Net Metering for Solar: How It Works, Benefits & Key Requirements
We all know that installing a solar power plant not only benefits our environment but also saves electricity bills and increases your EBETA, but what if your PV panels generate more energy than your facility needs? This is why you need a net meter. Net metering allows eligible solar systems to receive credits for excess solar electricity exported to the grid, which can help lower your utility cost on your next billing.
Net metering can help your finances positively for your businesses and facilities. But how does net metering actually work? What are the benefits, and what are the requirements for you to get a net meter for your facility as per your state laws? This guide will explain everything you need to know about net metering.
What Is Net Metering for Solar?
Net metering in your solar plant is a billing mechanism that helps you connect your PV modules to the electrical grid so you can export your excess generated electricity to the grid. Your solar panel system generates electricity to meet your facility and property energy needs then the extra generated electricity sent to the grid.
And if your demand isn’t met due to weather or other factors then your facility will draw power from the grid. A bidirectional net meter records your energy consumption and exported electricity in both directions and these factors are applied to your monthly bill based on state and electricity companies regulations.
Generate solar electricity → use what you need → export the surplus → receive applicable credits or billing adjustment → use grid electricity when required.
How Does Net Metering Work?
Here is the way net metering works in a straightforward process.
1. Solar Panels Generate Electricity
First your PV panel generates electricity from the Sun then the inverter then converts into AC electricity for your electrical loads use.
2. Solar Electricity Powers Your Loads
You can use generated electricity for your facility use for appliances, equipment, lighting, motors, etc.
3. Excess Electricity Is Exported
After fulfilling all your facility electrical needs, the surplus electricity flows through electrical connections and is exported to your utility grid.
4. The Meter Records Electricity Flow
A bidirectional meter measures both:
- Electricity imported from the grid
- Electricity exported to the grid
This allows the power distribution company to work out the net use of ledgers or export credits, in line with the current legislation.
5. Grid Electricity Is Used When Required
When your PV panel doesn’t generate enough electricity during nighttime and periods of low solar irradiation, the facility can draw electricity from the grid. The billing system will adjust based on your import and export units.
Example of Net Metering
Here is an example of how net metering works. Suppose your commercial building solar plants generate 1000 kWh.
| Energy Flow | Electricity |
|---|---|
| Solar electricity used directly by the building | 700 kWh |
| Solar electricity exported to the grid | 300 kWh |
| Electricity imported from the grid | 500 kWh |
| Net grid consumption | 200 kWh |
Your final billing will be based upon the import and export of units based upon your state regulations, utility use, and specific net metering mechanism.
What Are the Benefits of Net Metering?
Here are the benefits of using net metering based upon your state regulations.
1. Lower Electricity Bills
The primary benefit of utilizing net metering is the possible reduction in electricity prices. The net meter can be used to credit and adjust billing for both grid-purchased electricity and qualifying surplus generating.
2. Better Utilization of Solar Energy
Solar generation and electricity consumption rarely occur at exactly the same time. For example, you may get significant solar power generation on some afternoons but have different consumption patterns throughout the day. Net meters allow surplus generation to be exported rather than left unused.
3. Improved Solar Project Economics
Net meters can improve the ROI of your solar projects but managing surplus energy efficiently rather than going to waste.
4. No Need for Batteries in Every System
Net meters also remove the need for batteries to store your surplus energy. Instead, your surplus electricity will be exported to the grid and will be subjected to applicable rates and will be used in your billing cycles.
Key Requirements for Net Metering
| State / UT | Net-metering capacity limit |
|---|---|
| Andhra Pradesh | Up to 500 kW or sanctioned load, whichever is lower, where central fallback applies; state-specific provisions may apply |
| Arunachal Pradesh | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Assam | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Bihar | 500 kW or sanctioned load, whichever is lower, unless state-specific provisions differ |
| Chhattisgarh | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Goa | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Gujarat | State-specific; varies by consumer category/DISCOM |
| Haryana | 500 kW or sanctioned load/contract demand, whichever is lower |
| Himachal Pradesh | State/category-specific |
| Jharkhand | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Karnataka | 1 MW or sanctioned load, whichever is lower, under the applicable KERC framework |
| Kerala | State/category-specific |
| Madhya Pradesh | 500 kW or sanctioned load, whichever is lower, where applicable |
| Maharashtra | 5 MW or sanctioned load/contract demand, whichever is lower |
| Manipur | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Meghalaya | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Mizoram | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Nagaland | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Odisha | 500 kW or sanctioned load, whichever is lower |
| Punjab | 500 kW |
| Rajasthan | State/DISCOM-specific |
| Sikkim | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Tamil Nadu | State/category-specific; limits vary by consumer category |
| Telangana | State/category-specific |
| Tripura | 500 kW or sanctioned load, whichever is lower, under central fallback |
| Uttar Pradesh | 2 MW or sanctioned load, whichever is lower, under the applicable UP framework |
| Uttarakhand | State/category-specific |
| West Bengal | State/category-specific |
| Delhi (NCT) | Depends on applicable DERC provisions and consumer category |
| Jammu & Kashmir | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Ladakh | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Chandigarh | 500 kW |
| Puducherry | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Andaman & Nicobar Islands | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Lakshadweep | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
| Dadra & Nagar Haveli and Daman & Diu | 500 kW or sanctioned load, whichever is lower, where central fallback applies |
Disclaimer: All net metering limits are subject to the latest regulation and added orders of the respective State Electricity Regulatory Commission (SERC), DISCOM, consumer category, sanctioned load/contract demand, and application technical conditions. Before applying for net metering, please verify your relevant DISCOM and limit as per your state.
Is Net Metering Suitable for Commercial & Industrial Solar?
Net metering is a positive addition to your commercial and industrial solar projects as they reduce your electricity cost but this is based on the state energy excess limit. Here are a few things to consider before you install net metering for maximum ROI.
- Electricity consumption profile
- Solar system capacity
- Available rooftop or installation area
- Grid connection
- Tariff structure
- Applicable state regulations
- Export limitations
- Utility requirements
- Local net-metering regulations (Check the Above List)
- Electricity distribution company's requirements
- Maximum permitted solar capacity
- Consumer-category eligibility
- Existing sanctioned load
- Applicable electricity tariff
- Export or injection limits
- Metering and interconnection requirements
- Application and approval process
- Settlement mechanism for surplus electricity
These factors ensure that you obtain the highest ROI for your solar project and will help you decide whether to use net metering or a battery for energy use.
Frequently Asked Questions About Net Metering
Q1: What is net metering for solar?
Ans: Net metering helps you in calculating, reporting, and exporting your surplus generated energy to the grid and getting credit as compensation that will be adjusted in your electricity bill based on state and electricity provider policies.
Q2: How does a net metering solar system work?
Ans: Net metering first supplies electricity to your facility to meet load demand, then the surplus electricity is exported to the facility's connected grid. If your facility requires more load, then the grid provides the remaining electricity, and net metering calculates and reports all imported or exported units of electricity, finally your bill is generated based on the net meter’s calculation.
Q3: Does net metering eliminate electricity bills?
Ans: No, net metering is a mechanism to export your extra generated energy to electricity companies, and you will get compensation based on the rupees assigned per unit as per state and electricity companies policy. That generated unit will get deducted from your final bill. If you generate more and use less, then your credit will get stored with the electricity provider with a lapse date of Financial Year.
Q4: Does a solar system need batteries for net metering?
Ans: No. A grid connected solar system with net metering doesn’t require a connection with any batteries because surplus electricity is exported to the grid and not to personal batteries for later use.
Q5: Can commercial buildings use net metering?
Ans: Commercial buildings need to be eligible for betting a net metering connection, which depends upon application regulations, consumer category, system capacity and electricity distribution company according to your state.
Conclusion
Net metering provides a means to increase solar savings by crediting surplus electricity exported to the grid when eligible. The actual benefit will be determined by the system's size, consumption level, tariff, export limitations, customer category, and state-specific criteria. Before installing net metering solar systems, businesses should assess the quantity they use and ensure that it fulfills the current demands and standards of the relevant DISCOM.
In case you are in need of a solar EPC partner to develop your commercial or industrial energy needs, then Sunkind India Limited can help with evaluation of system design, grid connectivity, metering requirements, policies, project economics and long-term ROI before your solar project even starts.
