Net Metering vs Gross Metering: What's the Difference?
Net metering and gross metering are two different billing arrangements for grid-connected solar systems, and while net metering is far more common for residential installations in India, understanding both — and when gross metering might actually be relevant — helps clarify how solar billing really works.
Net Metering: The Standard Approach
As covered in detail elsewhere, net metering measures the net difference between electricity you draw from the grid and electricity you export to it over a billing cycle — you're only billed for the shortfall after your solar export is credited against your grid draw. This is the standard arrangement for the vast majority of residential and small commercial rooftop solar installations across India, and it's the mechanism the PM Surya Ghar subsidy scheme is built around.
The key financial characteristic of net metering is that your solar-generated electricity effectively offsets your consumption at the same retail rate you'd otherwise pay the DISCOM — meaning every unit of solar power you generate and use (or export and later draw back) is worth the same as a unit you would have bought from the grid, making self-consumption and export equally valuable from a pure billing perspective (though export credit rules and carry-forward policies vary somewhat by state, as covered in our net metering guide).
Gross Metering: A Different Model
Gross metering works differently: instead of netting your consumption against your export, it separately measures and values all the electricity your solar system generates (regardless of whether you use it yourself or export it) at a fixed feed-in tariff rate set by the DISCOM or regulatory commission — while you continue paying your normal retail tariff for all electricity you separately draw from the grid to meet your consumption needs.
In practical terms, under gross metering, your solar generation and your electricity consumption are treated as two completely separate transactions: you sell 100% of what you generate to the DISCOM at the feed-in rate, and you buy 100% of what you consume from the grid at the retail rate — rather than the two being directly offset against each other as they are under net metering.
Whether gross metering is financially better or worse than net metering for a specific installation depends entirely on the relationship between the feed-in tariff rate and the retail tariff rate. If the feed-in rate is close to or higher than the retail rate, gross metering can be comparably attractive or even better; but in most Indian states, feed-in tariff rates for rooftop solar are typically set lower than retail tariff rates, which generally makes net metering the more financially favourable arrangement for most residential and small commercial installations, since it effectively lets you "use" your own solar generation at full retail value rather than selling it at a discounted feed-in rate.
Gross metering is more commonly relevant for larger, dedicated solar power generation projects — like PM-KUSUM Component A ground-mounted solar plants, where the explicit business model is generating and selling power to the DISCOM under a long-term power purchase agreement, rather than primarily offsetting the generator's own consumption. For typical residential and small commercial rooftop solar aimed at reducing your own electricity bill, net metering remains the standard, and generally more advantageous, choice in the current Indian regulatory environment.
How Net Metering Works
Net metering is the billing arrangement that makes rooftop solar financially worthwhile for most Indian households and businesses. Once your solar system is installed, the DISCOM replaces your regular meter with a bi-directional net meter that can measure electricity flowing both ways — the power you draw from the grid, and the surplus solar power you export back to it.
During the day, your solar panels generate electricity that first powers whatever appliances are running in your home or business. Any extra power your panels produce beyond what you're using gets exported to the grid, and the net meter records this as a credit. In the evening or on cloudy days, when your panels aren't generating enough, you draw power back from the grid as usual. At the end of the billing cycle, you're only charged for the net units consumed — total units drawn from the grid minus total units exported to it.
This means the grid effectively acts as a free "battery" for your solar system during the day, and you only pay the DISCOM for the shortfall. For most homes with a well-sized rooftop system, this can bring monthly electricity bills down by 70–90%, and in some cases reduce them to the fixed minimum charge only.
What Is the PM Surya Ghar Muft Bijli Yojana?
Launched by the Government of India in February 2024, the PM Surya Ghar Muft Bijli Yojana is the country's flagship scheme for residential rooftop solar. Its goal is to get solar panels onto one crore (10 million) homes, and it does this by offering a direct subsidy — called Central Financial Assistance (CFA) — straight into the homeowner's bank account after installation, rather than routing it through the installer.
Under the scheme, households can get a subsidy of ₹30,000 per kW for the first 2 kW of capacity, and ₹18,000 per kW for the next 1 kW (i.e., the 2–3 kW slab), capped at a maximum of ₹78,000 for systems of 3 kW or larger. A household installing a 3 kW system, for example, can expect to receive close to ₹78,000 back from the government, substantially reducing the net cost of going solar.
To apply, homeowners register on the national portal (pmsuryaghar.gov.in), select their state and electricity distribution company (DISCOM), and choose an empanelled vendor to carry out the installation. Net metering is arranged through the DISCOM once installation is complete and inspected, after which the subsidy is credited directly to the applicant's bank account — usually within 30 to 45 days of a successful net-meter installation.
Cost and Payback Period
The cost of a rooftop solar system in India varies with system size, panel and inverter brand, roof type, and installation complexity, but as a rough benchmark, a good-quality on-grid residential system typically costs between ₹50,000 and ₹65,000 per kW before subsidy, using Tier-1, DCR-compliant components. After applying the government subsidy under PM Surya Ghar (up to ₹78,000 for a 3 kW system), the net out-of-pocket cost drops meaningfully.
Payback period — the time it takes for your electricity bill savings to equal your net investment — usually works out to between 3 and 6 years for most residential and commercial systems in India, depending on your local electricity tariff, how much of your solar generation you self-consume versus export, and how well the system is sized to your actual usage pattern. After the payback period, the electricity generated is essentially free for the remaining 18–22 years of the panel's rated life, making solar one of the few home investments that pays for itself and then keeps paying dividends.
Documents and Application Process
Applying for solar subsidy in India, whether under PM Surya Ghar for residential rooftops or PM-KUSUM for agricultural applications, generally requires a similar set of documents: proof of identity (Aadhaar card), proof of address, a recent electricity bill showing your consumer/connection number, proof of property ownership or a no-objection certificate if you're a tenant, and bank account details (for the subsidy to be credited directly).
The typical process starts with online registration on the relevant government portal, followed by selecting your state, DISCOM, and an empanelled installer. The installer conducts a site survey, submits a technical feasibility report to the DISCOM, and — once approved — carries out the installation. After installation, the DISCOM inspects the site and installs the net meter, following which the subsidy amount is disbursed directly to the applicant's registered bank account, typically within 30 to 45 days of the net meter going live.
Why Solar Makes Sense in India
India receives an average of 300 sunny days a year and among the highest solar irradiance levels in the world, which is precisely why the country has made solar power a cornerstone of its energy policy. For homeowners and businesses, this translates into a straightforward proposition: install a solar system once, and it keeps generating free electricity from sunlight for the next 25 years or more, dramatically cutting down what you pay to the grid.
Rising electricity tariffs, frequent hikes by state electricity boards, and the volatility of diesel prices for backup power have made solar an increasingly obvious financial decision, not just an environmental one. Combined with central and state government subsidies, the payback period on a typical residential or commercial rooftop solar system in India today ranges between 3 to 6 years, after which the electricity generated is effectively free for the remaining life of the system.
Beyond the financial case, solar also insulates households and businesses from unplanned power cuts, voltage fluctuations, and the uncertainty of grid supply in many semi-urban and rural parts of the country — a benefit that's often just as valuable as the money saved.
Maintenance and Lifespan
One of solar power's biggest practical advantages is how little maintenance it needs. With no moving parts, solar panels typically require nothing more than periodic cleaning to remove dust, bird droppings, and pollen that can reduce output — in most parts of India, cleaning once every 2–4 weeks (more frequently during dry, dusty months, less during and after the monsoon) is enough to keep output close to optimal.
Panels themselves are extremely durable, typically carrying a 25-year performance warranty guaranteeing they'll still produce at least 80–85% of their original rated output after a quarter century — degradation of roughly 0.5–0.8% per year is normal and expected. Inverters have a shorter lifespan than panels, typically needing replacement once every 10–15 years, so it's worth factoring this into your long-term cost calculations. Beyond cleaning and an occasional visual inspection for loose wiring or physical damage, a well-installed solar system needs very little hands-on attention to keep delivering reliable output year after year.
Common Myths, Busted
A persistent myth is that solar panels don't work on cloudy or rainy days — in reality, panels still generate electricity from diffused sunlight on overcast days, just at a reduced output (typically 10–25% of peak capacity), and India's overall annual sunshine is more than enough to make solar worthwhile even accounting for the monsoon months. Another common misconception is that solar panels require constant maintenance or frequent replacement — as covered above, the reality is closer to occasional cleaning with a 25-year usable life.
Many people also believe solar is only viable for large houses or businesses with big roofs, but modern high-efficiency panels mean even a modest 1–2 kW system on a small rooftop can meaningfully cut a household's electricity bill. Finally, there's a widespread assumption that solar installation is prohibitively expensive — while the upfront cost is real, government subsidy schemes, falling equipment prices, and financing options available through most installers have brought solar within reach of a much wider range of households than most people assume.
Frequently Asked Questions
Can I choose between net metering and gross metering for my home solar system?
This depends on your specific state's regulations — most states default to net metering for residential rooftop solar, and gross metering isn't typically offered as an alternative option for standard household installations, though rules do vary somewhat across states and it's worth confirming with your installer or local DISCOM.
Which arrangement is required for PM-KUSUM Component A ground-mounted solar plants?
Component A projects typically operate under a gross metering-like arrangement, since the entire purpose is generating and selling power to the DISCOM under a power purchase agreement, distinct from offsetting the generator's own consumption.
Is the feed-in tariff rate the same across all Indian states?
No, feed-in tariff rates are set individually by each state's electricity regulatory commission and can vary meaningfully between states, and are periodically revised — worth checking current rates with your state's regulatory commission or your installer if this is relevant to a specific project you're evaluating.
Does gross metering affect eligibility for the PM Surya Ghar subsidy?
The PM Surya Ghar scheme is specifically structured around net metering for residential rooftop solar, so gross metering arrangements (more relevant to larger, dedicated generation projects) generally fall outside this particular subsidy scheme's scope.
If retail tariffs rise over time, does net metering become even more valuable?
Generally yes — since net metering effectively lets you offset consumption at the prevailing retail rate, rising retail tariffs increase the value of each unit of solar generation you're able to self-consume or export under net metering, strengthening the financial case for solar over time.
Final Thoughts
For the overwhelming majority of homeowners and small businesses in India considering rooftop solar, net metering is both the standard and generally the more financially favourable arrangement — gross metering remains relevant mainly for larger, dedicated power generation projects with a different underlying business model. Understanding this distinction helps clarify exactly how your future solar bill savings will actually be calculated.