Net Metering

The Australian distinction

Many Australian solar owners assume “net metering” is how their system works - that exported solar offsets imported electricity at the retail rate. This is not how the Australian system works, and the distinction has significant financial implications.

True net metering (US model): Export 1 kWh → credited 1 kWh against your next import. At 30¢/kWh retail rate, export earns an effective 30¢/kWh.

Australian gross/net billing: Export 1 kWh → credited at the feed-in tariff rate, typically 5–10¢/kWh. Import 1 kWh → charged at retail rate, typically 28–42¢/kWh. The two flows are priced differently, and the gap between them is wide.

This is why self-consumption is so much more valuable than export in Australia. A kWh used in the home avoids a 32¢/kWh import. The same kWh exported earns 6¢/kWh. The spread between self-consuming and exporting can be 5× or more.

Why Australia moved away from net metering

Early state-run premium feed-in tariffs (2008–2012) in NSW, VIC, and QLD effectively provided net metering at premium rates - sometimes 60¢/kWh or more. These proved costly to administer and were wound back. The current “net billing” model, where export is valued at a market-reflective rate rather than the retail rate, is the deliberate policy choice across the NEM.

The rationale: retail electricity prices include network infrastructure costs, retailer margins, and environmental levies. Solar export is simply the wholesale value of the electricity - it doesn’t offset the other components of a retail tariff, so crediting it at retail rate would be a cross-subsidy from non-solar customers to solar owners.

Implications for system design

Because Australia uses net billing rather than net metering, the financial case for solar is maximised by maximising self-consumption rather than maximising export. Design choices that follow from this:

• East-west oriented panels produce more in the morning and afternoon when households are active
• Batteries store midday surplus for evening use rather than exporting at low rates
• Hot water diverters and EV charging timed to solar generation windows increase self-consumption
• Oversizing systems beyond what the household can self-consume has diminishing returns under net billing