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How does net metering work?

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Quick answer

Net metering is a billing arrangement for homes with rooftop solar. During the day, panels power the house and push any surplus into the grid, spinning the meter's export count up. At night the house draws grid power. The bidirectional meter tracks both, and the bill charges only for imports minus exports.

Net metering lets a home or business with rooftop solar panels send surplus electricity to the grid and receive credit that offsets the power it draws at other times. A bidirectional meter records energy in both directions, and the customer is billed only for the net amount consumed.

Step by step

  1. Rooftop solar panels generate direct current whenever sunlight falls on them.
  2. A grid-tied inverter converts it to alternating current synchronised with the grid supply.
  3. Household loads use the solar power first, reducing what the home draws from the grid.
  4. Any surplus flows through the bidirectional meter into the street network, where neighbours use it.
  5. At billing time, the utility subtracts exported units from imported units and charges for the difference.

Key things to understand

  1. Solar panels produce direct current, and an inverter turns it into AC synchronised with the grid's voltage and frequency.
  2. The building's appliances use solar power first, so less electricity is drawn from the grid during sunny hours.
  3. When panels produce more than the building uses, the surplus flows out through the meter into the local distribution network.
  4. A bidirectional meter records both imported and exported units, and the utility subtracts exports from imports each billing cycle.
  5. Unused credits may carry forward to later months, with settlement rules set by the local regulator or utility.

Labelled diagram

  1. Solar panels

    Rooftop modules convert sunlight into direct current during daylight hours.

  2. Inverter

    Converts direct current into grid-synchronised alternating current for the building.

  3. Home loads

    Appliances use solar power first before drawing anything from the grid.

  4. Bidirectional meter

    Counts units exported to the grid and units imported from it.

  5. Utility grid

    Absorbs daytime surplus and supplies power at night or on cloudy days.

How electricity flows under net metering

Real-world examples

  • Indian households adding rooftop panels under the PM Surya Ghar scheme typically apply for net metering through their electricity distributor.
  • A family in Bengaluru exports midday surplus while at work and draws it back as credits for evening fans and lights.
  • Many US states offer net metering, though some, including California, have moved new customers to net billing.
  • A school with a large rooftop array runs a surplus during summer holidays that offsets bills during term time.

Common mistake

✗ Myth: With net metering, the grid stores your extra solar power and sends the same electricity back later.

✓ Fact: The grid does not store anything for you; exported power is used immediately by neighbours. Net metering is an accounting credit that offsets the separate power you buy later.

People also ask

How does net metering work for solar panels?
Solar panels feed the building first, and any extra electricity flows through a bidirectional meter into the grid. The meter records both exports and imports. At the end of each billing period, the utility deducts exported units from imported units, so the owner pays only for the net electricity consumed.
What happens to excess units in net metering?
Excess exported units are usually carried forward as credit to the next billing cycle. At the end of a settlement period, often a year, any remaining surplus may be paid out at a set rate or lapse, depending on the rules of the local electricity regulator or utility.
Does net metering save money?
It usually does, because surplus daytime solar offsets electricity bought at night, reducing the grid units you pay for. Savings depend on the system size, how much electricity you use, local tariffs and whether exports are credited at the full retail rate or a lower one.
What is the difference between net metering and net billing?
Under net metering, each exported unit offsets one imported unit, usually at the same retail price. Under net billing, exports are paid at a separate, often lower, rate and imports are charged at the normal tariff, so the two are valued differently.
Does net metering work during a power cut?
Usually not. Grid-tied inverters shut down when the grid fails so they do not send power into lines that workers may be repairing. Keeping lights on during an outage requires a battery and an inverter designed for backup.
What is gross metering?
With gross metering, all the electricity a solar system produces is exported and paid for at a fixed feed-in tariff, while the building buys all its own power from the grid at the normal rate.
Do I need a special meter for net metering?
Yes. The utility installs or approves a bidirectional meter that records electricity flowing both into and out of the building. Many modern smart meters can do this, but the switch must be approved under the local application process.

Part of the guide: Energy & Electricity at Home →