- Net metering surplus settlement India: unused export units carry forward as kWh credits month to month.
- At the end of the settlement cycle (often the financial year) the surplus is settled.
- Year-end surplus is either paid at a low rate (APPC) or lapses — by state.
- A payout is usually far below the retail tariff, so self-use beats selling surplus.
- Every rule is SERC-order specific — verify the cycle, rate and treatment before promising it.
When a customer's solar makes more than they use in a month, those extra units do not vanish — they carry forward as credits. But what happens at year-end depends entirely on the state. Get this wrong in a sales pitch and you promise money that never arrives.
This guide explains net metering surplus settlement in India: how carry-forward works, when credits settle, and whether a surplus is paid out or lost. Every rule here is indicative — verify the current cycle, rate and treatment with the SERC order and your DISCOM. Settlement rules vary by state and change with each order.
What is surplus settlement in net metering?
Surplus settlement is how a DISCOM treats the export credits left over after you have offset all your import. Net metering nets your export against your import in units (kWh). When you export more than you import, you build a credit balance.
Through the year, those unused credits carry forward. At the end of the settlement cycle, any net surplus is settled — paid out at a set rate or lapsed, depending on the state. This is different from net billing and gross metering, where export is paid a separate rate or sold outright. Under net metering, the credit is in units, not rupees, until settlement.
How does carry-forward of credits work?
Carry-forward means the export units you do not use in a billing month roll over to the next month as kWh credits. Those credits then offset your import in later months. This matters because solar generation and household use rarely match in the same month.
A home generates a surplus in sunny months and draws more in monsoon or winter. Carry-forward lets the sunny-month surplus pay for the cloudy-month draw, so the customer benefits across the year, not just month by month. Carry-forward continues until the settlement date set by the SERC.
Credits are in units, not rupees
An important detail for the sales pitch: net metering credits are stored in kWh, not money. One exported unit offsets one imported unit at the retail tariff. That is the real value of net metering — every credit is worth a full retail unit while it offsets import. It only drops in value if it survives to year-end as surplus.
When is the annual settlement?
The settlement is usually done at the end of a fixed cycle, often the financial year (April to March), though the exact cycle is set by the SERC and can differ by state. On the settlement date, the DISCOM tallies the net position over the cycle.
If the customer imported more than they exported over the cycle, they simply paid for the net import along the way. If they exported more than they imported — a net surplus — that surplus is now settled. The treatment of that surplus is the part that varies most by state.
Is the surplus paid out or does it lapse?
At the end of the cycle, a net surplus is treated one of two ways, depending on the state: some states pay for it at a set rate, and some let it lapse with no payment. There is no single national rule.
Where a payout applies, it is usually at a low rate — often the average power purchase cost (APPC) — which is well below the retail tariff. Where surplus lapses, the customer simply loses the unused credits. Either way, a large year-end surplus is poor economics. This is the single most important fact to set straight with a customer, because it shapes the right system size.
What is the APPC payout rate?
APPC, the average power purchase cost, is a low per-unit rate some states use to pay for net surplus solar at year-end. It reflects what the DISCOM pays on average to buy bulk power, which is far below what it charges you at retail.
So a unit you self-consume saves the full retail tariff, while a surplus unit paid at APPC might earn a fraction of that. The APPC rate is set by the SERC, usually each year, and differs by state. Never quote a fixed payout figure without checking the current APPC for that state — it is one of the most-revised numbers in net metering.
Surplus settlement by state — indicative table
The table shows the shape of settlement across major DISCOMs. It is a planning aid, not a rate card. Every entry is indicative — verify the current cycle, payout treatment and rate with the SERC order.
Caption: Indicative settlement and carry-forward structure by major DISCOM. Source: SERC orders and DISCOM net metering policies, summarised by the SuryaHub team. Cycle, treatment and rate are indicative and change with each order — verify with the SERC and DISCOM.
How to set client expectations on settlement
Set the expectation that the value of solar comes from cutting the bill, not from selling surplus. Tell the customer plainly: credits offset import at the full retail rate, but a year-end surplus earns little or nothing.
- Lead with self-consumption — every unit used or offset saves the full retail tariff.
- Be honest about surplus — a year-end surplus is paid at a low rate or lapses; do not promise a windfall.
- Name the cycle — tell them when the settlement happens, so credits are not a mystery.
- Verify the state rule — confirm payout vs lapse for their DISCOM before you put it in writing.
Why settlement changes system sizing
Because surplus is worth little at settlement, the right size is one that meets annual consumption, not one that maximises export. An oversized system builds a surplus that the customer cannot use and the state barely pays for.
Size to the customer's yearly units, allow for carry-forward to balance seasonal swings, and stop there. This ties straight into the ROI and payback worksheet, where the settlement rule decides whether extra capacity adds value or just sits idle. Also check the capacity limits by state, which can cap the size before settlement even matters.
How SuryaHub helps you size and explain settlement
SuryaHub keeps the settlement assumptions for each DISCOM with your quotation and net-metering workflow, so the size you propose reflects the real carry-forward and payout rule for that state. When a SERC revises the cycle or the APPC rate, you update it once. SuryaHub is pre-revenue; real pilots are Suryantra Energy and RGESPL, and the settlement rules here are regulatory facts you must verify, not guarantees.
Size to savings, not surplus
See how SuryaHub keeps each state's settlement rule in your quote.
Related guides
Frequently asked questions
What is surplus settlement in net metering?+
Surplus settlement is how a DISCOM treats the export credits left over after you have offset all your import. Through the year, unused export units carry forward as credits. At the end of the settlement cycle, any net surplus is either paid out at a set rate or lapses, depending on the state. The rule is set by the SERC, so verify it.
How does carry-forward of net metering credits work?+
Carry-forward means the export units you do not use in a billing month roll over to the next month as kWh credits. These credits offset your import in later months, which helps when generation and use do not match. Carry-forward continues until the settlement date set by the SERC, after which any surplus is settled.
What happens to surplus solar at the end of the year?+
At the end of the settlement cycle, any net surplus export is treated per the SERC rule: some states pay for it at a set rate, often the average power purchase cost, and some let it lapse with no payment. The treatment differs by state and changes with orders, so verify the current rule with your DISCOM.
What is the APPC rate for surplus solar?+
APPC, the average power purchase cost, is a low per-unit rate some states use to pay for net surplus solar at year-end. It is usually well below the retail tariff, so a payout is worth far less than self-consumption. The APPC rate is set by the SERC each year, so verify the current figure before promising a payout.
Should I oversize a system to sell surplus?+
Oversizing to sell surplus rarely pays, because year-end surplus is either paid at a low APPC rate or lapses, both far below the value of offsetting your own bill. It is usually better to size the system close to annual consumption. Confirm the settlement rule for the state, because it decides whether surplus has any value.
Do carry-forward credits expire?+
Carry-forward credits usually roll month to month until the end of the settlement cycle, often the financial year. At that point the credits are settled — paid out at a set rate or lapsed, depending on the state. Within the cycle they do not expire, but they reset at settlement, so verify the cycle with the SERC.
Sources & references
Settlement and carry-forward rules come from primary government and regulator sources. Every rule is indicative — confirm the current cycle, rate and treatment in the SERC order and with your DISCOM before you promise it.
- Ministry of Power — Rights of Consumers Rules ↗
The national framework for net metering settlement.
- State Electricity Regulatory Commission (SERC) orders ↗
Each SERC sets the carry-forward and payout rules.
- State DISCOM net metering policy ↗
DISCOMs apply the settlement cycle and rate.
Written by the SuryaHub team · reviewed against MoP, SERC & DISCOM sources · updated 19 June 2026.
Method: Settlement rules are drawn from SERC orders and DISCOM policies and re-checked every 30 days. Cycle, treatment and APPC rate are indicative and change with each order — verify with the SERC. SuryaHub is pre-revenue; only Suryantra Energy and RGESPL are real pilots.
Change log: 19 Jun 2026 — first published.