Net Metering vs Gross Metering

Imagine a small shopkeeper who both buys stock from, and occasionally sells surplus goods back to, the same wholesaler. There are two honest ways to settle the account: net the two flows and pay only the difference, or record every purchase and every sale separately at their own price. Rooftop solar billing works on exactly this choice.

Under net metering, a single meter tracks the difference between what a home draws from the grid and what its rooftop panels export back to it. The owner is billed only for the net shortfall, valued at the normal retail electricity tariff, which is usually the more expensive and more favourable rate for the homeowner. Under gross metering, two separate meters record total generation and total consumption independently. All solar output is paid for at a separately fixed, often lower generation tariff, while all consumption is billed in full at the retail rate, with no netting between the two.

The difference matters enormously to whoever is on the other end. Net metering is broadly more attractive to a homeowner because it values their exported solar power at the higher retail tariff rather than a lower generation tariff. DISCOMs, on the other hand, often prefer gross metering, because widespread net metering erodes their most profitable customer segment's retail purchases without a matching drop in the fixed cost of maintaining wires to that home.

Most Indian states use net metering for small residential rooftop systems, typically up to a threshold between 1 and 10 kilowatts depending on the state, and shift larger commercial or industrial rooftop installations toward gross metering or separate commercial arrangements.

Whenever a state revises its rooftop solar policy and the trade press reports installers unhappy about the change, a shift between net and gross metering, or a lowering of the net metering capacity threshold, is very often the actual story underneath.