All that you need to know about Net-metering

September 12th, 2016 by nimbus

There are a surprising number of people who would like to do more to conserve and protect our natural resources and become responsible citizens. If you are one of them, the best way to do so is to join the solar revolution by installing solar panels on your roof tops and using clean energy. You can also go one step further and share your electricity with others.

In order to pay you for your services and motivate more people to do so, the government has introduced “Net-metering”.

You can now send the extra electricity that you are producing back to the grid and earn energy reversals on the electricity consumed from your contemporary electricity connection. This is called net-metering. A specialised meter is installed which turns backwards every time you send your energy to the grid. This reverses the units of electricity you have consumed from your electricity provider.


As a consumer how does net-metering help you?

A straightforward benefit is that you get compensated for the power sent to the grid. In addition, it also helps you compensate for the cost that is incurred during the installation of a solar system.

For high consumers of electricity, net-metering can help take some pressure off on peak hours. And needless to say, it contributes to the cleanliness of the environment as well.

Is net-metering a motivating factor to adapt to solar power?


India’s roof-top solar capacity is about 740 MW. Currently, we are utilising a very small fraction of that power. Experts have analysed that adaptation to solar power can increase by 60% if net-metering is implemented effectively.

This makes net-metering a very important aspect for energy policy makers.

If net-metering is available, then why are consumers not shifting to this cleaner substitute and earning back energy reversal?

Let us answer this with the assumption that consumers have the funds to set up solar panel systems.

The consumers who have solar panels in place receive compensation for the electricity being sent back to the grid. So if you consume 5 units of electricity and you give 5 units to the grid, you earn 5 units through reversal. This seems to be a fair deal.

However, in actual scenarios, the cost of electricity is not constant everywhere. It is artificially kept low with subsidy. The cost of electricity with subsidy can cost Rs 3 to Rs 6 per unit.

The cost of producing electricity through solar power comes to Rs 10 per unit in the beginning. However, this cost reduces significantly in the long run. Now when solar electricity is provided back to the grid, the value earned is low.

Let’s look at it with an example.

Producing 5 units of solar energy costs Rs. 50, assuming that the cost of producing solar energy is Rs. 10 per unit.

If 5 units of solar energy is fed to the grid and 5 units of energy reversal is earned, then assuming that the subsidised cost of electricity is Rs. 5, the value earned is 5 x Rs. 5 = Rs. 25. Here you incur a cost of Rs. 50 and get back electricity worth Rs. 25. This is not a profitable deal.

But the situation is different in areas where the electricity is not subsidised. If the cost per unit of grid electricity is more than the per unit cost of solar, net-metering becomes a value add for consumers.

The DISCOMs also face the heat of power subsidy. They have to recover their profits by charging the commercial and industrial segment. For net-metering to be a viable solution it has to be a win-win situations for both consumers and DISCOMs.

If, policy-wise, the government can come up with something innovative that is beneficial to DISCOMs and consumers alike, can net-metering be implemented immediately?

The answer is no.

Let us understand why. Power grids can have problems. When this happens workers are sent to the location to rectify it. It is ensured that the power source is cut off at the power grid so that no power flows out of the grid till the workers are on site. But a solar house, which is unaffected by the power cut-off at the grid, produces power and, through net-metering, sends power to the grid. This poses a threat to the workers working on the grid. Hence the inverter in the solar panel system must shut itself down in case it senses a problem in the grid. This is called anti-islanding protection. This implies that the home running on solar power cannot use electricity because of anti-islanding protection. This will also lead to wastage of power generated through solar PV.

In addition to this, most of the regions in India suffer from frequent power outages. So net-metering becomes very ineffective and is a key reason why consumers do not opt for it.

Anti-islanding is very essential and cannot be done away with. This is where innovation is required. If a system is developed that would allow users to use solar-generated electricity when power source to the grid is cut off due to problems at the grid, the use of net-metering would become feasible.

Geographical regions in India that are working on net-metering implementation

Based on industry discussions, it seems that only a handful of states and union territories, such as Andhra Pradesh, Telangana, Punjab, Delhi, Chandigarh and Karnataka, have begun actual implementation of net-metering. Some other states such as Haryana, Tamil Nadu and Rajasthan are also showing interest; however, there is a lot of work that needs to be done to ensure effective implementation.


Sources – How stuff works, Bridge to India

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