Net metering is the single mechanism that decides whether your rooftop solar pays back in four years or seven. Yet most homeowners in Madurai sign a contract without understanding the two rules that matter most: the sanctioned-load cap and annual settlement at avoided cost. Get those wrong and you'll pay for capacity that earns you a fraction of what you expected.
On this page
What net metering actually is
Your solar panels generate during the day. Your house uses some of that power in real time — the fridge, the fans, the pump. Whatever you don't use flows out to the grid. At night, when the panels produce nothing, you draw power back from the grid.
Net metering is the billing arrangement that reconciles those two flows. Instead of paying for everything you import and being paid nothing for what you export, you're billed on the net difference. A single bidirectional meter replaces your ordinary meter and records both directions independently.
That's the concept. The details are where the money is, and in Tamil Nadu those details are set by TANGEDCO and TNERC.
How net metering works in Tamil Nadu
Tamil Nadu operates net metering on a monthly netting basis. At the end of each billing cycle, your imported units and exported units are offset against each other:
- Import more than you export — you pay the net difference at your standard TANGEDCO tariff.
- Export more than you import — the excess is carried forward as a credit into the next month.
Those credits accumulate month to month. It's a genuinely favourable arrangement for most of the year: a surplus in sunny March offsets a deficit in cloudy November. TANGEDCO's current policy for LT consumers defaults to net metering, so most homes and small commercial premises in Madurai fall into this mechanism automatically.
The mechanism in one line
Every unit you consume at the moment you generate it saves you the full retail tariff. Every unit you export earns you a credit — and if that credit is never used, it is eventually cashed out at a much lower rate.
The sanctioned-load cap
This is the rule that catches people out. Your solar system capacity cannot exceed your sanctioned load (your contract demand with TANGEDCO).
If your home has a sanctioned load of 5 kW, the maximum system eligible for net metering is 5 kWp. Applications for oversized systems are not approved. If you want a larger array, you must first apply to increase your sanctioned load — a separate process with its own charges and approval timeline.
There is a second constraint worth knowing: the cumulative capacity of all solar systems connected to a given distribution transformer is capped as a proportion of that transformer's capacity. In dense neighbourhoods where many neighbours have already gone solar, this can occasionally delay approvals.
Check this before you sign anything
Look at your TANGEDCO bill and find your sanctioned load in kW. That number is your ceiling. Any installer quoting you a system larger than it, without also handling a load-enhancement application, is either careless or hoping you won't notice until after you've paid.
Annual settlement and the avoided cost rate
Monthly credits carry forward, but they don't carry forward forever. At the end of the settlement year, any cumulative excess export still sitting in your account is settled in cash — and it is not paid at your retail tariff. It's paid at the avoided cost rate: roughly what it would have cost the utility to buy that power elsewhere.
The avoided cost rate is substantially lower than the retail tariff you'd otherwise have saved. Broadly, published figures place it in the region of ₹2.25–₹3.50 per unit, against retail tariffs that are often two to three times higher.
| Where a solar unit goes | What it's worth to you |
|---|---|
| Used on-site, as it's generated | Full retail tariff — the best outcome |
| Exported, then offset against a later import | Full retail tariff — equally good |
| Exported, never used, settled annually | Avoided cost rate only — significantly less |
This single fact drives the entire sizing strategy. A system that generates far more than you consume doesn't earn you proportionally more money. It dumps the surplus into an annual settlement that pays a fraction of retail.
How to size your system correctly
The optimal approach is to size your system to offset roughly 85–95% of your annual consumption, through a combination of direct self-consumption and monthly netting, with minimal annual surplus.
Practically, that means:
- Start with your bills, not your roof. Pull twelve months of TANGEDCO bills and total the units. That annual figure — not your roof area, not a salesman's package — is what determines the right system size.
- Check your sanctioned load. Whatever the bills suggest, the system cannot exceed this without a load enhancement.
- Model generation honestly. In Madurai's irradiation, each kW of well-installed rooftop solar generates roughly 4–4.5 units per day averaged across the year — already accounting for monsoon and cloudy days. Be sceptical of anyone quoting peak-day figures as if they were annual averages.
- Weight it toward daytime load. If most of your consumption is in the evening, a larger array won't help as much as you'd hope. It exports at midday and you re-import at night — which monthly netting handles well, but only up to your consumption.
You can run these numbers yourself with our free solar calculators — the savings and payback tools model self-consumption and export credit separately, which is exactly the distinction that matters here.
How to apply through TANGEDCO
Applications go through TANGEDCO's Unified Online Solar Rooftop portal (USRP). The portal handles both subsidised applications under the PM Surya Ghar scheme (for domestic consumers) and non-subsidy applications across all consumer categories, as well as the net meter installation itself.
The broad sequence:
- Feasibility and sizing — confirm sanctioned load, roof area, shading and annual consumption.
- Register on the USRP portal and generate your TNPDCL reference number.
- Apply — subsidised (CFA) or non-subsidy, depending on your category and eligibility.
- Technical approval from TANGEDCO, including feasibility at the distribution transformer.
- Installation by an empanelled vendor, with inverter details recorded on the national portal.
- Net meter agreement and inspection — plant photographs and documentation uploaded.
- Bidirectional meter installed and the system synchronised with the grid.
For residential subsidy claims, the central PM Surya Ghar scheme is administered nationally, with TANGEDCO acting as the state nodal agency and coordinating with MNRE-empanelled vendors. Subsidy amounts, eligibility and slabs are set centrally and do change — always verify the current figures on the official portal (pmsuryaghar.gov.in) before signing an agreement, rather than relying on a vendor's brochure.
A note on subsidy eligibility
Subsidy under the residential scheme generally requires that the electricity account holder and the property owner are the same person, and that the metering arrangement is approved by the DISCOM. Tenants are typically not eligible. Commercial and industrial consumers do not receive this subsidy, though they benefit from accelerated depreciation — covered in our commercial solar ROI guide.
Five costly mistakes
1. Sizing to the roof instead of the bill
A large roof is an opportunity, not an instruction. Filling it with panels that export surplus you'll never consume simply converts capital into avoided-cost payments.
2. Ignoring the sanctioned load
The most common reason a net metering application is rejected. Check it first, every time.
3. Assuming export earns full tariff
Within a month, exports offset imports at full value. Beyond your annual consumption, they don't. Treat "we'll just export the extra" as a red flag when it's used to justify a bigger system.
4. Believing peak-day generation figures
A panel's rated output is measured under standard test conditions, not a Madurai afternoon in May. Real annual yield is what pays your bills.
5. Choosing an installer who won't handle the paperwork
The application, technical approval, net meter agreement and inspection are a genuine administrative burden. If an installer's quote is cheap because they've quietly left all of that to you, it isn't cheap. Read our rooftop solar buying guide for the full list of questions to ask, and our EPC process guide for who should be handling each stage.
Frequently asked questions
Is net metering available in Tamil Nadu?
Yes. TANGEDCO's current policy for LT consumers defaults to net metering. Applications are made through the USRP portal, and TANGEDCO installs a bidirectional meter after approval.
Can my solar system be larger than my sanctioned load?
No. System capacity cannot exceed your sanctioned load or contract demand. A 5 kW sanctioned load permits a maximum 5 kWp system under net metering. Oversized systems are not approved.
What happens to surplus units at the end of the year?
Monthly credits carry forward, and any cumulative excess remaining at the end of the settlement year is settled at the avoided cost rate — significantly below retail tariff. This is why oversizing reduces effective return.
What is a bidirectional meter?
A meter that separately records energy imported from the grid and energy exported to it, so billing can be calculated on net consumption. TANGEDCO installs it once your application is approved.
Does net metering work during a power cut?
No. A standard grid-tied system shuts down during an outage for the safety of line workers, regardless of metering arrangement. To keep power flowing during cuts you need battery storage or a hybrid inverter — sized with our battery backup estimator.
Rules change — verify before you commit
Net metering regulations, subsidy slabs and settlement rates are set by TNERC, TANGEDCO and MNRE, and are periodically revised. The principles in this guide are stable; the specific figures are not. Confirm current rules on the TANGEDCO USRP portal and pmsuryaghar.gov.in, or ask us — we track them because we file these applications every week.
Want your net metering handled end to end?
We file TANGEDCO applications, manage technical approval and commission the bidirectional meter — as part of one turnkey contract. Free site assessment in Madurai.