Two identical 3 kW systems on two identical houses can save very different amounts depending on how the DISCOM counts the energy that crosses the meter. The arrangement is set by the central Rules, the state commission's regulations and the customer's category. Before you size or price a system, know which scheme applies.
Self-consumed and exported energy
Solar energy goes one of two ways: - Self-consumed: used inside the building the moment it is produced. It never reaches the meter, so it saves the full retail rate under every scheme. - Exported: sent through the meter to the grid when the building uses less than the system produces.
Homes typically self-consume a minority of their solar directly (perhaps 25–45%, depending on daytime occupancy and loads); offices, shops and schools that work in daylight hours self-consume much more. The schemes differ in how they value exported energy.
The three schemes
Net metering
One bidirectional meter records import and export. Over the billing period, exports are subtracted from imports and the customer pays for the net units. If exports are larger than imports, the surplus is carried forward to the next bill until the settlement date, when any remaining surplus is paid (or credited) at a rate set by the SERC, usually close to the DISCOM's average power purchase cost, far below retail.
Net metering gives the customer the best value for every exported unit that is matched by an imported unit. It is the most common arrangement for Indian homes.
Net billing (net feed-in)
The same meter, but exported units are valued at a fixed export rate, often ₹2–4 a unit, while imports are billed at the full retail tariff. The two amounts are netted in rupees, not units. Self-consumption becomes much more valuable than export.
Gross metering
All solar generation goes to the grid through a separate meter and is paid at a feed-in tariff. All of the building's consumption is bought at retail. The building's own use of solar has no special value. It is used mainly for larger projects, or where a customer category is not allowed net metering.
The rules that decide which applies
The Electricity (Rights of Consumers) Rules, 2020, as amended, give prosumers the right to connect rooftop solar and set the framework: net metering for systems up to 500 kW or the sanctioned load, whichever is lower, with net billing or gross metering for others. State commissions write the detailed regulations, and they differ (check the current notification). For example, from our state notes:
- Settlement period: monthly in Telangana, Andhra Pradesh and Karnataka; annual in Maharashtra and Madhya Pradesh; financial-year in Kerala.
- Surplus rate: about ₹2.82 in Maharashtra, ₹2.25 in Gujarat; in Karnataka the rate is lower for systems that received PM Surya Ghar subsidy.
- Choice: Rajasthan lets domestic customers choose net metering or net billing.
- Category limits: Uttar Pradesh allows net metering for domestic, agricultural and institutional customers; commercial customers get gross metering.
- Extra charges: grid support charges on gross generation above 10 kW in Maharashtra; a network charge in Tamil Nadu (under litigation).
Worked example: one system, three schemes
A family in Jaipur: - Consumption: 4,800 kWh a year (400 units a month) - 3 kW system generating about 4,500 kWh a year - Directly self-consumed: 35% = 1,575 kWh; exported 2,925 kWh - Imports from grid: 4,800 − 1,575 = 3,225 kWh - Retail rate: ₹7.50 a unit (simplified flat figure, including surcharges) - Net billing export rate ₹3.65; gross feed-in ₹3.50 (illustrative)
| Annual bill (energy) | Annual saving | |
|---|---|---|
| No solar | 4,800 × 7.50 = ₹36,000 | – |
| Net metering | (4,800 − 4,500) × 7.50 = ₹2,250 | ₹33,750 |
| Net billing | 3,225 × 7.50 − 2,925 × 3.65 = ₹13,511 | ₹22,489 |
| Gross metering | 4,800 × 7.50 − 4,500 × 3.50 = ₹20,250 | ₹15,750 |
The same panels on the same roof earn about twice as much under net metering as under gross metering. That is why the scheme must be confirmed before the customer signs, and why payback figures from one state cannot be copied to another.
Sizing for the scheme
Under net metering: do not oversize
Exports above annual consumption are paid only at the surplus rate. Take the same family but install 5 kW (about 7,500 kWh a year):
- First 4,800 kWh offset at ₹7.50 = ₹36,000 (and the energy bill falls to zero)
- Surplus 2,700 kWh paid at, say, ₹3.26 = ₹8,802
The extra 2 kW, costing perhaps ₹1 lakh or more, earns ₹8,802 a year: a poor return. Size to annual consumption, with allowance for expected growth (a new AC, an EV) that the customer can describe.
With monthly settlement, the summer surplus cannot be carried to the winter, so size even more carefully, close to the lower months' consumption.
Under net billing: favour self-consumption
Every unit used on site saves ₹7.50; every unit exported earns ₹3.65. Help customers move loads into daylight: pumps, washing machines, water heating, EV charging. Batteries become more interesting (see module 7, lesson 4), though they may still not pay back.
Under gross metering: it is an investment
The return depends on the feed-in tariff and the system cost. Model it like a small power plant.
Key points
- Self-consumed solar saves the full retail rate; schemes differ in how they value exports.
- Net metering offsets exports unit for unit; net billing pays exports at a low fixed rate; gross metering sells all solar at a feed-in tariff.
- The central Rules allow net metering up to 500 kW or the sanctioned load; SERCs set the details, which vary widely.
- Under net metering, size to annual (or monthly, if settled monthly) consumption; surplus earns little.
- Confirm the scheme, settlement period and surplus rate before quoting savings.
Check yourself
- Under net billing, which is worth more to the customer: a unit used at home or a unit exported?
- A net-metered home uses 3,600 kWh/yr and its system makes 4,200 kWh/yr. The surplus rate is ₹3. What is the surplus payment?
- Why must you be more careful about sizing when settlement is monthly?
Answers
- A unit used at home: it saves the retail rate (₹6–10), while an export earns the lower export rate.
- 600 kWh × ₹3 = ₹1,800 (if the surplus accumulates to the settlement date).
- Surplus in sunny months is settled at the low rate each month instead of offsetting high-consumption months later.