Key Takeaways
- Net metering lets your rooftop solar system send surplus power to the grid and get credited for it, so your electricity bill counts only the net units you actually drew.
- You need a bidirectional meter and a signed agreement with your DISCOM (state distribution company) before export is allowed.
- Most Indian states cap net metering at 500 kW and settle credits over a billing period or a full year, depending on the state policy.
- Net metering is different from gross metering and net billing, and the one you get depends on your state and system size.
- It only helps you if your system is sized sensibly against your consumption, not oversized just to chase export credits.
If you have looked into rooftop solar in India, you have almost certainly hit the phrase net metering and nodded along without a clear picture of what it actually does. Put simply, net metering explained is this: your solar panels make power during the day, you use some of it, and whatever you do not use flows back into the grid and earns you credits. At night or on cloudy days you pull power back, and your bill charges you only for the net difference. I have commissioned enough rooftop systems to have watched dozens of first bills land, so in this guide you will learn how it works, how it differs from gross metering and net billing, the rules that apply in most Indian states, and how to make sure it actually saves you money.
What net metering actually means
Your rooftop system rarely produces exactly the power you are using at any given second. Around noon, a 3 kW system often makes far more than a house is drawing, so the surplus has nowhere to go except back into the grid. Net metering is the arrangement that says: fine, send it back, and we will keep score.
A special bidirectional meter records both directions of flow. It counts the units you import from the grid and the units you export to it separately. At the end of the billing cycle, the DISCOM subtracts your exports from your imports, and you pay for the net. That single word, net, is the whole idea.
How the credits work in practice
Say your house imports 300 units in a month but your panels exported 120 units back to the grid during the same period. Under net metering you are billed for 180 units, not 300. The 120 exported units directly cancel imported units at the same retail tariff, which is why net metering is the friendliest of the three billing models for a homeowner.
If you export more than you import in a month, the extra units usually roll over as credits to the next billing cycle. At the end of the settlement period, most states pay out any remaining surplus at a lower, pre-agreed rate rather than the full retail tariff. So banking a huge surplus is not as valuable as simply covering your own consumption.
Tip: The best financial outcome under net metering is to size your system so your annual export roughly matches your annual shortfall, not to build the biggest array your roof allows. Self-consumption at the retail rate beats surplus paid out at the low settlement rate.
Net metering vs gross metering vs net billing
These three terms get used interchangeably in casual conversation, but they pay you very differently. Net metering nets your export against your import at the same tariff. Gross metering sends every unit you generate straight to the grid at a fixed feed-in rate and bills all your consumption separately. Net billing values your export and your import at different rates and settles the money difference.
| Feature | Net metering | Gross metering | Net billing |
|---|---|---|---|
| What is measured | Net of import and export | Total generation and total consumption separately | Import and export separately, valued at different rates |
| Export valued at | Retail tariff (same as import) | Fixed feed-in tariff | A separate export rate, often below retail |
| Best when | Your usage roughly matches your generation | You want a guaranteed feed-in payment | State policy mandates it |
| Homeowner benefit | Highest for self-use | Depends on feed-in rate | Moderate |
For a typical Indian home under 10 kW, net metering is almost always the most rewarding, which is exactly why states apply size caps to it. Above the cap, you are usually pushed onto net billing or gross metering.
Net metering rules across Indian states
Electricity is a state subject in India, so the fine print differs by DISCOM. That said, the broad shape is consistent. Most states offer net metering up to 500 kW of sanctioned load, with residential rooftops sitting comfortably inside that limit. The national policy direction, backed by MNRE, has been to keep net metering available for smaller systems while nudging larger commercial plants toward net billing.
Common rules you will meet include a limit on export capacity relative to your sanctioned load, an annual settlement of leftover credits, and a requirement that the inverter be a certified grid-tied unit with anti-islanding protection. Your installer files the net metering application with the DISCOM, and a meter change plus inspection follows before export is switched on.
Safety warning: Grid-tied solar involves DC wiring and a live mains connection. Meter swaps, isolator installation, and the tie-in to your consumer unit must be done by a licensed electrician working to your DISCOM's standards. Do not attempt the mains-side connection yourself, and make sure earthing and surge protection are in place before commissioning.
How to apply for net metering: the usual steps
The process is more paperwork than construction, and a competent installer handles most of it. Still, it helps to know the sequence so you can spot delays.
- Confirm your roof and sanctioned load can support the system size you want, and that it stays within your state's net metering cap.
- Pick a certified grid-tied inverter and empanelled installer, since most DISCOMs only approve work by empanelled vendors.
- Submit the net metering application to your DISCOM with your latest bill, load details, and system specification.
- Get technical feasibility approval, then let the installer complete the rooftop installation and wiring.
- The DISCOM inspects the system, replaces your meter with a bidirectional one, and signs the net metering agreement.
- Export is switched on, and your next bill starts reflecting net units.
What I have seen go wrong (and right)
When I commissioned my first few residential rooftops, the single biggest surprise for owners was that the meter swap and inspection can take weeks after the panels are physically up. The hardware sits there generating, but without the bidirectional meter and signed agreement, no export is credited. Plan for that gap and do not celebrate savings until the new meter is spinning both ways.
The other lesson, over a handful of installs, was that oversized systems disappoint. One homeowner insisted on a system far larger than the family's usage, then felt cheated when the annual surplus was settled at the low export rate instead of the retail tariff. The systems that made owners happiest were the ones sized to consumption, where nearly every generated unit offset a unit they would otherwise have bought.
Getting the sizing right is really a design question, and it feeds directly into your payback. If you want the full picture, see our complete guide to designing a home solar system, and pair it with the wiring safety side covered in earthing and surge protection for solar systems. To model the money, our breakdown of rooftop solar cost and ROI in India shows how net metering credits shape the payback period.
Frequently Asked Questions
Does net metering mean my solar power is free at night?
No. Net metering credits the units you export during the day against the units you import at night. You are not storing your own power; you are banking value with the grid. If you import more than you exported over the cycle, you still pay for the difference at the retail tariff.
What size system can I have under net metering in India?
Most states allow net metering up to 500 kW of sanctioned load, which covers essentially every home and many small businesses. There is also usually a limit tying your export capacity to your sanctioned load. Check your specific DISCOM policy, since the exact cap and rules vary by state.
Do I need a special meter for net metering?
Yes. A standard meter only counts import. Net metering requires a bidirectional meter that records both the units you draw from the grid and the units you send back. Your DISCOM installs this meter as part of the net metering process, usually during the inspection after your system is built.
What happens to extra credits at the end of the year?
Unused export credits typically carry forward through the billing cycles within the settlement period. At the end of that period, most states pay out any remaining surplus at a lower, pre-agreed rate rather than the full retail tariff. This is why sizing to your consumption beats chasing a large surplus.
Is net metering the same as net billing?
No. Net metering nets your export against your import at the same retail tariff, which is best for homeowners. Net billing values export and import at different rates and settles the money difference. Your state policy and system size decide which one applies, so confirm with your DISCOM before finalising your design.
The bottom line
Net metering is the mechanism that turns your rooftop into a two-way relationship with the grid, crediting your daytime surplus so your bill reflects only the net units you truly consumed. It rewards sensible sizing far more than oversized ambition, and it hinges on getting the meter, the agreement, and the wiring done properly. Understand your state's cap and settlement rules, work with an empanelled installer, and the numbers tend to look after themselves. When you are ready to translate this into a real system, start with our complete guide to designing a home solar system, and if you want to know more about who is behind this advice, our about page lays it out.
