What is Net Metering? How will I benefit from Net Metering?

Imagine you are running a factory and have a solar plant on your rooftop. Your factory is shut on Sunday. What happens to the power generated by the solar plant on your rooftop on Sunday, when there is little to no load to use that solar power?

Answer: Without any load to use that power, the solar power generated goes to waste. Remember, this is solar power you have already paid for by installing the plant, so wasting power is wasting the money you have invested in the plant.

Still worse, this surplus power may flow out from your facility into the grid. If you have a normal unidirectional meter this outflow of power will be recorded by the meter; but as the meter can run in only one direction (forward) this power you supply to the grid will be recorded as power consumed from the grid and will add to your electricity bill.

Net metering is a way to avoid this wastage and excess billing. A net meter, or bidirectional meter, is installed by your utility in place of your normal unidirectional meter. This meter effectively runs backwards for power exported to the grid, subtracting units exported from units consumed, causing a reduction in your electricity bill.

E.g., your EB tariff is Rs. 7/unit and you consume 500 units every month.

Before introducing solar you would have paid 7 X 500 = Rs. 3,500 per month to the utility.

If your solar plant exported 200 units in a particular month, your net meter will record your electrical consumption as 300 (500-200) units, and you will only pay 7 X 300 = Rs. 2,100 for that month. This amounts to being paid Rs. 7 for every unit of solar power exported to the grid. If solar only costs you Rs. 5 to generate, you are making a profit of Rs. 2 per unit! The higher your tariff, the more you will benefit from net metering.

Even better, if your EB tariff changes based on consumption slabs, you could see even greater savings on your EB bills if net metering allows you to be billed on a lower slab.

E.g., in the above case if your tariff is Rs. 5/unit until 350 units and Rs. 7/unit if your consumption is greater than 350 units, then exporting 200 units of solar to the grid would reduce your meter reading to 300 units which falls in the lower slab, and you would now pay only 5 X 300 = Rs. 1,500 instead of Rs. 3,500 to the utility. Not only are you being paid generously for your solar power, you are also earning a discount on your EB tariff.

Net metering is essentially a way for consumers’ solar power generation to be subsidised, with the subsidy paid on actual generation of solar power and contribution to the grid. Unlike the capital subsidy offered, consumers do not need to worry about receipt of subsidy as there is no payment involved from the government to the consumer. Instead, consumers receive the subsidy by paying less to the government.

Are there any downsides to net metering? If it is such an attractive proposition why isn’t it spreading like wildfire across the country?

Answer: The answer to both questions lies in the above statement that it is a form of subsidy, and is therefore dependant on supportive administration.

  • Each state government has to frame a policy that supports net metering for solar
    • It is the policy that lays down who will be eligible for net metering, how the scheme will be implemented, permits, whether any limits will be placed on plant size, billing in case exported power is greater than consumed power, etc.
  • State Electricity Regulatory Commissions may wish to set technical standards/limits on net metering to ensure grid stability (e.g., in Tamil Nadu net metered solar plants connecting to the grid will be limited to 30% of the distribution transformer capacity)
  • The state will need to implement the scheme. This includes taking care of details such as ensuring net meters are made available, and training EB officials across the state on how to implement it

Adoption of rooftop solar with net metering in India will increase as Governments work on regulatory and implementation issues.

To summarise

  • Net metering allows you to be compensated for solar power that would otherwise go to waste due to insufficient load
  • Net metering requires replacing your existing unidirectional meter with a bidirectional net meter
  • Consumers do not need to worry about receiving payment from government/utility as the compensation is in the form of reduced billing
  • Net metering depends on policies framed by governments

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