Net Metering or Net Energy Metering is a billing arrangement that allows the consumer to sell excess energy to the utility company or buy deficit energy from the utility company using a meter to track this energy exchange. In other words, net metering takes into account the difference of energy consumed from the gird and energy fed back to the grid.
Net Metering can be explained with the help of the following possibilities:
If the generation of energy from alternate sources like solar or wind is more than the required load, the excess energy is fed back into the main grid and the meter runs backwards. The system owner is then credited for the units that were fed back into the system.
If the generation of energy from alternate sources like solar or wind is less than the required load, the deficit energy is drawn from the main grid and the meter, as usual, runs forward. The system owner is then charged for the units that were consumed.
In both possibilities, the system owner is charged for the difference of units as per standard retail tariffs.