Two houses, same 5 kW system, same sunshine. One saves Rs 45,000 a year, the other Rs 28,000. The difference is not the equipment. It is what their states do with the extra units they send back to the grid.
The three systems
Net metering
Your extra units are banked at the same rate you pay. Generate 100 extra units in April, and in July you can draw 100 units free. Your meter effectively runs backwards.
This is the best deal for you. Building a slightly bigger system makes sense.
Net billing
Your extra units are bought at a lower rate than you pay, often half or less. You buy at Rs 8, you sell at Rs 3.
Build only what you will use. Exporting is a poor deal here.
Gross metering
Everything you generate is sold to the DISCOM at a fixed rate. You keep buying all your own electricity at retail. There is no self consumption at all.
Only worth it if the fixed rate is generous, which it usually is not for homes.
What it does to system sizing
Take a home using 400 units a month:
| System | Net metering | Net billing |
|---|---|---|
| 3 kW (matches usage) | Good | Good |
| 5 kW (some export) | Still good | Poor value |
| 8 kW (heavy export) | Reasonable | Bad idea |
Under net metering, a bigger system is a reasonable bet. Under net billing, everything above your own usage earns you very little. This is the single most important thing to check before choosing a size, and most installers will not raise it.
Banked units expire
Under net metering your banked units usually get settled at the end of the financial year, often at a low rate. They do not carry forward forever.
So even with net metering there is no point sizing a system to bank huge amounts. Match it to what you use across a year.
What to ask your DISCOM
Before you sign anything with an installer, get these answered:
- Is it net metering, net billing or gross metering?
- What rate are exported units credited at?
- Is there a cap on system size relative to my sanctioned load?
- When are banked units settled, and at what rate?
- How long does net meter installation usually take?
The short version
Net metering: you can size a little above your usage.
Net billing: size to your usage, not above.
Gross metering: do the maths carefully, it often does not work for homes.
The same house, three regimes
A home using 400 units a month with a 5 kW system generating 7,000 units a year. Retail tariff Rs 8, feed-in rate Rs 3.
| Net metering | Net billing | Gross metering | |
|---|---|---|---|
| Units generated | 7,000 | 7,000 | 7,000 |
| Units consumed | 4,800 | 4,800 | 4,800 |
| Self-consumed value | Rs 38,400 | Rs 38,400 | nil |
| Surplus 2,200 units at | Rs 8.00 | Rs 3.00 | Rs 3.00 on all 7,000 |
| Surplus value | Rs 17,600 | Rs 6,600 | Rs 21,000 |
| Still buying from grid | nil | nil | Rs 38,400 |
| Net annual benefit | Rs 56,000 | Rs 45,000 | Rs 21,000 |
Identical hardware, identical sunshine, and the annual benefit ranges from Rs 21,000 to Rs 56,000. That is entirely a policy difference, and it is decided before you buy anything.
What it means for sizing
| Regime | Size it to | Why |
|---|---|---|
| Net metering | Your annual consumption, or slightly above | Surplus banks at full value |
| Net billing | Your daytime consumption | Surplus is worth much less than what you pay |
| Gross metering | Run the numbers carefully | Only works if the feed-in rate is generous |
Under net billing the useful move is to shift consumption into daylight hours rather than to build a bigger system. Run the washing machine, the pump and the geyser during the day and you consume your own units at Rs 8 instead of selling them at Rs 3.
Banked units expire
Under net metering your surplus banks across months, which is exactly why it works so well in India — your March excess covers your July shortfall.
But the banking is not indefinite. In most states unused credit is settled at the end of the financial year, usually at a low rate rather than at retail.
Questions to put to your DISCOM
Before you sign anything with an installer, get written answers to these:
- Is my connection under net metering, net billing or gross metering?
- What rate are exported units credited at?
- Is there a cap on system size relative to my sanctioned load?
- When is banked credit settled, and at what rate?
- How long does net meter installation take after commissioning?
- Is there any charge for the net meter itself?
Question 3 catches people out. Many states cap the system at your sanctioned load — if yours is 3 kW, you may not be permitted an 8 kW system regardless of your roof. Raising the sanctioned load is a separate application and takes its own time.
Why states are moving to net billing
Worth understanding, because it affects how likely your state is to change.
Under net metering the distribution company buys your surplus at retail rate. That retail rate includes their network costs, not just the cost of the power. So every unit they take back at retail is a unit they lose money on.
As rooftop solar grows, that becomes a real cost for the DISCOM, and the usual response is to move to net billing. Several Indian states have already made that shift.
You cannot control this. What you can do is size sensibly rather than betting a large system on a favourable policy staying favourable for twenty five years.
Questions people ask
If my state changes to net billing later, does my old system change?
Existing installations are often grandfathered under the rules at the time of commissioning, but not always, and not everywhere. Ask your DISCOM whether the terms are locked for a period.
Can I choose which regime I get?
No. It is set by state regulation for your connection type.
Is there any point in solar under gross metering?
Sometimes, if the feed-in rate is generous. Run the numbers rather than assuming either way, and check whether a battery changes the answer — under gross metering, storing your own power actually has value.
What is the meter itself, physically?
A bi-directional meter that records import and export separately. Your DISCOM installs it, usually after inspecting the installation. It is the last step before your billing changes.
What happens between commissioning and the net meter arriving?
Your system generates, you consume what you can directly, and the surplus goes to the grid unrecorded — you get nothing for it. This gap can be several weeks, which is a good reason to chase the DISCOM rather than wait politely.
Can I check my regime from the electricity bill?
Once solar is running, yes. A net metered bill shows import, export and net units. A net billed one shows export credited at a separate, lower rate. Before installation the bill will not tell you — you have to ask.
Find out which one applies to you first. Everything else about your solar decision follows from it.