What is Net Metering and How is It Relevant for Solar?

Net metering is a metering mechanism wherein the net electricity exported to the grid is measured. This import and export of energy is measured with a bi-directional meter. It is an electricity policy that has been introduced to accelerate investment in solar.

Net meter reading = (total electricity generated) – (total electricity consumed)

Why net metering?

Simply put, net metering helps an energy consumer to reduce the electricity bill that is paid to the utility.

There are times of the year when there is a surplus generation of electricity. For example, in the summers there is excess generation of electricity from the solar system. This excess energy is exported to the grid. During this reverse flow of electricity to the grid, the electricity meter runs backward thereby reducing consumer bills.

It is also an added incentive for consumers to invest in a solar generation plant.

How does it work?

The figure below provides a pictorial understanding of how net metering works.

Solar Net Metering

Net electricity exported (C) = Gross generation (A) – Energy consumed by house (B)


  • Financial incentive in the form of credits to produce extra power
  • Eliminates need for battery storage
  • Incentivizes consumers to reduce wastage of electricity and improve energy efficiency

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India Renewable Energy Expert