Net Metering vs Gross Metering vs Net Billing India: 2026 Guide

TL;DR — Net Metering vs Gross Metering vs Net Billing

• The bottom line: Net metering (you pay only for net grid imports after deducting solar export) is the answer for 88%+ of Indian C&I rooftop solar projects because it captures the highest kWh credit value. Gross metering (export at low feed-in tariff, import at full retail tariff) is uneconomical and avoided. Net billing (export at low feed-in, no kWh-for-kWh swap) is increasingly used for projects above the net metering cap.
• The most important sizing implication: under net metering, oversize up to your daytime self-consumption capacity (88-93% self-consumption target). Under net billing, oversize only to 95%+ self-consumption because exported kWh have low realisation. Under gross metering, sizing is irrelevant — every kWh exports at low rate.
• The key state variation: most Indian states allow net metering up to 1 MW (UP and MP allow 2 MW). Above the cap, projects use net billing or open access wheeling. A few states (rare) require gross metering for very large LT consumers.
• In short, the most cost-efficient structure for an Indian factory is net metering with rooftop sized for 90%+ self-consumption — capturing the full retail-tariff credit on every kWh.
• Sun Wave Technologies, a leading solar EPC company in India, structures all three settlement models depending on project size, state, and DISCOM rules.

Definitions: What Each Settlement Model Means

Net Metering

You install a bi-directional meter at your service point. During the day, solar generation may exceed factory demand; the surplus exports to the grid. During the evening/night, you import from the grid. The settlement is kWh-for-kWh — you pay for the net import (gross import minus gross export), at your retail tariff.

If solar generation matches consumption: zero net import = zero electricity bill (you still pay fixed charges and demand charge).

Gross Metering

A separate meter measures every kWh of solar generation, which is sold to the DISCOM at a fixed feed-in tariff (typically ₹2.80-3.40/kWh in 2026 — far below your retail tariff). Your factory's grid imports are billed separately at full retail tariff (₹7-9/kWh).

There is no kWh-for-kWh credit. Solar revenue and grid bills are separate streams. Net economic effect = (solar gen × ₹3.20/kWh) − (grid imports × ₹8.00/kWh) — usually a much worse outcome than net metering.

Net Billing

A hybrid: solar generation that is self-consumed offsets grid imports at retail tariff. Solar generation that exports (because it exceeds momentary demand) is paid at a lower export tariff — typically 70-85% of retail tariff (so ~₹6.00-7.50/kWh in 2026).

The economic effect is similar to net metering for solar projects sized to 95%+ self-consumption (where exports are minimal), but worse for projects with significant export volumes. Used commonly for projects above the net metering cap.

Side-by-Side Economic Comparison

For a 1 MW solar plant generating 1,500 MWh/year, with 88% self-consumption (1,320 MWh) and 12% export (180 MWh), against grid retail tariff of ₹8.00/kWh:

The result: Net metering and net billing produce similar economics for properly-sized rooftop projects (within 1-2% of each other). Gross metering produces dramatically worse economics — never choose it voluntarily.

(The above example is illustrative; actual numbers vary with system losses, banking charges, and demand-charge interactions.)

State-by-State Net Metering Caps

The key takeaway: net metering is universally preferred for projects within the cap. Above the cap, structure as net billing OR open access OR group captive.

For state-specific guides, see Maharashtra, Gujarat, TN, Karnataka, AP, Telangana, Kerala, UP, MP, Punjab, Rajasthan, Haryana.

Banking: How Surplus Carries Forward

Under net metering, surplus solar export in a billing month is banked (carried forward to next month). State-specific banking rules:

Banking charge in kind means the DISCOM keeps 5-12% of your banked kWh (you get credit for only 88-95% of the surplus). The remaining "unsettled" kWh at year-end is paid at a low feed-in tariff or forfeited.

For factories with seasonal load variation (sugar mills, food processing, hospitality), banking is crucial because solar generation is consistent year-round but consumption varies. The most important factor: choose a state with low banking charges and monthly (vs annual) settlement.

Practical Implications for Sizing

Under Net Metering

Size up to 88-93% self-consumption. Surplus exports earn nearly full retail tariff via banking, so slight oversizing is rational.

Under Net Billing

Size to 95%+ self-consumption. Surplus exports at 70-85% of retail are still meaningful but lose 15-30% of value vs net metering. Smaller is better.

Under Gross Metering

Sizing barely matters because every kWh exports at low feed-in tariff. The answer is to avoid gross metering entirely whenever possible.

For sizing fundamentals see our how-to-size-solar guide.

When to Use Each Settlement

Net Metering: Default for All HT-I Projects ≤ NM Cap

If your project size ≤ state NM cap (1 MW typical, 2 MW UP/MP), use net metering. The most cost-efficient outcome by 8-12% over net billing for the same plant.

Net Billing: For Projects Above NM Cap

If your project size > state NM cap, choose net billing for the portion above the cap. Some states allow split-meter structures: e.g., 1 MW under net metering + balance under net billing.

Open Access Wheeling: For Large Projects

For projects above 1 MW load (consumer-side) seeking off-site solar, open access wheeling (third-party or group captive) delivers landed cost of ₹3.20-3.85/kWh — comparable to or better than net-billed rooftop in many states.

Gross Metering: Avoid Unless Mandatory

Gross metering is uneconomical. Some sub-LT residential schemes require it; for HT industrial, never choose it voluntarily.

Frequently Asked Questions

What's the difference between net metering, gross metering, and net billing?

The bottom line: net metering settles solar export and grid import as a kWh-for-kWh net amount at retail tariff (best economics). Gross metering sells every solar kWh at a low feed-in tariff and bills imports separately at full retail (worst economics). Net billing settles self-consumption at retail tariff but exports at a lower export tariff (70-85% of retail) — middle ground, used for projects above the net metering cap.

Which settlement model gives the best economics?

Net metering is the best by 8-12% over net billing and 80%+ over gross metering. The reason: net metering captures full retail tariff value on every solar kWh (whether self-consumed or exported), whereas net billing discounts exports and gross metering discounts everything. For 88%+ of Indian C&I rooftop projects within the state NM cap, net metering is the right answer.

What's the net metering cap in my state?

Most Indian states allow net metering up to 1 MW per HT consumer. Notable exceptions: Uttar Pradesh and Madhya Pradesh allow 2 MW (the highest in India), Rajasthan caps at 0.5 MW. Above the cap, projects use net billing or open access wheeling. Caps are reviewed periodically; always verify current state rules with your DISCOM at proposal stage.

What happens to my surplus solar generation in net metering?

Surplus is banked (carried forward) into the next billing month, with state-specific banking charges of 5-12% in kind. At annual settlement (typically March 31), unsettled banked kWh is either paid out at a low feed-in tariff or forfeited per state rules. Banking is crucial for factories with seasonal load variation; choose a state with low banking charges and monthly settlement.

Can I use net metering for projects above 1 MW?

Most states cap net metering at 1 MW; UP and MP allow 2 MW. For projects above the cap, structure as: (a) 1 MW (or state cap) under net metering + balance under net billing, OR (b) all of it under net billing, OR (c) move to open access wheeling for the large component. Sun Wave Technologies structures the right hybrid based on your project size and state rules.

Should I choose gross metering for any project?

No, not voluntarily. Gross metering economics are 60-80% worse than net metering for the same solar plant. The only reasons to choose gross metering are: (a) regulatory mandate in a specific state-segment, or (b) very small (sub-LT) projects where gross metering is the only option. For HT industrial projects, always insist on net metering or net billing.

How does open access wheeling compare to net metering?

Open access wheeling (third-party or group captive) is for projects above 1 MW load that cannot fit within rooftop net metering. Landed cost: ₹3.20-3.85/kWh after wheeling charges (₹0.70-1.50/kWh state-specific) and cross-subsidy surcharge waiver in group captive structures. For large consumers (>1 MW load), open access often beats net-billed rooftop. For small-to-mid consumers, rooftop net metering wins on simplicity and per-kWh economics. See our open access solar India guide.

Are banking charges negotiable?

No, banking charges are fixed by state regulator (SERC) and apply uniformly to all consumers in a category. However, the choice of state for new manufacturing locations is partly informed by banking charge structure. Among major industrial states, Gujarat (5%) and Andhra Pradesh (5%) have the lowest banking charges; Tamil Nadu (12%) and West Bengal (12%) have the highest. For multi-state operators, this consideration is one factor in plant siting decisions.

Sources

• MNRE / SERC Tariff Orders FY 2026-27 (state-specific)
• State Discom Net Metering Regulations
• India installs record 45 GW solar capacity in FY2026 — pv magazine India