Feed-in tariff vs net metering explained simply. Compare net billing, FiT, and gross metering, rates, approvals, and savings in 2026.
BySolar Bazaar Team
If you are planning a solar system, you will quickly run into terms like feed-in tariff, net metering, net billing, and gross metering. They can feel confusing at first. This guide breaks down feed-in tariff vs net metering in plain language so you can see how you get paid for exported solar power and which model may fit your situation.
Think of it like this: your roof becomes a small power plant. The question is how the grid pays you for what you send out.
What Does "Exporting Solar Power to the Grid" Mean?
Self-consumption vs export
Your solar panels generate electricity during the day. Your home or business uses that energy first. That is called self-consumption. If your system produces more than you need at that moment, the extra electricity flows back to the grid. That surplus is what you may earn credits or payments for.
Here is a quick way to picture it. If your system makes 5 kWh while you are only using 3 kWh, the extra 2 kWh goes out to the grid.
Why utilities pay for solar electricity
Utilities can use your excess solar energy to serve nearby demand. It reduces how much power they need to generate or buy elsewhere. In return, they offer credits or payments based on local policy. The value of that energy can change a lot depending on where you live and the time of day.
Grid interaction basics
A grid-tied solar system uses a bidirectional meter. It tracks both the electricity you draw from the grid and what you send back. Your bill reflects both directions. The rules behind this exchange decide whether you are on net metering, net billing, a feed-in tariff, or gross metering.
Miss this detail and your savings estimate can be way off.
Feed-in Tariff vs Net Metering: Core Concepts
At a basic level, feed-in tariff vs net metering comes down to how exported electricity is valued. Net metering credits your exports at the same rate you pay for electricity. A feed-in tariff pays a fixed price per kilowatt-hour under a contract. Net billing and gross metering sit alongside these models, each using a different way to calculate compensation.
Ask yourself one question early: will you use most of your solar power, or send a large share to the grid?
Net Metering Explained
How billing credits work
Net metering looks at your net electricity use over a billing cycle. For example, if you export 300 kWh and import 400 kWh in a month, you are billed for the remaining 100 kWh. If you export more than you import, many programs carry that credit forward to future bills.
Some regions also settle unused credits at the end of the year, though the rate may differ.
Retail rate compensation
The main benefit is the value of each exported unit. Your electricity is credited at the same retail rate you pay, often between USD 0.10 and 0.40 per kWh depending on the region. This makes exports valuable in places where electricity prices are high.
It is close to running your meter backwards.
Where it is still available
Net metering still exists in parts of North America and a few other regions, including some programs in Canada and the UAE. Many areas began phasing it out between 2023 and 2025. In many cases, it has been replaced by net billing.
Policies change. Always check your local rules before sizing your system.
Net Billing Explained
Export at wholesale or avoided cost
Net billing separates what you consume from what you export. You pay retail rates for electricity you draw from the grid. Your exported energy is paid at a lower rate, linked to wholesale or avoided cost pricing. Export rates fall between USD 0.03 and 0.15 per kWh.
That gap between buy and sell price is what changes your savings strategy.
Time-of-use pricing impacts
In many net billing systems, the value of your exports depends on the time of day. Electricity sent during peak demand can earn more than midday exports, when solar supply is high. This adds complexity but also creates chances to earn more with the right setup.
Battery storage can help shift energy to higher-value hours.
Why countries are shifting to this model
Utilities argue that retail-rate credits overstate the value of exported solar. As more solar comes online, many regions have moved to net billing to better reflect actual grid costs. In the United States, several states reduced export values by about 30 to 75 percent during this transition.
This shift puts more focus on using your own solar energy instead of exporting it.
Feed-in Tariff (FiT) Explained
Fixed long-term contracts
A feed-in tariff pays a fixed amount for each kilowatt-hour you export. These contracts often last 10 to 25 years. That gives predictable income and shields you from changing electricity prices.
It works a bit like locking in a price for what your system produces.
Guaranteed rates vs market rates
FiT rates are set by policy rather than real-time market prices. Depending on the country and when your system was installed, rates range from USD 0.05 to 0.30 per kWh. In Germany, recent programs are around USD 0.09 to 0.14 per kWh depending on system size and export type.
Older contracts in some regions pay more than newer ones.
Declining FiT trends globally
Feed-in tariffs helped drive early solar growth, especially in Europe. As solar costs dropped, many countries reduced FiT rates or replaced them with net billing-style systems. FiTs are less generous than before but still attractive for their stability.
If you value certainty over flexibility, this model stands out.
Gross Metering Explained
Full export vs full consumption billing
Gross metering takes a different approach. All the electricity your system generates is sent to the grid. At the same time, all the electricity you use is billed separately at retail rates. The utility pays you for every unit generated, usually at a rate lower than retail.
You are fully selling what you produce and buying what you use.
Use cases in commercial systems
This model is more common in commercial and industrial setups. These systems are often designed mainly for export. Gross metering can simplify accounting and align with policy rules for larger installations.
For a factory with steady output, that simplicity can matter.
Countries where it applies
Gross metering is used in parts of India and in various commercial programs worldwide. Export compensation falls between USD 0.03 and 0.10 per kWh. Rules depend heavily on local regulators.
Feed-in Tariff vs Net Metering: Key Differences
Payment structure
Each model handles payments differently. Net metering offsets your bill at retail rates. Feed-in tariffs pay a fixed rate for each unit exported. Net billing pays a lower, market-linked rate. Gross metering pays for all generation while billing your consumption separately.
Same solar panels, very different outcomes.
Savings potential
Net metering gives the highest value per kWh exported. Net billing reduces export value, so using more of your own solar power becomes more important. FiTs offer steady returns, though they can be lower than retail-rate credits depending on the contract.
Best use cases
The best model depends on your daytime energy use, how stable local policies are, and any limits on system size. A household that is empty during the day will see different results than one with constant daytime demand.
Model Type
How Energy Is Measured
Export Compensation Rate (USD/kWh)
Billing Method
Typical Regions/Countries
Best For
Net Metering
Measured as net import/export over billing cycle
0.10 to 0.40
Credits offset consumption at retail rate
USA (select states), Canada, UAE
Households with moderate export
Net Billing
Export measured separately from consumption
0.03 to 0.15
Export paid at avoided or wholesale rate
USA (many states), Australia, South Africa
High self-consumption systems
Feed-in Tariff (FiT)
All exported energy tracked
0.05 to 0.30
Fixed long-term payment contract
Germany, parts of Europe, legacy global programs
Predictable long-term income
Gross Metering
All generation exported; consumption billed separately
0.03 to 0.10
Utility buys 100% of generation
India (some states), commercial projects globally
Large systems with dedicated export
Approval Process & Required Documents
Interconnection application
You need to apply to connect your solar system to the grid. This includes details such as system size in kW, inverter type, and site information. Some utilities also ask for a single-line diagram.
Technical system approval
The utility reviews your design to confirm it meets safety and grid requirements. This step may set limits on system size, export capacity, or inverter settings. If changes are needed, you will revise and resubmit.
Metering and inspection
A bidirectional meter is installed to track imports and exports. In many areas, a physical inspection is required before you are allowed to operate the system. Skipping this step can delay your connection.
Export agreement
You will sign an agreement that defines how your exported electricity is paid. This document confirms whether you are on net metering, net billing, a feed-in tariff, or gross metering. Keep a copy. It sets the rules for your long-term returns.
How Buyback Rates Are Calculated
Retail vs wholesale vs avoided cost
Retail rates are what you pay for electricity. Wholesale or avoided cost rates reflect what utilities pay to produce or buy power. Net metering uses retail rates. Net billing and gross metering use lower values tied to wholesale costs.
That difference is the core of your payback calculation.
Time-of-use and dynamic pricing
Some programs change rates depending on the time of day. Electricity in the evening may be worth more than midday solar exports. This is becoming more common in net billing systems.
Policy-driven tariffs
Feed-in tariffs are set by policy rather than market prices. Governments may adjust these rates over time as solar costs fall and grid needs change. Contracts already signed are usually honored for their full term.
Country Examples (Global Comparison)
North America
The United States and Canada use a mix of policies. Many areas have moved from net metering to net billing, lowering export values and encouraging self-consumption. Interconnection approval and permission to operate are standard steps.
Europe
Germany remains a well-known example of feed-in tariffs, with structured national programs and options for full export or self-consumption. Other European countries follow similar paths, though policies continue to evolve.
Asia
India uses a mix of net metering, net billing, and gross metering depending on the state and system size. Export compensation ranges from about USD 0.02 to 0.07 per kWh. Policies can change and usually require approval from local distribution companies.
Africa & Middle East
South Africa and several Middle Eastern countries use net billing or net metering-style systems. In the UAE, exported energy often offsets future consumption instead of direct cash payments.
Australia
Australia uses a net billing approach often referred to as a feed-in tariff. Export rates range from USD 0.03 to 0.10 per kWh. Time-based pricing and export limits are becoming more common.
Which Model Is Best for You?
High self-consumption vs high export
If you use most of your solar energy during the day, net billing can still deliver strong savings even with lower export rates. If you expect to export a large share, net metering or a strong FiT can offer better value.
This is where system design matters more than people expect.
Policy stability considerations
Feed-in tariffs offer long-term certainty, which helps in regions where policies change often. Net billing may shift over time as market conditions change.
System sizing strategy
Oversizing your system mainly for export is less attractive in net billing regions. Many installers suggest sizing systems closer to your actual usage and adding storage where it makes sense. Insights from Solar Bazaar highlight the value of maximizing self-consumption under modern policies.
Practical Next Steps
Start by checking your local policy, since definitions and rates vary widely. Ask for a system design that estimates both self-consumption and export. Review the interconnection process and confirm any system size limits before moving ahead.
Then compare scenarios. Look at how your savings change under different models available to you. Understanding feed-in tariff vs net metering clearly helps you avoid surprises and build a system that performs well over time.
For deeper guidance on policy updates, system sizing, and export rules worldwide, Solar Bazaar provides regularly updated resources for a global audience. It is a useful reference point when comparing options across regions.
One last check before you decide: how much of your solar energy will you actually use during the day?
feed in tariff vs net metering
FIT vs net metering
feed in tariff explained
export tariff
what is a feed in tariff
Calculate Your Solar Savings
Estimate your system size, savings and payback in minutes.
