What Is Net Metering and How Does It Work?
Net metering is a billing arrangement that lets rooftop solar panel owners export surplus electricity to the grid and receive credits on their electricity bill. A bi-directional meter records both how many units you draw from the grid and how many you export. At the end of each billing cycle, your DISCOM subtracts your exports from your imports and charges you only for the net difference. If exports exceed imports in a cycle, the surplus credits carry forward to the next billing period (rules vary by state).
This is how net metering works in India in 2026. The rules are set at the state level by State Electricity Regulatory Commissions (SERCs) and implemented by your local DISCOM.
Net Metering vs Net Billing vs Gross Metering: The Terminology Gap
Most guides use these three terms interchangeably. They are not the same. This is the disambiguation most commercial pages skip:
Mechanism | How Export Is Valued | Who Uses It |
|---|---|---|
Net metering | Unit-for-unit: 1 exported kWh = 1 kWh credit at retail tariff | Most Indian residential consumers |
Net billing | Exports valued at a fixed feed-in tariff (usually lower than retail) | Some states for larger systems |
Gross metering | All solar generation exported; all consumption billed separately | Less common in residential India |
Virtual net metering | Credits from one solar system shared across multiple meters | Apartments, housing societies |
Group net metering | One owner, multiple connections; surplus adjusted across own connections | Residential colonies, RWAs |
Why this matters for your pocket: In states where your DISCOM uses net billing instead of net metering, your exported units fetch a lower feed-in rate than the retail tariff you pay to import. This directly affects your payback period. Always confirm with your installer whether your state uses net metering or net billing before sizing your system.
As of 2026, Delhi (DERC) simplified its billing time-block rules for residential consumers, and Maharashtra (MERC) enabled larger net-metered capacities for commercial projects. Kerala drafted a proposal to restrict residential net metering to systems of 3 kW or less, which impacted new installations. State policies change: verify the current order with your DISCOM before committing to system size.
How a Solar Net Meter Works: Step by Step
A bi-directional meter (also called a net meter or smart meter) measures current flow in both directions simultaneously.
During the day (solar generation peaks):
- Your solar panels generate DC electricity
- The inverter converts it to AC
- Your home appliances run on solar power directly
- Surplus beyond your home's current consumption flows out through the net meter to the grid
- The meter records the exported units
In the evening and at night:
- Solar generation stops
- Your home draws electricity from the grid
- The meter records the imported units
At billing: Your DISCOM calculates: Net units = Units imported - Units exported You are billed on the net figure at your applicable tariff.
If exported units exceed imported units for the month, the surplus carries forward as a credit. Most states settle the carry-forward annually. If any surplus remains at year-end, the DISCOM purchases it at a rate defined in the state's net metering order.
Solar Net Meter Installation: The Approval Process
This is the step most buyers underestimate. The grid connection approval takes longer than the physical panel installation.
Stage | Responsible Party | Typical Timeline |
|---|---|---|
Apply on pmsuryaghar.gov.in | You (or your installer) | Day 1 |
Feasibility check | DISCOM | Up to 30 days |
Approval and registration | DISCOM | 10-15 days after docs are complete |
Solar system installation | MNRE-empanelled vendor | 1-3 days (residential) |
Submit commissioning certificate | Vendor + you | Within days of install |
DISCOM site inspection | DISCOM engineer | 1-4 weeks |
Net meter installation (bi-directional) | DISCOM | At time of inspection |
Subsidy credit (if applicable) | DISCOM to your bank | 30-45 days post-inspection |
Total realistic timeline | 60-90 days from application |
Timelines vary significantly by DISCOM and state. Delhi and Maharashtra typically move faster than rural DISCOMs. Factor this into your planning; you will not be earning net metering credits on day one.
Required documents (verify the current list with your DISCOM, as it changes):
- Electricity consumer number and latest bill
- Site plan / Single Line Diagram (SLD) of the solar system
- Photo ID
- Vendor's MNRE empanelment certificate
- Commissioning certificate (issued post-installation)
- Test report from the vendor
What Is a Grid Connection for Solar?
A grid connection for solar means your rooftop system is electrically tied to the distribution network, allowing two-way power flow. This is distinct from an off-grid system, which is isolated from the DISCOM infrastructure.
Grid-connected solar systems must comply with the Central Electricity Authority (CEA) metering and interconnection regulations, including:
- Anti-islanding protection (the inverter automatically disconnects during grid outages, which is why on-grid systems provide no backup during power cuts)
- BIS-certified inverter
- ALMM-listed panels (domestically manufactured, approved by MNRE)
Important: If you want power during grid outages, you need a hybrid system with battery storage. A standard on-grid net-metered system shuts off automatically when the grid fails. This is a safety requirement, not a design flaw.
Net Metering in India: State-Level Variations That Affect Your Returns
The central government sets guidelines but cannot override state SERC orders. Key variations to check:
State | Known 2025-2026 Position | What to Verify |
|---|---|---|
Delhi | Simplified time-block billing rules in 2025 | Credit mechanism for off-peak export hours |
Maharashtra | Enabling higher capacity net metering; virtual NM for housing societies active | System size cap for your category |
Kerala | Proposed cap of 3 kW for residential net metering | Current status of the cap draft |
Rajasthan | Virtual and Group Net Metering introduced via 2025 amendment | VNM eligibility for your consumer category |
All states | ALMM List-II compliance mandatory from June 2026 for new installations | Confirm your vendor uses compliant panels |
Does Net Metering Make Sense Without a Battery?
Yes, and for most urban Indian homes with stable grid power, an on-grid system without a battery is the fastest-payback solar configuration. Here is the economic logic:
If your tariff is Rs 7/unit and you export 200 units/month while importing 100 units, your bill falls from roughly Rs 700 to Rs 0 (with 100 units carried forward as credit). The system pays off in 4-5 years for a 3kW setup at this tariff.
Adding a battery costs Rs 40,000-80,000 extra and reduces payback by storing solar energy for your own evening use rather than exporting it. Whether this trade-off is worth it depends on whether your grid is reliable and whether your state credits exports at the full retail tariff (net metering) or a lower feed-in rate (net billing).
If your state uses net billing at a rate below your retail tariff, storing energy in a battery and using it yourself at retail value beats exporting at the lower rate.
Adwin's Solar PCU inverter and charger supports both hybrid (with battery) and on-grid configurations through the same hardware platform, letting you start without a battery and add storage later.
You can also cross-reference the 3kW solar panel price guide and 5kW solar panel price guide to see how net metering payback changes at different system sizes.
Honest Pros and Cons of Net Metering
Pros:
- Reduces electricity bill to near-zero for well-sized systems
- No battery needed, which keeps upfront cost lower
- Carries forward credits across billing cycles in most states
- Works automatically through the meter with no effort after setup
- Supports India's 500GW renewable target, making state regulators broadly supportive
Cons and real limitations:
- Approval takes 60-90 days in practice; you are paying the electricity bill during this time
- On-grid systems shut off during power cuts (no backup without a battery)
- State policies change; what is generous today may be restricted next year (see Kerala's proposed 3kW cap)
- Some states use net billing (lower export rate) rather than net metering (retail rate credit)
- You must use an MNRE-empanelled vendor and ALMM-listed panels. Using uncertified equipment disqualifies your subsidy and may result in the DISCOM rejecting your net meter application
- If your system size exceeds your sanctioned load, the DISCOM may reject the application
FAQs: Net Metering
What is net metering in India?
Net metering is a billing system where your solar panels' surplus electricity exports to the grid and earns credits at the retail electricity tariff rate. At billing, the DISCOM deducts your export units from your import units and charges you only the net difference.
What is a solar net meter?
A solar net meter (also called a bi-directional meter) measures electricity flow in both directions: into your home from the grid and out of your home from your solar panels. It replaces your existing single-direction meter when you apply for net metering approval.
What is grid connection in solar and why does the system shut off during power cuts?
A grid connection means your solar system is electrically tied to the DISCOM network. When the grid goes down, your inverter shuts off automatically under anti-islanding safety rules to protect DISCOM workers repairing the line. This is mandatory, not optional. If you want backup during cuts, you need a hybrid system with a battery.
How long does net metering approval take in India?
From application to bi-directional meter installation, the process takes 60-90 days in practice, though regulations target 45-55 days. Delays are most common at the DISCOM inspection stage. Submitting complete documents on the first attempt is the single biggest factor in reducing wait time.
Is net metering the same as net billing?
No. Net metering credits your exported units at the full retail tariff rate (one-for-one). Net billing credits exports at a lower, fixed feed-in tariff. Net billing is less financially advantageous for consumers who export significant surplus. Always confirm which mechanism your state and category use before sizing your system.
What happens to excess solar credits at year end?
Most states allow monthly credits to carry forward. At the year-end settlement, any remaining export surplus is purchased by the DISCOM at a rate defined in the state's net metering order (typically lower than retail tariff). The exact rate and settlement cycle varies by state.
Can a housing society use net metering?
Individual flats with their own electricity connections can apply for net metering individually. Virtual net metering (VNM) and group net metering allow a single rooftop system to distribute credits across multiple meters. Maharashtra, Delhi, and Rajasthan have formal VNM frameworks in place as of 2026. Check your state's current SERC order for eligibility.
Do I need a battery for net metering?
No. Net metering works without a battery. An on-grid system exports surplus directly to the grid. However, without a battery, your system provides no backup during power cuts. Adding a battery creates a hybrid system that can still participate in net metering while also providing backup.
