Net Metering Explained for Indian Homes

Before installing rooftop solar, the question most people ask is how many panels they need. The question that ends up mattering just as much is what happens to the units they do not use — and that is decided by which metering arrangement their state and distribution company apply.

The rules are set at state level and are revised from time to time, so treat what follows as the mechanics rather than the specifics. The mechanics are consistent across the country; the rates, caps and settlement periods are not.

The three arrangements

Net metering

A bidirectional meter records units drawn from the grid and units sent back. You are billed on the net difference. In effect, the grid acts as storage: surplus generated at midday offsets consumption drawn that evening, one unit against one unit.

This is the most favourable arrangement for a household, because each exported unit offsets a unit that would otherwise have been bought at the retail tariff.

Gross metering

The entire output of the array is fed to the grid and metered separately, at a fixed procurement rate. Everything the house consumes is bought back at the normal retail tariff. Generation and consumption become two independent transactions.

Because the procurement rate is generally below the retail tariff, the economics are usually less attractive than net metering, and self-consumption gains you nothing — the array feeds the grid regardless of what the house is doing.

Net billing

A middle arrangement, and increasingly common. You consume what you can directly, and export the surplus — but the surplus is credited in rupees at a rate set by the regulator rather than offset unit against unit.

Since that export rate is typically lower than the retail rate you pay for imports, the arithmetic tilts sharply toward consuming your own generation rather than exporting it.

Why a self-consumed unit beats an exported one

Under gross metering and net billing this is straightforward: you sell low and buy high, so every unit you use directly avoids that spread. Under true net metering the two look equivalent at one-for-one, but even there self-consumption tends to win.

• Where the tariff is banded, self-consumption removes units from the top of your slab — the most expensive ones you buy
• Export credits are usually carried forward rather than paid in cash, so surplus beyond your annual consumption can simply expire
• Some states cap how much export they will settle, or apply charges to banked units

The practical consequence is the same across all three arrangements: shifting flexible loads into daylight hours is the cheapest improvement available to a solar household, because it needs no equipment at all.

Settlement periods and surplus

Credits are reconciled over a settlement period, commonly a financial year. Within it, surplus from generous months carries forward against leaner ones — a seasonal averaging that matters in a country where monsoon output can differ sharply from the clear months either side.

At the end of the period, any remaining surplus is treated according to state policy: paid out at a specified rate, carried forward, or in some cases lapsed. This is the single most important clause to read before oversizing a system in the hope of banking a large annual surplus.

Sizing around the policy, not just the roof

Where surplus is settled generously, sizing toward total annual consumption can make sense. Where it is credited at a low rate or lapses, the better target is the load the house can absorb during daylight — a smaller, cheaper system with a shorter payback.

That daytime load is not something most households can estimate. It is not the monthly total divided by thirty, and it is not the evening peak everyone notices. It is a specific figure: what the house draws between roughly nine in the morning and four in the afternoon, on a working day.

What to check for your own connection

1. 1Which arrangement applies — net metering, gross metering or net billing
2. 2The export rate or offset basis, and whether it differs by system size
3. 3The settlement period, and what happens to surplus at the end of it
4. 4Any cap on system size relative to your sanctioned load
5. 5Whether banked units attract any charges

Your distribution company publishes these, and your installer should confirm them in writing before the system is sanctioned. They change more often than the hardware does.