Net Metering, Net Billing and Feed-in Tariffs: How Export Compensation Actually Works

Ask what a rooftop system is worth and the honest first answer is another question: under which export scheme? The same array in the same climate can pay back in seven years or fifteen depending entirely on how the surplus is counted. This is regulatory design, not engineering, and it is the part of the analysis most owners skip.

Three families of scheme dominate, with endless national variations layered on top.

Net metering: the meter runs backwards

Under classical net metering the meter nets imports against exports over a billing period. Export a kilowatt-hour in June, import one in December, and the two cancel. Effectively you are paid the full retail rate for exports, including the network and levy components bundled into that rate.

This is by far the most generous model, and for exactly that reason it is being withdrawn almost everywhere. The objection is distributional: network costs are largely fixed but are recovered per kilowatt-hour, so a customer who nets to zero pays nothing toward a network they still rely on. Where net metering survives, it usually carries caps — a maximum system size, an annual reset that forfeits unused credit, or a fixed monthly charge that recovers network cost separately.

What to check: the netting period (instantaneous, monthly, annual), whether credits expire, whether taxes and network charges are netted or only the energy component, and the scheduled end date of the scheme.

Net billing: two different prices

Net billing values imports and exports separately. You buy at the retail rate and sell at a wholesale-linked or administratively set rate. A typical European spread is 0.25 to 0.35 EUR/kWh for imports against 0.04 to 0.10 EUR/kWh for exports.

This is now the mainstream model. It is also the one that makes self-consumption decisive: when exports are worth a quarter of imports, every kilowatt-hour moved from export to on-site use is worth three quarters of a retail kilowatt-hour in savings. Load shifting and storage become economically interesting precisely at this point, as set out in self-consumption and load shifting.

What to check: how the export price is set (fixed, indexed to a day-ahead market average, or a live hourly price), how often it is revised, and whether there is a floor. An export price indexed to hourly wholesale prices can approach zero at midday in a high-penetration market — the cannibalisation effect — which is a real risk over a twenty-year horizon.

Feed-in tariffs: a contracted price for everything

A feed-in tariff pays a fixed, contracted price per kilowatt-hour for the entire output, usually for fifteen to twenty years. Historically these were set above retail to drive deployment. Modern versions sit below retail and are often awarded competitively.

A feed-in tariff removes price risk, which is worth something in itself. It also removes the incentive to self-consume: if every kilowatt-hour earns the same regardless of destination, there is no reason to shift load. Some schemes distinguish a feed-in premium — a top-up above the market price — from a fixed tariff; the premium exposes you to market movement while the fixed tariff does not.

What to check: contract length, degression schedule for new entrants, whether the tariff applies to gross output or only exported surplus, and whether the contract is transferable when the property is sold.

The components hiding inside a retail price

To evaluate any scheme you need to decompose your own tariff. A European residential bill typically splits roughly into:

• Energy — the commodity, 30 to 50 percent
• Network charges — transmission and distribution, 20 to 35 percent
• Taxes, levies and VAT — 20 to 40 percent

Which of these an exported kilowatt-hour offsets is the whole question. Net metering offsets all three. Net billing usually offsets none of them, paying only an energy-component price. Some jurisdictions sit in between, crediting energy and one levy but not network charges. Read the tariff sheet, not the marketing.

Capacity charges and the shift away from volumetric pricing

A slower structural change matters more than the export rate over a twenty-year life: the move from per-kilowatt-hour network charges toward capacity-based or fixed charges. As that shift proceeds, the avoided cost of a self-consumed kilowatt-hour falls, because a larger share of the bill no longer scales with volume.

Anyone building a twenty-year model on today's 0.30 EUR/kWh retail price is implicitly assuming the volumetric structure survives. It probably will not, entirely. A defensible model uses a slightly declining real value for avoided imports rather than the escalating one most quotes assume. That single assumption change often adds two to three years to payback, which is why quotes rarely make it.

Grid connection sits on top of all this

Compensation is separate from permission. Even a generous export scheme is worthless if the distribution operator caps your export at 70 percent of installed capacity, or refuses connection on a constrained feeder. Export limitation is now routine in several countries, implemented in the inverter or via an external controller. Check the connection rules before sizing, not after; grid connection and export rules covers the process in detail.

Building the model

Whatever the scheme, the annual benefit reduces to:

`` Benefit = E_self × P_import + E_export × P_export - O&M ``

where E_self and E_export come from an hourly overlay of generation and load, and P_export depends on the scheme above. Under net metering, P_export equals P_import and the split does not matter. Under net billing it matters more than anything else. Run the numbers in the payback calculator, and test at least three export-price scenarios, because that is the input with the widest genuine uncertainty.

Frequently asked questions

Is net metering being abolished? It is being narrowed nearly everywhere in Europe and in a growing number of US states, usually replaced by net billing with a separately recovered fixed network charge. Existing installations are commonly grandfathered for a defined period, but grandfathering terms vary and are worth confirming in writing before purchase.

Can I choose which scheme applies to me? Rarely. The scheme is set by national or state regulation and by the size class of your installation. Where a choice exists it is usually between a fixed export tariff from your supplier and a market-indexed one, and the right answer depends on your appetite for price risk.

What happens to my export credits if I move house? Under most schemes credits are tied to the metering point and the account holder, not the property, and unused credit is forfeited on account closure. Contracted feed-in tariffs are more often transferable with the property, but this must be checked in the contract terms.

Should I install a battery purely because export rates are low? Only if the spread between import and export prices exceeds the amortised cost of a stored kilowatt-hour, typically 0.10 to 0.15 EUR at current prices. Cheaper interventions — timers, a hot water diverter, EV charge scheduling — capture much of the same value first.

References

• Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources, Articles 21 and 22 on renewables self-consumers
• Directive (EU) 2019/944, provisions on active customers and dynamic price contracts
• Council of European Energy Regulators, reports on distribution tariff methodologies
• IEA PVPS, National Survey Reports of PV Power Applications