Rooftop Solar and Prosumer Reforms Under the Draft Electricity Consumer Rules 2026

The Rise of the Prosumer

India's rooftop solar sector has grown rapidly over the past several years. The government's PM Surya Ghar Muft Bijli Yojana and its predecessors have brought grid-connected rooftop solar to millions of homes and commercial establishments. As of 2025-26, the installed rooftop solar capacity in India exceeds 15 GW, with substantial further growth anticipated.

This growth has created a new category of electricity consumer: the prosumer — a person or entity that both produces and consumes electricity from the same premises, typically through a rooftop solar photovoltaic system. Prosumers use the distribution grid in a fundamentally different way from conventional consumers: they draw power from the grid at night and during cloudy periods, and inject surplus power into the grid during solar generation hours.

Managing this two-directional relationship — and ensuring that the costs of grid infrastructure are fairly recovered — is the central challenge addressed by the Draft Electricity (Rights of Consumers) Amendment Rules, 2026, released on 12 March 2026.

The Existing Framework: Net Metering

Under the current Rules, the primary mechanism for prosumers is net metering. In a net metering arrangement:

• A bidirectional meter records both the electricity consumed from the grid and the electricity injected into the grid
• At the end of each billing cycle, the consumer pays only for the net electricity consumed (consumption minus injection)
• Surplus generation over a billing period is typically carried forward as a credit

Net metering has been the cornerstone of rooftop solar policy in India and has been instrumental in making rooftop solar economically viable for consumers. However, it has also attracted criticism from DISCOMs, who argue that prosumers use the grid extensively as a storage medium — drawing power at night and injecting during the day — without paying appropriately for grid services.

Amendment to Rule 11: Key Changes

1. Net Metering Charges for Systems Above 5 kW

The most significant and potentially controversial change is the introduction of a "net metering charge" for rooftop solar systems above 5 kW.

Under the proposed amendment, State Commissions may levy a net metering charge to recover the costs of:

• Grid infrastructure used by prosumers
• Energy storage services implicit in net metering
• System balancing costs caused by variable injection patterns

Systems up to 5 kW are exempt from this charge, ensuring that small residential prosumers — the target beneficiaries of the PM Surya Ghar scheme — are not disadvantaged.

For systems above 5 kW, the actual quantum of the charge will be determined by individual State Commissions. This means the impact will vary significantly by state — states with financially stressed DISCOMs are likely to be more aggressive in levying charges, while states with financially healthier utilities may be more restrained.

2. Default Metering Arrangement

The draft clarifies the default metering arrangement for different system sizes:

• For loads up to 500 kW: Net metering is the default arrangement where state regulations do not specify otherwise
• For loads above 500 kW: Net billing or net feed-in applies

This creates a clear hierarchy and reduces regulatory ambiguity for consumers planning solar installations.

3. Gross Metering Option

State Commissions may now permit gross metering arrangements for prosumers who prefer to sell all electricity generated from their rooftop solar systems to the DISCOM, rather than first consuming it themselves.

In a gross metering arrangement:

• All generated electricity is fed into the grid and metered separately
• The prosumer draws all their consumption needs from the grid at the normal retail tariff
• The DISCOM pays the prosumer for all generated electricity at a generic tariff determined by the Commission under tariff regulations

Gross metering is suitable for consumers who want to maximise revenue from solar generation but may not have flexible load profiles to benefit from net metering. It may also be preferable for commercial installations where consumption patterns are irregular.

4. Energy Storage Mandate for Large Prosumers

One of the more consequential provisions is the power of State Commissions to mandate energy storage systems for prosumers whose renewable energy generation capacity exceeds 500 kW.

The policy rationale is clear: large renewable installations that inject substantial quantities of variable power into the distribution network create grid management challenges — voltage fluctuations, frequency deviations, and reverse power flow. Pairing them with storage systems smooths the injection profile and makes them more grid-friendly.

The provision is permissive rather than mandatory at the central level — State Commissions "may" mandate storage, not "shall." But given the direction of regulatory policy, large commercial and industrial solar consumers planning installations above 500 kW should factor storage requirements into their project economics.

5. State Commission Governance Retained

The amendment explicitly clarifies that net metering, net billing, gross metering, and net feed-in arrangements will continue to be governed by State Electricity Regulatory Commission regulations. This preserves the flexibility for states to adapt these frameworks to local conditions while the central rules set the outer parameters.

Comparative Framework: Net Metering vs. Net Billing vs. Net Feed-In vs. Gross Metering

| Mechanism | How It Works | Best For | |---|---|---| | Net Metering | Pay for net consumption; surplus carried forward | Small to mid-size systems with significant self-consumption | | Net Billing | Injected units valued at a determined rate, not offset directly | Systems with significant surplus generation | | Net Feed-In | All injected power paid at a fixed feed-in tariff | Maximising revenue from generation | | Gross Metering | All generation sold; all consumption purchased separately | Commercial installations seeking revenue maximisation |

Implications for Different Consumer Categories

Residential Consumers (up to 5 kW)

The exemption from net metering charges and the continuation of net metering as the default means that small residential prosumers are broadly protected. The PM Surya Ghar economics should remain largely intact for systems up to 5 kW.

Mid-Size Commercial and Industrial Consumers (5 kW to 500 kW)

These consumers will face net metering charges whose quantum will depend on State Commission regulations. They will need to evaluate whether net metering remains economical or whether switching to gross metering or net billing is preferable under their specific load and generation profiles.

Large Industrial and Commercial Consumers (above 500 kW)

The most significant impact is here. The potential storage mandate substantially increases capital costs for large installations. However, paired storage also enables participation in demand response programs and time-of-day tariff optimisation, potentially improving the overall economics.

The Broader Policy Direction

The rooftop solar amendments reflect a maturing policy approach. The early years of rooftop solar policy in India were necessarily promotional — the priority was to establish the market and make installations economically viable. As the market has grown, the policy focus is shifting toward ensuring that the growth of rooftop solar is compatible with grid stability and the financial health of DISCOMs.

The introduction of net metering charges, storage mandates, and multiple metering options signals that prosumers are being treated as legitimate participants in the electricity system — not simply as beneficiaries of a promotional scheme — with corresponding rights and responsibilities.

Conclusion

The prosumer framework amendments in the 2026 rules are nuanced and technically sophisticated. They preserve the fundamental attractiveness of rooftop solar for small consumers while introducing cost-reflective mechanisms for larger installations. The ultimate impact will depend heavily on how individual State Commissions implement the enabling provisions — particularly the quantum of net metering charges and the threshold for storage mandates. Consumers planning solar investments should monitor state-level regulatory proceedings closely as implementation details emerge.