Net Metering: What You Need To Know

Migration to renewable alternatives for energy is imperative due to the depletion of the conventional sources and the mounting menace of climate change. People have steadily started to accept and adopt renewable alternatives like solar energy. This shift can also be attributed to governments incentivizing widespread adoption of renewable energy.

In addition to direct subsidies, the governments have formulated policies encouraging consumers to become power producer by compensating them for the power fed into the utility grid.

This compensation is executed through metering mechanisms namely:

Net Metering : 

In a net metering mechanism the consumer is allowed to accumulate credits for the surplus power produced and fed in to the grid by the consumer. These credits may be used later to offset power usage from the grid.


Gross Metering :

In a gross metering mechanism, the consumer produces power and sells it to the power company at a pre-agreed price. Eventually, the income from sale offsets the cost of procurement of grid power. It is to be noted here that the sale-to-grid and purchase-from-grid of power happens at separate rates and are independent of each other.


Benefits of Metering Mechanisms

  • Metering mechanisms offers consumers with immediate reductions in electricity bills.
  • It allows consumers to generate revenue from the surplus energy fed into the grid at the end of the billing cycle.
  • It makes migration to solar PV systems an attractive proposition, allowing net compensation for every unit of power generated & exported.
  • At the power generation level, net metering policy reduces the stress on power generation companies for generation of incremental power, especially during peak load months.

What’s next?

As a part of our blog series, we will soon be coming up with what is net metering and how does it work, as a detailed commentary on the metering techniques and their comparisons. Also we will try to get you some interesting insights on the policy framework around the metering mechanisms in India.

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