Rooftop Solar and Net Metering

How households and businesses generate their own solar power, how net metering pays them for surplus electricity, and India's rooftop solar push.

Instead of relying only on large power plants, households and businesses can install solar panels on their roofs and generate their own electricity. This is called rooftop solar, a form of distributed generation.

How it saves money

Solar panels produce electricity during daylight. The electricity generated reduces how much a household buys from the grid. Over time, savings on electricity bills can repay the installation cost. The time this takes is called the payback period, often several years depending on costs, sunlight and electricity prices.

Net metering

Under net metering, when rooftop panels produce more electricity than the home uses, the surplus flows into the grid, and the meter effectively runs backwards. The household is billed only for its net use. This makes rooftop solar more attractive, because surplus power is not wasted.

Some places use gross metering or net billing instead, paying a set rate for exported power that may be lower than the retail price.

India’s push

India launched the PM Surya Ghar: Muft Bijli Yojana in 2024, aiming to install rooftop solar on 10 million households. It offers subsidies covering a significant share of installation costs for residential systems, with the goal of giving households up to 300 units of free electricity a month.

A household's calculation

A family installs a 3 kilowatt rooftop system. After the subsidy, the cost is a manageable amount. The system produces several hundred units a month, cutting their electricity bill substantially. Surplus power during sunny afternoons is credited through net metering. After a few years, savings have repaid the cost, and the panels continue producing for many more years.

Challenges

Upfront cost, even with subsidies.
Roof ownership: renters and apartment dwellers may lack control over roofs.
Utility finances: electricity distribution companies may lose revenue from their best-paying customers, straining their finances. This has led some to resist net metering or seek changes.
Grid management: many small generators make grid balancing more complex.

Thinking rooftop solar only helps the environment

Rooftop solar cuts emissions, but for many households it is also a sound financial investment, with savings repaying the cost over several years. Subsidies and net metering strengthen the economic case.

Key takeaways

Rooftop solar lets households and businesses generate their own electricity.
Net metering credits surplus power fed into the grid.
India's PM Surya Ghar scheme, launched in 2024, targets rooftop solar for 10 million households.
Upfront costs, roof access and utility finances are key challenges.