Net Metering and Gross Metering: Know the difference

Generating electricity at home using solar rooftop is steadily gaining popularity in the country as the price of solar panels has dropped drastically. There are plenty of incentives to have rooftop solar systems. Since it is expensive to store electricity, the solar plants are commonly connected to the grid, so the surplus/ or all the generated power is used to support the grid. When you use electricity at home or office, a metering device calculates how much you have consumed, and a bill is generated based on that. The same applies to on-grid solar consumers who have their rooftop systems connected to the grid. There are two ways in which it is metered; Net metering and Gross metering.

How Net Metering Works 

Net metering is what will be done if you set up a rooftop system for your private consumption of electricity with the surplus being exported into the grid. This system was introduced in India in 2015 to make solar power more economical and accessible to everyone. Anyone familiar with solar power knows that the output is not always steady, as cloudy days and nights cause a drop to zero. Also, if the demand is more than what is generated, excess power needs to be imported from the grid. For this purpose, a bi-directional net meter is used to account for both the imported and exported power in net metering. The meter doesn’t record the total energy that your solar panels generate, and it only records the surplus power imported to your house or what was exported to the grid.

For example, if you use 12 units of electricity in a day and generate eight units with your rooftop system, the net meter will show a reading of 4 units taken from the grid. If you use eight units and produce 12 units a day, then the meter will show -4 units. Your bill for the month will be net units produced/consumed, and if your production is more than what you consumed, you will get paid for it at the rate that is fixed by the state’s electricity regulatory commission.

How Gross metering Works 

In gross metering, you won’t be able to directly use any of the power generated by your rooftop system. The power is directly exported to the grid through a separate circuit, and the power for your home comes from the grid. Since there are two circuits here, there will be two meters: one for your consumption of electricity and the other for the production. Your billing for consumption will continue to be the same as it always was, and you will get paid for the electricity you produce separately. Typically, those who choose gross metering do so as there is no limit for the installed capacity, and they can use up all their vacant roof spaces to install the panels for higher earnings.

Which one should you consider? 

For both the purchasing schemes, you will have to sign a PPA (Power Purchase Agreement) with the Discom (Power Distribution Company), which is a legal agreement that is valid for many years. BESCOM (Bangalore Electricity Supply Company), for example, has the net metering PPA valid up to 25 years. The type of metering system you choose will depend on the size of your rooftop solar systems and existing mandates.

Generally, when you look at how electricity consumption is priced, the cost for power is less when the consumption is less, and it is more when the usage is more. In the net metering system, the import of power is calculated against the export, and you are billed for the lower consumption slab of the tariff. So, this made it slightly better for the consumers since the scheme was introduced. In the gross metering arrangement, you are compensated marginally less than the supply tariff at which you import. Therefore, in the interest of revenue protection Discoms started pushing for more gross metering than net metering.

In December 2020, the Ministry of Power issued new rules that mandate net metering for installed loads up to 10 kW and gross metering for loads higher than 10 kW for all systems on-grid or hybrid. The new rules will come into play on March 31, 2020. PPA for new projects post that will have to be signed under the new regulations, and all projects still under construction will have 500 days to complete.

The new rules do not impact small-capacity consumers with rooftop systems over their homes (up to 4-5 BHK). Larger spaces such as apartment complexes, office buildings, educational institutions, or other buildings that need solar plants with capacities higher than 10 kW will be impacted. The Karnataka Electricity Regulatory Commission (KERC) has suggested generic tariffs in the range of INR 3.82/ kWh for net metering systems and INR 2.84/ kWh for gross metering systems.

Amplus Solar

March 12, 2021