Net metering, net billing or gross metering: which applies?
Three mechanisms, three very different paybacks, and customers who use the words interchangeably. How to tell them apart before you build a savings table.
A customer says they are on net metering. Their state regulation says something else. Your payback table was built on the word they used.
This is not a pedantic distinction. The three mechanisms produce materially different savings from the identical system on the identical roof.
The three, in plain terms
Net metering. Units exported to the grid are netted against units imported. Export effectively earns the retail tariff, because it cancels a unit you would otherwise have bought. A bidirectional meter records both directions and the bill settles the difference.
Net billing. Import and export are priced separately. The customer buys at the retail tariff and is paid for exports at a determined rate, which is usually well below retail. A unit consumed at home is therefore worth much more than a unit exported.
Gross metering. Everything the system generates is sold to the utility at a fixed tariff, and everything the customer consumes is bought at retail. Self consumption is irrelevant, because none of the generation reaches the customer's own load.
Same panels. Different economics, sometimes by a wide margin.
Why it decides the design, not just the sum
Under true net metering, a unit is a unit. The system should be sized against annual consumption, and it does not much matter when it generates.
Under net billing or gross metering, timing is everything. Every unit the customer uses while it is being generated is worth the retail tariff. Every unit exported is worth the lower rate. So:
- Sizing changes. The optimal system is smaller, and matched to daytime load rather than to the annual total.
- Orientation can change. Splitting an array to widen the generation curve can beat maximising annual yield, if the extra output lands when the customer is drawing.
- Storage enters the conversation earlier, because shifting a unit from export to self consumption is now worth real money.
Sizing method is in sizing a system from the customer's electricity bill. The point here is that the mechanism decides which target you are sizing against.
How to find out which one applies
Ask three questions in this order.
- Which state and which DISCOM? The mechanism is set by the state regulator, and the detail is in the commission's rooftop or grid interactive regulations.
- What consumer category and what size? Many states run net metering for smaller residential systems and net billing or gross metering above a threshold, or for commercial categories. The threshold matters more than the label.
- What does the sanction letter say? This is the one that settles it. The approval names the arrangement. Read it before you build the savings model, not after.
What changes in the proposal
If the customer is on net billing or gross metering, three lines in your proposal have to change, and most templates do not change them.
The savings calculation cannot use one blended rate. It needs self consumed units at the retail tariff and exported units at the export rate, which means it needs an assumption about what share is self consumed, stated openly.
That self consumption share should come from the customer's load pattern, not from a default. A house empty from nine to five and a shop open all day have completely different answers.
The payback follows from those two, and it will be longer than the net metering version. Showing a shorter payback by quietly assuming net metering is the most common way rooftop proposals mislead customers, usually without anyone intending to.
Why this is getting more important
The direction of travel across several states and central drafts is toward narrowing net metering for larger systems and consumers, with charges attached to export or even to total generation. That makes the distinction less academic every year, and it makes an EPC who understands it more useful than one who repeats the word the customer used. The current picture is in net metering is being rewritten.
The short version
- Net metering nets export against import, so export earns retail value.
- Net billing prices export separately, usually well below retail, so self consumption is worth more.
- Gross metering sells all generation at a fixed tariff and buys all consumption at retail.
- The mechanism decides system size, sometimes orientation, and when storage makes sense.
- Determine it from the state regulation and the sanction letter, by consumer category and size, not from what the customer calls it.
- Under net billing, savings need self consumed and exported units priced separately, with the assumed split stated.
Sources
- Net Metering in India, complete 2026 guide, Qbits, trade guidance
- Net Metering vs Net Billing, TNERC 2026 rules, Tristar Energy, trade guidance
- Net Metering for Solar India 2026, state-wise guide, Credence Solar, trade guidance
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