Net Metering vs Net Billing vs Gross Metering vs Feed-in Tariff

Two houses, identical panels, identical consumption, identical weather. One saves twice as much as the other. The difference is not the hardware - it is which billing scheme the utility put them on.

There are four schemes in common use worldwide. Knowing which one applies to you is the single most important input to any solar payback calculation.

The four schemes at a glance

	What is measured	What you are paid for export	Who benefits
Net metering	Net difference (import − export)	Full retail rate, 1:1	Best for the owner
Net billing	Import and export separately	A lower, separately set export rate	Utility-favourable
Gross metering	Total generation, and total consumption	A fixed rate on everything generated	Depends entirely on the rate
Feed-in tariff	Export only	A set per-kWh incentive rate	Depends on the rate

1. Net metering - the 1:1 deal

Your meter tracks flow in both directions and you are billed on the net figure. Export 20 kWh, import 30 kWh, and you pay for 10 kWh. Export more than you import and the surplus usually banks as a credit for a future cycle.

The defining feature: an exported unit is worth exactly as much as an imported unit, because it simply cancels one out.

Why utilities dislike it. Your retail rate is not purely energy. It bundles in transmission, distribution and capacity costs. When an exported unit cancels an imported one, you avoid paying those fixed costs, and they get recovered from everyone else. This argument - cost-shifting - is behind nearly every rollback of net metering worldwide.

Where it still applies: India, Canada, much of the UAE, Kenya, Bangladesh, many US states, and the Netherlands until January 2027.

2. Net billing - buy at retail, sell at wholesale-ish

Import and export are settled as two separate transactions. You buy what you import at your retail tariff, and you sell what you export at a separate buyback rate set by the regulator or utility - typically far below retail.

Export 20 kWh at 10/unit and import 30 kWh at 40/unit, and you do not pay for 10 units. You pay 1,200 and receive 200.

Under the same physical flows, net metering would have cost you the equivalent of 10 units

• 400. Net billing costs you a net 1,000. Same panels, same sun, two and a half times the bill.

That is why the distinction matters so much, and why a payback figure calculated under the wrong assumption is not slightly off - it is wrong by years.

Where it applies: Pakistan since February 2026, California (NEM 3.0), Nevada, Hawaii, Arizona, and a growing list.

The strategic consequence is always the same: self-consumption becomes far more valuable than export. If you buy at 40 and sell at 10, a unit you use yourself is worth four units you sell.

3. Gross metering - sell everything, buy everything

Everything your panels generate goes to the utility at a fixed rate. Everything you consume comes from the grid at the retail rate. Nothing is offset, and self-consumption gains you nothing - the two flows are entirely separate.

This requires a generation meter measuring total production, not just a bidirectional meter at your boundary.

Whether it is good or bad depends entirely on the gross rate. If it is generous, gross metering can beat net metering. If it is not, it is the worst of the four for a household, because you lose the ability to avoid retail-priced imports through self-consumption.

Several Indian states apply gross metering above certain system sizes, which is one reason capacity thresholds there deserve attention.

4. Feed-in tariff - a payment for export

You are paid a set rate per exported kWh. Mechanically this is close to net billing; the framing differs. A FiT is usually presented as a policy incentive with a guaranteed term, whereas a net-billing rate is presented as the market value of the energy.

Where it applies: Australia, the UK's Smart Export Guarantee (supplier-set rather than government-set), and Japan's FIT/FIP.

The Australian trajectory is instructive. Early tariffs paid 44-66c/kWh. By 2026, typical rates are a few cents, and at least one major retailer's standing offer has reached zero. When four million homes export at the same midday moment, the energy is not scarce, and the price reflects that.

A worked comparison

One billing cycle. You generate 600 kWh. You use 700 kWh. Of your generation, 250 kWh is consumed directly as it is produced; 350 kWh is exported. You therefore import 450 kWh.

Assume retail 40/unit, export 10/unit, gross rate 20/unit.

Net metering. Net position: 450 imported − 350 exported = 100 units payable. Cost: 4,000.

Net billing. Buy 450 × 40 = 18,000. Sell 350 × 10 = 3,500. Cost: 14,500.

Gross metering. Buy all 700 × 40 = 28,000. Sell all 600 × 20 = 12,000. Cost: 16,000.

Feed-in tariff at 10/unit. Same shape as net billing. Cost: 14,500.

The spread between the best and worst outcome here is 12,000 per cycle on identical hardware. Nothing about the panels changed.

Note too what happens if you shift load to daylight so that direct consumption rises from 250 to 400 kWh (exports fall to 200, imports fall to 300):

• Net metering: 300 − 200 = 100 units. Cost: 4,000 - unchanged.
• Net billing: (300 × 40) − (200 × 10) = 10,000 - a saving of 4,500.

Under net metering, load shifting achieved nothing. Under net billing, it saved a third of the bill. That is the behavioural difference the schemes create.

How to tell which one you are on

1. Look at your bill, not your meter. Separate line items for energy purchased and energy sold means net billing or gross metering. A single net figure means net metering.
2. Check the rate you are credited at. If your export credit per unit equals your retail rate, that is netting. If it is conspicuously lower, it is net billing.
3. Read your agreement. The scheme is named in the connection agreement with your utility, whatever the marketing said.
4. Check whether surplus carries forward, and for how long. Credit expiry is a quiet but significant term.

Remember that the meter tells you nothing about the scheme - the same bidirectional "green meter" is used for all of them.

What to do about it

If you are on net metering: size for annual consumption, bank the summer surplus, and watch for policy change. Note the expiry date of any grandfathering.

If you are on net billing or a feed-in tariff: stop optimising for export. Size to your daytime load, shift consumption into daylight, and evaluate storage seriously - a battery turns cheap surplus into avoided expensive imports.

If you are on gross metering: compare the gross rate against your retail rate carefully. If a net scheme is available to you instead, model both before choosing.

Whichever applies, you can put your actual readings into the free net metering calculator to see your import, export and net balance for the cycle in a few seconds - and see immediately how much of your position depends on export value.

Frequently asked questions

Is net billing the same as a feed-in tariff? Close, but not identical. Both pay a set rate for exports. A feed-in tariff is usually a policy incentive with a fixed term; a net-billing rate is a settlement price meant to reflect the energy's value. In practice the effect on your bill is similar.

Can I choose my scheme? Rarely, but sometimes. Sri Lanka lets prosumers pick between three schemes and permits a one-time migration. Most markets assign you one based on when you connected and your system size.

Does a battery help under net metering? Much less than under net billing. If exports already offset imports 1:1, the grid is effectively acting as a free battery. Storage mainly buys you outage protection. Under net billing the arithmetic reverses and storage becomes a genuine financial lever.