Net metering transforms rooftop solar adopters into prosumers, enabling bidirectional energy exchange with the grid. Its design directly determines the financial attractiveness of distributed renewable energy and the pace of India's solar transition.
Under net metering, when a rooftop solar installation generates more electricity than the household consumes, the surplus flows into the grid and the meter effectively credits the prosumer at the retail tariff rate. This billing offset — rather than a separate cash payment — is the core financial incentive that makes rooftop solar economically viable for small consumers.
India's Electricity (Amendment) Rules, 2022 extended net metering eligibility to rooftop solar systems up to 500 kW, a significant expansion from earlier limits. Systems above this threshold are governed by gross metering or net billing arrangements, where export is compensated at a lower feed-in tariff, reducing returns for larger installations.
Net metering credits surplus at retail rates, whereas net billing or feed-in tariff models pay a lower wholesale-equivalent rate. Conflating the two misrepresents the policy: net metering inherently supports prosumer economics, while net billing introduces a revenue gap that can undermine investment decisions.
Widespread net metering shifts fixed network cost recovery away from solar prosumers toward non-solar consumers, creating cross-subsidy tensions. State Electricity Regulatory Commissions must balance prosumer incentives against distribution company financial health, a governance challenge that has led to inconsistent implementation across states.
The PM Surya Ghar: Muft Bijli Yojana leverages net metering to deliver free electricity to eligible households, linking subsidy design with metering policy. Effective implementation requires robust smart metering infrastructure and standardised state-level net metering regulations.
Net metering is a foundational instrument for democratising solar energy, but its long-term sustainability depends on equitable tariff design that protects both prosumer returns and distribution network viability — a balance regulators must continuously recalibrate.
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