Net Metering – A Complete Guide

Netmetering is also known as Net Energy Metering (NEM). It is a popular electricity billing mechanism in India that levies charges only for the electricity consumed (net) and compensates for the idle units. The concept allows the individual and commercial consumers, who produce their energy, to sell the excess power produced to the grid, at the retail price. The solar net metering mechanism was first introduced in 1995 from where it gained popularity and has been evolving thereafter.

How does it work?

The net metering system allows the owner to leverage the excess solar energy produced to generate a potential revenue stream. Typically, solar rooftop solutions produce more energy than required by the owner during the daytime. In such a case, net metering allows the owner to sell the excess units (kWh) produced to the grid at a market price. To account for the ‘net’ usage, the meter is set to run backward. It offers credit for electricity consumed at night or in cases where the need exceeds the output. The meter bills the consumer only for the net energy used (energy produced – energy purchased). If the energy consumed is less than produced, the owner gets a due compensation per retail price.

What are the benefits of net metering?

Netmetering in India has become a widely accepted solar billing mechanism. Some of the important benefits of this concept include:

1.       Zero-cost electricity: This method can help bring the cost of utility bills to zero. Generally, solar panels produce more energy than the required consumption during the daytime. In a net metering system, the excess units of energy are exported to the grid at the kWh market value. While the user can buy the units when needed and the net consumed figure is billed. If the usage is equal to production, the cost of electricity will be zero.

2.       Eradicates batteries and storage systems: In this system, the utility grid functions as a battery storage system, as well as a backup generator. The excess energy units are stored in the grid itself, which eliminates the need for a battery and large generators.

3.       Cost-effective: A solar net metering reduces the repair expenditure. The system eliminates the major sections of the PV system, such as a battery and generator that need high maintenance. All other sections are exceptionally low in maintenance.

4.       Financial credits: In this billing mechanism, if the usage is less than the energy produced, the owner is compensated via financial credits. This also gives them the power to control their electricity bills.

5.       Community participation and help: Net metering in India encourages active community participation in producing alternative and renewable energy. Moreover, with increased demand for solar energy, this concept increases jobs, income, and investments for the people.

6.       Protects electricity grid: The billing mechanism helps grids to manage their peak loads. It aids the generation of electricity near to consumption. Thus, reducing strain on the distribution channels and preventing loss of energy in transmission.

The net metering system is forward-looking, economical, safe, rewarding, and easily applicable. And as renewable energy paves its way into the future, net metering in India is expected to become widely accepted and more popular.