far more valuable than grid export. BTM systems in NEM 3.0 territory now prioritize battery storage to capture solar energy for on-site use during evening peak hours, when retail rates are highest. Similar policy changes are spreading to other states. Designers should model BTM economics with storage as the default, not the exception. Use solar design software to simulate hourly self-consumption and storage dispatch for accurate financial projections.

Guidance by Role

Designers

Size BTM systems based on the building’s load profile, not just available roof area — oversizing without storage leads to low-value exports
Model self-consumption ratios at 15-minute intervals to capture realistic coincidence between generation and load
Include battery storage in every commercial BTM design to capture demand charge savings and time-of-use arbitrage
Account for future load changes (EV chargers, heat pumps) that may increase on-site consumption and improve BTM economics

Installers

Place the production meter (if required) and the inverter on the load side of the main service panel to maintain BTM classification
Verify interconnection requirements with the utility before installation — BTM systems typically follow NEC 705 and local AHJ rules
Install consumption monitoring (CTs on the main breaker) to enable real-time self-consumption tracking and battery dispatch
Coordinate with the utility on meter upgrades — many BTM systems require a bi-directional smart meter for net metering

Sales Professionals

Lead with the self-consumption story: “Every kWh you use from your own panels avoids the full retail rate” — this is the clearest value proposition
Show customers the difference between retail and export rates to justify battery storage as part of the BTM system
For commercial customers, quantify demand charge savings separately — this is often the largest single value stream for BTM storage
Use solar design software to generate proposals that break down BTM value by self-consumption, export credits, and demand charge reduction

Maximize Behind-the-Meter Value with Accurate Load Modeling

SurgePV models hourly generation against real load profiles to optimize self-consumption, battery sizing, and demand charge savings for every BTM project.

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Frequently Asked Questions

What does behind-the-meter mean in solar?

Behind-the-meter means the solar system is installed on the customer’s side of the utility meter, between the meter and the building’s electrical loads. The system generates electricity for direct on-site use first. Any surplus can be exported to the grid for credits under programs like net metering. The term distinguishes customer-sited generation from utility-scale “front-of-meter” solar farms that feed directly into the grid.

Is rooftop solar behind-the-meter?

Yes. All rooftop solar systems are behind-the-meter by definition. They connect to the building’s electrical system on the load side of the utility meter, serving on-site consumption before any surplus reaches the grid. Ground-mounted solar on a customer’s property is also BTM, as long as it connects behind the utility meter. The classification depends on the electrical connection point, not the physical mounting location.

How does behind-the-meter solar save money?

BTM solar saves money through three mechanisms. First, self-consumed solar energy avoids the full retail electricity rate, which typically ranges from $0.12 to $0.40/kWh depending on location and rate plan. Second, surplus energy exported to the grid earns credits through net metering or feed-in tariffs, though usually at a lower rate than retail. Third, commercial BTM systems paired with batteries can reduce peak demand charges by $5–$15/kW per month. The generation and financial tool can model all three value streams for a specific project.