Net metering is a metering mechanism in which the utility meters the amount of excess electricity (typically solar power produced on the consumer’s rooftop) that the consumer exports to the grid. Net Metering is measured with a bi-directional meter. Net metering, just like feed-in-tariffs, is a measure introduced to accelerate private investment in renewable energy systems.

The figure below provides a pictorial understanding of how the net metering system works.

As mentioned above, a net metering system uses a bi-directional meter. It is this bi-directional meter that replaces the normal consumer meter, which only measures the amount, and not the direction, of electricity flowing.