PSEG Long Island Solar Buyback Rates: $0.27–$0.31/kWh Explained

Ask three Long Island solar installers what PSEG-LI “pays” for excess solar power and you’ll likely get three different-sounding answers — because the real mechanism, net metering, doesn’t work like a buyback rate at all. For any system connected since 2018 it works like a rolling credit balance that offsets future bills and never converts to cash.

How PSEG-LI actually values your exports

When your panels produce more than the house is using — a sunny Tuesday afternoon in June, for instance — the surplus flows onto the grid and PSEG-LI credits your account at the full retail supply rate, currently around $0.27–$0.31/kWh depending on season and rate class. That credit isn’t a check; it’s a line item that offsets a future bill, the same way a gift card offsets a future purchase.

Those credits carry forward month to month. Produce more than you use in July and August, when panels run hardest and Long Island’s central-AC load peaks right alongside them, and you bank a credit balance that draws down through the shorter, lower-production days of December and January. That summer-to-winter carry is a big part of why solar pencils out here despite a latitude that gets real winters.

There is no yearly payout on a new system

Many explanations of Long Island solar describe a yearly “true-up” that pays out leftover credit in cash. That describes the older rules. Under LIPA’s tariff, an annual payment at the avoided-cost rate applies to residential systems connected before January 1, 2018. For a residential system connected on or after January 1, 2018, which is every system bought today, exports are credited to your next bill at the rate other customers in your class pay, there is no annual cash payment, and any credit still on the account at the 20th anniversary of the in-service date is removed (LIPA Tariff for Electric Service, Leaf No. 34F-1 and 34F-2, effective June 1, 2024).

This is the part that trips people up: “solar buyback” sounds like a price PSEG-LI pays for everything you send back. It isn’t. Exported power is only worth what it offsets on your own bills. Credit you never use has no cash value.

Why this makes system sizing the real lever

The buyback structure means the financial return on your array isn’t just about total production — it’s about how much of that production gets used as retail-value credit versus how much piles up unused. The residential solar installation design process starts from your trailing 12-month PSEG-LI usage specifically because of this math.

A tight-sized system. A house pulling 9,000 kWh/year with an 8 kW array (roughly matched to that usage under Long Island’s ~4.3 peak sun hours) will produce close to what it consumes across the year. Nearly all of that production either offsets real-time usage directly or earns a retail-rate credit that gets drawn down within the same cycle. Very little is left over unused.

An oversized system. The same house with a 10.5 kW array — sized for “future-proofing” without a specific plan — will overproduce relative to usage for most of the year. The overage banks as credit, and the balance keeps growing faster than the house can use it. That credit never converts to cash, so the extra panels that produced it earn nothing.

Oversizing isn’t always wrong — see the EV and heat pump note below — but it should be a deliberate call tied to a known future load, not a rounding-up decision made at the proposal stage.

When oversizing actually makes sense

Buyback economics change the calculus once you know a major new electric load is coming. A homeowner in Northport planning to add a heat pump within two years, or a Huntington family that’s already ordered an EV, is going to add several thousand kWh of annual usage that doesn’t exist yet in this year’s PSEG-LI bill. Sizing to today’s usage alone would leave that future load running mostly on grid power at retail rates.

In that case, a moderately oversized system captures value two ways: it produces at retail-offset value once the new load exists, and in the interim, the “excess” production banks credit that softens the bill during the gap. Credit banked before the new load arrives is drawn down once it does, so temporary overproduction is not wasted the way permanent overproduction is. The install process page walks through why planned loads — EV timeline, heat pump conversion, pool — get asked about before array size is finalized, specifically so this call is made with real numbers instead of a guess.

Time-of-use and the SC1-VS rate

Most Long Island residential accounts sit on PSEG-LI’s flat SC1 rate, where the retail credit value is the same regardless of when the export happens. A smaller number of homeowners are enrolled in PSEG-LI’s time-of-use rate, SC1-VS, where the commodity rate — and therefore the value of a net-metering credit — shifts by hour. On TOU, a credit earned during a summer weekday afternoon peak is worth meaningfully more than one earned at 10am on a spring weekend, because it’s valued at the rate in effect at export, not at consumption.

If you’re already on TOU, or considering switching for other reasons, that’s worth flagging on the first call — it changes not just the bill math but sometimes the recommended orientation and tilt, since maximizing afternoon production becomes more valuable than maximizing total annual kWh. For everyone else on flat SC1, the buyback math above applies without the extra layer.

How battery storage changes the buyback math

Adding a battery shifts some exports from “sold” to “stored.” Instead of pushing midday surplus onto the grid for a retail credit, a battery-equipped system can hold that surplus and discharge it that evening — covering usage that would otherwise be pulled from the grid at retail purchase price. For a homeowner who’s already sized tightly to annual usage, this doesn’t change the credit balance much, since there was little unused surplus anyway.

Where it matters more is for storm-season resilience and for homes carrying a moderately oversized array for a planned EV or heat pump. A battery captures the midday surplus that would otherwise wait around as a bill credit and puts it to work covering evening load directly, which is a better outcome than a credit that may sit unused. Our battery storage page covers sizing a battery against Long Island’s outage patterns specifically — PSEG-LI’s above-ground distribution lines see more storm-driven outages than underground urban grids, which is a separate reason Long Island homeowners add storage beyond the buyback-rate math covered here.

Where buyback fits with the rest of the incentive stack

Net metering credits are one piece of the incentive picture. The other piece left in 2026 is New York State’s 25% solar tax credit (capped at $5,000), which reduces the up-front install cost rather than the ongoing energy value. The 30% federal residential credit ended for systems bought after December 31, 2025, and the NY-Sun rebate block for standard-income Long Island homes is exhausted. Our full incentives breakdown covers what remains, and how a cash purchase compares against a financed, leased, or PPA system on a Long Island roof.

The Long Island example system builds model this against PSEG-LI rates: a system sized close to usage uses nearly all its credit, while an intentionally oversized system — sized ahead of a planned EV purchase — carries a larger credit balance until usage catches up to production.

The bottom line on PSEG-LI buyback rates

There’s no “we pay you $X per kWh” number to quote, because for a system connected since 2018 PSEG-LI doesn’t pay for exports at all: it credits them against your future bills at the retail rate, and credit you never use has no cash value (LIPA Tariff for Electric Service, Leaf No. 34F-1 and 34F-2, effective June 1, 2024). The homeowners who get the best return aren’t the ones with the biggest arrays — they’re the ones whose array size matches their actual and near-term electric load closely enough that almost all of their credit gets used.