Two customers install the same 10 kW array and get very different paybacks. The panels are not the cause. The billing mechanism is. Net metering vs net billing decides what each exported kilowatt-hour (kWh) is worth. That one number drives system size, battery choice, and the proposal you show the customer.
Quick answer. Net metering subtracts exported kWh from imported kWh, so every exported unit is worth the full retail rate. Net billing values imports and exports separately at two different prices, and the export price is usually lower. California’s Net Billing Tariff (NEM 3.0) and India’s net billing option under the Electricity (Rights of Consumers) Rules both work this way. Under net billing, self-consumption and storage matter more than array size.
TL;DR
- Net metering nets units (kWh against kWh). Net billing nets money (import charges against export credits).
- California closed NEM 2.0 to new applications after April 14, 2023. New customers get export credits based on the Avoided Cost Calculator.
- India's 2021 amendment lets State Commissions allow net metering up to 500 kW or the sanctioned load, whichever is lower.
- Under net billing, the value of solar comes mainly from power used on site. Design for self-consumption first.
This guide is for EPC and installer teams that sell in California, in Indian states, or in both. It explains the mechanics, shows the math, and lists the design changes each regime calls for. For the state process side in India, see our DISCOM net metering process guide.
What is the difference between net metering and net billing?
The difference is what gets netted. India’s Ministry of Power wrote both definitions into the Electricity (Rights of Consumers) Amendment Rules, 2021, notified on 28 June 2021.
- Net metering: exported solar energy “is deducted from energy imported from the Grid in units (kWh).”
- Net billing or net feed-in: imported and exported energy “are valued at two different tariffs.”
- Gross metering: total generation and total consumption are accounted for separately.
The full rule text is reproduced by LegitQuest (2021 amendment rules). The same logic applies in the US, where the terms are used in tariffs rather than in one national rule.
| Feature | Net metering | Net billing | Gross metering |
|---|---|---|---|
| What is netted | kWh against kWh | Money: import charges minus export credits | Nothing; all generation is sold |
| Value of an exported kWh | Retail rate (in effect) | A separate export rate, usually lower | A fixed feed-in tariff |
| Value of a self-consumed kWh | Retail rate | Retail rate | Not applicable |
| Best design target | Annual energy offset | Self-consumption share | Maximum generation |
| Role of storage | Optional | Often decisive | Rarely relevant |
How does net metering work?
Under net metering, the grid acts like a free battery. A unit exported at noon cancels a unit imported at 8 pm. The customer pays only for the net imported units over the billing or settlement period.
The net metering in India model uses a single bidirectional meter at the point of supply. Because every exported unit is worth retail, the economic target is simple. Size the array to offset annual consumption, within the sanctioned load and the state cap.
How does net billing work?
Net billing keeps two ledgers. Imports are charged at the retail tariff. Exports earn a credit at a separate rate. The bill is the difference in money, not in units.
That separation changes the incentive. An exported unit earns less than the unit it would have replaced. So the most valuable solar kWh is the one used on site, at the moment it is produced, or stored and used later.
What does California’s NEM 3.0 actually change?
The California Public Utilities Commission (CPUC) adopted Decision D.22-12-056 in December 2022. It created the Net Billing Tariff (NBT), commonly called NEM 3.0. The NBT applies to interconnection applications submitted on or after April 15, 2023, according to the CPUC NEM Revisit page.
PG&E’s implementing filing, Advice Letter 6848-E (January 30, 2023), lists the main terms for PG&E, SCE, and SDG&E:
| NBT term | What the filing says |
|---|---|
| Netting | The NBT “eliminated netting of imports and exports” |
| Export value | Based on the Avoided Cost Calculator (ACC), varying by hour, month, weekday, weekend, and holiday |
| Lock-in | Export rates follow a nine-year schedule from the ACC adopted as of January 1 of the interconnection year |
| ACC Plus | Extra residential credit for the first five years after NEM 2.0 closed, cut 20 percent each year until it reaches zero |
| Billing | Usage charges paid monthly, with a 12-month annual true-up kept |
| Sizing | Estimated annual production up to 150 percent of usage, with an attestation |
| Non-bypassable charges | Export credits cannot offset them; only ACC Plus can |
The NEM 3.0 glossary entry and our NEM 3.0 design retrospective cover what this did to battery attachment and array orientation. Customers who applied by April 14, 2023 stay on their earlier tariff for their legacy period.
How does India handle net metering and net billing?
India sets a national default and leaves the details to each State Electricity Regulatory Commission (SERC).
Under Rule 11(4) of the 2021 amendment, metering arrangements follow the State Commission’s regulations. Where the regulations are silent, the Commission may allow net metering “for loads up to five hundred kW or upto the sanctioned load, whichever is lower.” Other loads get net billing or net feed-in. The rule also lets Commissions introduce time-of-day tariffs for net billing prosumers to encourage storage.
What this means in practice:
- Check the state regulation first. Caps, settlement periods, and export rates differ by state. Our guides for MSEDCL and Andhra Pradesh DISCOMs cover state specifics.
- Above 500 kW, assume net billing or gross metering unless the state regulation says otherwise.
- Watch the 2026 draft. On 12 March 2026 the Ministry of Power published draft amendment rules for comment. As reported by Mercom India (2026), the draft proposes a net metering charge above 5 kW and lets regulators require storage for prosumers above 500 kW.
We could not confirm from a primary source whether the 2026 draft has been notified as final. Treat it as a proposal and check the Ministry of Power gazette before you price a project on it. Our tracker of DISCOM net metering changes in 2026 follows the state-level moves.
Worked example: the same system under both regimes
The numbers below are illustrative, not a real tariff. They show how the mechanism alone changes the bill.
Assume a C&I customer with 10,000 kWh of annual solar generation. It uses 6,000 kWh on site and exports 4,000 kWh. It later imports 4,000 kWh at night. The retail rate is ₹8 per kWh and the net billing export rate is ₹3 per kWh.
| Line item | Net metering | Net billing |
|---|---|---|
| Value of 6,000 kWh used on site (₹) | 48,000 | 48,000 |
| Night imports, 4,000 kWh (₹) | Netted to zero | 32,000 charge |
| Export credit, 4,000 kWh (₹) | Included in netting | 12,000 credit |
| Net grid cost for the year (₹) | 0 | 20,000 |
| Effective value of one exported kWh (₹) | 8 | 3 |
The self-consumed share is worth the same in both columns. The entire gap comes from exports. That is the key point for design: under net billing, raise the share of solar used on site before you add panels.
How should you design differently under net billing?
Use this checklist when a project moves from net metering to net billing.
- Pull interval load data. Annual kWh is not enough. You need hourly or 15-minute load to estimate self-consumption.
- Size to daytime load, not annual load. Extra panels mostly add low-value exports.
- Model storage against the export rate. A battery energy storage system (BESS) earns the spread between the retail rate and the export rate.
- Test orientation. West-facing capacity can shift output toward evening loads where export values or time-of-day tariffs reward it.
- Check the tariff rules for oversizing. The California NBT caps estimated production at 150 percent of usage.
- Recheck the financial model. Payback built on net metering assumptions will overstate returns under net billing.
Our Solar 3D Pre-Design service builds bid-stage layouts with shading and energy estimates. Our engineering reports cover PVsyst yield studies that feed these models.
Common mistakes when comparing the two
- Treating net billing as “net metering with a lower rate.” The settlement logic is different, so the monthly cash flow is different too.
- Using annual offset as the sales target. Under net billing, 100 percent offset can mean a large share of low-value exports.
- Ignoring fixed and non-bypassable charges. In California, export credits cannot offset non-bypassable charges.
- Assuming one national rule in India. The central rule sets defaults. The state regulation decides the project.
FAQ
Is NEM 3.0 net metering or net billing?
It is net billing. The CPUC named it the Net Billing Tariff, and PG&E’s filing says it eliminated netting of imports and exports.
What is the net metering limit in India?
The 2021 amendment allows net metering up to 500 kW or the sanctioned load, whichever is lower, where state regulations do not set other terms. Always check your SERC regulation.
Does net billing make batteries worth it?
Often, but not always. Storage pays when the gap between the retail rate and the export rate is large enough to cover the battery cost. Model it with real load and tariff data.
What is gross metering?
All generation is exported and paid at a set tariff, and all consumption is bought at the retail tariff. India’s 2021 rules let State Commissions permit it.
Size the project to the tariff, not to the habit
The mechanism decides the design. Confirm which regime applies, pull interval data, and size for self-consumption when exports are discounted. Tariffs and draft rules change, so verify the current terms with the utility, the CPUC, or your DISCOM before you commit.
If you want a bid-stage layout and yield model built on the right tariff, send us your project details. We reply within 1 business day.