Net Metering versus Gross Metering

Updated: February 18, 2021

When you receive electricity bills at your home, office, apartment, school or anywhere else, an electricity meter keeps track of the units of electricity you used. Conventionally, you only import electricity from the power grid and get charged for the same. However, if you were to produce electricity at your premises, your relationship with the power grid changes. 

If you are planning to be a grid-connected (otherwise known as on-grid) solar consumer, the metering modes available to you are: 

1. Net metering 

2. Gross metering 

How does Net Metering work?

The Net Metering policy was introduced in India, around 2015, to make solar energy more accessible and economical. It calculates the difference of energy exported from your solar power system and import from the grid. You either pay for the difference in units or get paid by the utility company (DISCOM) for extra units at the end of the billing cycle (based on the state level policy). 

The electricity generated by your solar energy system directly powers your premises during the day. When you don’t have enough electricity coming from solar (during the night time or cloud cover), the balance comes from the grid. A bi-directional meter records this quantity of imported power.

The bi-directional meter does not record the total amount of energy generated by your solar panels. It only records the surplus solar electricity exported to and imported from the grid.

Then, how does Gross Metering work?

Unlike net metering, your premises cannot directly use the power generated by your solar panels. It gets exported entirely to the power grid, and the electricity you require comes from the power grid.

Gross Metering requires an extra electricity meter to measure the outflow of electricity from your solar power system to the grid. As a result, the prices for electricity consumption and electricity generation vary. The regular meter records the total amount of electricity consumed by you. You will be paid a pre-determined feed-in tariff (FiT) for the electricity exported to the grid from your solar power system.

For instance, here are the details for the state of Karnataka for 2019-20.

*per kWh of electricity | ** for systems of sizes 1 to 10 kWp only

For the consumer, a power purchase agreement (PPA) drives the implementation of both net and gross metering. The PPA is a legal agreement made between you and the utility company for multiple years. For instance, the net metering PPA with BESCOM (Bangalore Electricity Supply Company) is valid for 25 years. 

Net and gross metering is also equally applicable for rooftop solar systems as well as open access (ground-mounted) solar power systems. However, the difficulty of attaining a PPA differs according to the type of system, policy, political climate, and geographical region. 

In Bangalore, it is now simpler to attain PPAs for rooftop solar power systems. By working with the energy secretary and BESCOM, solar energy companies have been able to move the processes online. 

India has a target of 100 GW of solar installation by 2022. The policies and processes around solar energy have to be simpler than they are now, to achieve such optimistic targets.

In December, 2020, the Ministry of Power issued The Electricity (Rights of Consumers) Rules. 

One noteworthy provision in the rules is that it mandates net metering for loads up to 10 kW and gross metering for loads greater than 10 kW for any on-grid or hybrid solar system.

These new rules are set to be imposed from March 31, 2020. After this date, the PPA for new projects will have to be signed as per the given rules and all work-in-progress projects will have 500 days to be completed.

This rule does not impact most individual homes (up to 4-5 BHK). However, larger homes, office spaces, apartment complexes, educational institutions, and other buildings that might require an on-grid or hybrid solar plant that is greater than 10kW, will be impacted. As mentioned above, gross metering requires the export of all energy to the grid. This cost is approximately Rs. 3 plus tax per unit of electricity.

Here’s a real-world report that depicts the advantages of net metering over gross metering for an apartment in Bangalore.

Solarify’s Recommendation 

If you are planning on installing a solar plant in a building with a load that is greater than 10kW, now would be a great time to contact us and get your power purchase agreement (PPA) signed!