Net Metering vs Captive Registration at 500 kW: Economics and Paperwork

At 500 kW the choice is mostly about export. Net metering lets surplus flow into the grid and be adjusted against your bill under your state commission's rules. A captive plant behind the meter is sized to be consumed on site and, on MNRE's 4 August 2026 O.M., sits outside the ALMM lists if used solely for captive consumption. Your daytime load decides which suits you.

How do the two routes compare side by side?

What does the law say about each route?

On net metering, the Ministry of Power's annual report for 2021-22 records that the Electricity (Rights of Consumers) Rules, 2020 provide net metering for loads up to 500 kW and gross metering for loads above 500 kW, and that the limit was raised from 10 kW by an amendment in 2021. The state commission's regulation then sets the detail: how units are adjusted, the settlement period, the treatment of any surplus, and any cap against sanctioned load. Punjab's published position is the one our 500 kW cost page uses: up to 100% of sanctioned load within a 500 kWp net-metering limit. Other states differ, so read your own commission's order. See the Ministry's report and our glossary entry on net metering.

On captive status, the Act defines a captive generating plant as one set up by any person to generate electricity primarily for his own use (Electricity Act, 2003, section 2(8)). The Ministry of Power's statement to Parliament on 20 March 2025 gives the Rule 3 test: users collectively own at least 26% of the plant and consume at least 51% of its output annually (Lok Sabha Starred Question 281). For a consumer who owns the plant alone, our reading is that the ownership limb is met and the annual consumption limb is what remains. Some states and DISCOMs ask for a captive declaration or a permission letter; the name and process vary, and we could not confirm a single national format, so ask your DISCOM what it requires.

What is the economic difference at 500 kW?

The plant itself costs much the same either way. On our 500 kW page the indicative turnkey figure is about ₹1.30 crore, with around 50,000 sq ft of shadow-free roof and roughly 60,000 units a month in the northern belt. What differs is what happens to the units your load cannot absorb.

Under net metering those units earn a credit on terms the commission fixes. Under a zero-export captive design they are not generated at all, because the inverters are throttled by an export-limiting relay. So the economic question reduces to one number: what share of annual generation would be surplus. Build it from data, not from the roof area:

1. Take 12 months of meter data at 15-minute or hourly intervals, or at least monthly bills plus the shift pattern.
2. Overlay a plant output profile for the same intervals. Our net-metering savings calculator gives a first pass.
3. Sum the intervals in which output exceeds load. That sum, divided by annual generation, is the export share.

If the export share is small, the two routes give nearly the same bill saving and the decision turns on paperwork and ALMM. If it is large, zero export wastes energy that net metering could credit, and a smaller plant might be the better answer. Check also how the state bills kVA demand: solar cuts energy units reliably, but a demand charge may not fall by the same proportion.

How does the paperwork differ?

Net metering is the longer file. It normally runs from the DISCOM's online application through a feasibility check on the feeder and transformer, an agreement, meter installation and testing, and synchronisation. The Punjab and Haryana experience in our note on net-metering delays shows that the DISCOM's queue, not the construction, often sets the commissioning date.

A behind-the-meter captive plant still needs the electrical inspector's approval wherever the state's threshold is crossed, because that is a safety requirement for the installation. Most DISCOMs also expect to be told about a grid-parallel generator and to see reverse-power protection. We could not confirm one national rule for this, so treat it as a question to put to your DISCOM in writing.

Why does the commissioning date matter this year?

As of October 2026, MNRE's O.M. of 4 August 2026 exempts net-metering and open-access projects from ALMM List-II (solar cells) only if they are commissioned by 31 December 2026. List-I (modules) still applies to them. The same O.M. says neither list applies to behind-the-meter plants solely used for captive consumption by a consumer other than a government entity or public sector enterprise. MNRE also says the exemption is not an extension: after the cut-off, net-metering projects must comply with List-II. Read the O.M. and the MNRE notice, and see our glossary entry on ALMM.

The practical consequence: a net-metered plant that slips into 2027 may need List-II cells, which can change availability and price. Whether your DISCOM treats a zero-export plant with a bi-directional meter as behind-the-meter for this purpose is a question for MNRE and the DISCOM, not for us. Get the answer in writing before ordering modules.

Which route should you choose?

• If the factory runs six or seven days with steady daytime load, a plant sized to that load rarely exports. Behind-the-meter captive is simpler.
• If weekends and holidays are idle, net metering recovers value that would otherwise be curtailed.
• If commissioning is likely after 31 December 2026, include the List-II question in the decision.
• If the DISCOM's timeline is uncertain, ask what it takes for a grid-parallel, zero-export plant, and compare the dates.
• If your sanctioned load or contract demand is below the plant size, check the state's cap before you size anything.

For group or off-site arrangements, see captive vs open access for a 1 MW+ consumer.

How Secured Engineers helps

We design the plant in-house, size it against your load data and file both the CEIG and DISCOM net-metering applications in-house, whichever route you take. Solar and the rest of your MEPF scope can sit under one contract. We work from offices in Noida (Delhi NCR) and Ludhiana, with 535+ projects across 18+ states and 89.77% repeat clients. We state the ALMM position of the modules in each proposal.

Send us your last 12 bills and your shift pattern, and we will compare the two routes on your numbers. Start from our solar EPC service, message us on WhatsApp, call +91 70099 85817, or ask for a free proposal.