Net Metering vs Gross Metering: What's the Difference?

Introduction

Installing rooftop solar panels means you can generate electricity for your home, but what happens when your panels produce more power than you need? Depending on your electricity provider's rules, the surplus can offset your grid consumption, or you may be able to sell your entire solar output.

This is where net metering vs. gross metering becomes important. Both arrangements connect your solar system to the electricity grid, but they differ in how electricity is accounted for and how you receive financial benefits.

Let's explore the main difference between net metering and gross metering and what you should consider before your solar investment.

What Is Net Metering vs. Gross Metering?

While both are billing arrangements for grid-connected solar systems, the primary difference between net metering and gross metering lies in how generated electricity is used and valued.

How Does Net Metering Work?

Under net metering, your property consumes the electricity generated by its solar panels first. When generation exceeds your immediate requirements, the surplus flows into the grid.

A bidirectional meter records the electricity imported from and exported to the grid. At the end of the billing period, exported units are deducted from imported units to calculate your net electricity consumption.

Any excess export credits may be carried forward or settled according to your state's regulations.

How Does Gross Metering Work?

Gross metering takes a different approach. Your entire solar electricity output is supplied to the grid rather than consumed directly by your property.

Your distribution company (DISCOM) compensates you for the electricity generated at an approved feed-in tariff. Meanwhile, your property purchases the electricity it requires at the applicable retail tariff.

Net Metering vs. Gross Metering: Key Differences

If you are wondering whether net metering or gross metering is better, check the following parameters:

Net Metering or Gross Metering: Which Is Better for Your Solar System?

The financial benefits of each arrangement depend on your electricity requirements, local tariffs, and permitted system capacity.

Five considerations can help you evaluate net metering vs. gross metering before investing in rooftop solar.

1. Check Your State's Metering Regulations

Start by confirming the arrangements available for your property. State electricity regulatory commissions determine eligibility, system capacity limits, and metering requirements.

Residential and commercial consumers may face different conditions depending on their sanctioned load and local DISCOM regulations.

Obtain approval for your proposed solar capacity and metering arrangement before proceeding with installation.

2. Examine Your Electricity Consumption

Your electricity consumption helps determine the solar capacity required and how much generation you can utilise.

Under net metering, daytime solar generation can power your appliances directly, while eligible export credits can offset electricity imported during other hours.

Gross metering separates your generation from consumption, making total solar output the basis for revenue.

Review your previous electricity bills to estimate annual consumption and avoid installing a system that produces substantially more electricity than your chosen arrangement can economically accommodate.

3. Compare Retail and Export Tariffs

Electricity tariffs are particularly important when comparing the financial returns of both arrangements.

Under net metering, eligible exported units offset imported units according to the applicable billing rules. Gross metering compensates your entire solar output at the approved feed-in tariff.

When the feed-in tariff is lower than the retail electricity rate, net metering can offer greater savings for comparable generation.

Check your DISCOM's current tariff schedule and account for fixed charges, which may remain payable even after installing rooftop solar.

4. Understand Surplus Electricity Settlement

A solar system may generate more electricity than your property consumes during certain months. How this surplus is treated can affect your annual savings.

Under net metering, excess export credits may be carried forward to subsequent billing periods or settled at a prescribed rate. The applicable provisions depend on your state's regulations.

Gross metering follows its approved payment and settlement schedule for generated electricity.

Review credit validity, carry-forward provisions, and annual settlement conditions. Also confirm that your DISCOM offers net metering rather than net billing, under which imports and exports are valued at different tariffs.

5. Calculate Installation Costs and Long-Term Returns

Once you have established the applicable tariffs and settlement conditions, compare the total financial value of each permitted arrangement.

Your calculation should account for installation expenses, expected annual generation, maintenance costs, and projected electricity savings or export revenue.

Eligible residential consumers can also receive central financial assistance under the PM Surya Ghar: Muft Bijli Yojana. The subsidy provides ₹30,000 per kW for the first 2 kW and ₹18,000 for the additional capacity up to 3 kW, with a maximum standard subsidy of ₹78,000.

Confirm scheme eligibility and approved metering requirements before including any subsidy in your calculation. Comparing estimated annual benefits against your net installation cost will help establish the expected payback period.

Choose the Right On-Grid Solar Solution With Eastman

The difference between net metering vs. gross metering affects how your rooftop solar system uses and values the electricity it generates. Once you have confirmed the metering arrangement available for your property, the next step is to choose a solar system that matches your electricity needs, sanctioned load, and installation requirements.

The inverter is a key part of this setup. It converts the DC electricity generated by your solar panels into AC electricity that your home can use and works with the grid to support reliable power conversion.

Eastman offers solar solutions with a 30-year warranty on solar panels, backed by 24x7 service support, a 2-hour service response time, and a one-stop solar solution. Eligible residential installations can also benefit from a ₹78,000 subsidy under the PM Surya Ghar Yojana, subject to scheme conditions.