Net metering is one of the most searched and most misunderstood topics in South African commercial solar. The short version: if your solar system generates more than your site consumes at a given moment, you can export that surplus to the grid and receive a credit against your electricity account. But the mechanism has nuances that significantly affect whether it adds real value to your project, and whether you qualify in the first place.
What is Net Metering?
Net metering is a billing arrangement between a solar system owner and their electricity utility. When your solar panels produce more power than your building is consuming, the surplus flows back onto the grid. Your meter records that export, and it is credited against what you import from the grid in the same billing period.
In South Africa, net metering falls under the Small-Scale Embedded Generation (SSEG) framework. It is not automatic. It requires a formal SSEG application to your municipality, approval of your system design, and in most cases a bidirectional meter installation. The process and timelines vary significantly between municipalities.
Cape Town: Feed-In Tariff with Cash Payment
The City of Cape Town operates a feed-in tariff rather than strict net metering. Instead of a kilowatt-hour-for-kilowatt-hour offset, exported energy is credited to your municipal account at a fixed rate per kilowatt-hour. For commercial customers, the current export rate is 82.06c/kWh, with an additional incentive on top of that base rate.
Credits first offset your full municipal account, including electricity, rates, and other municipal charges. Once your account balance reaches zero, any remaining credits accumulate and are paid out in cash through the City's Cash for Power programme. Commercial customers receive a monthly cash payout once the credit balance exceeds R5,000.
This is genuinely more attractive than standard net metering and makes export a meaningful financial consideration for Cape Town businesses with systems that regularly generate surplus. The export rate is still below the import rate, so self-consumption remains the priority, but the cash payout mechanism adds real value for well-sized systems.
Eskom Direct Customers: Gen-Offset and Banking
Businesses connected directly to Eskom rather than a municipality use Gen-Offset. Surplus solar export in a given TOU bracket offsets imports in the same bracket, settled monthly. The export rate is set out in Eskom's Table 43 tariff schedule and is below the import rate.
Gen-Offset includes an administration fee charged per Point of Delivery per day. On smaller systems, this fee can erode a meaningful portion of the export credit value.
Eskom also introduced a Banking mechanism in 2026. Surplus export that exceeds your monthly import in a given TOU bracket is carried forward into subsequent months. Banking is per bracket: Peak credits carry into future Peak periods, Standard into Standard, Off-Peak into Off-Peak. Banked energy is valued at the export rate, not the import rate, so drawing down banked credits is not a one-for-one substitution for grid imports. Banked energy also resets to zero on 1 April each year, aligned with Eskom's financial year. Any unused credits at that date are forfeited.
The TOU Bracket Rule Most Businesses Miss
On a flat tariff, net metering and feed-in credits are straightforward. On a TOU tariff, there is a critical constraint that is widely overlooked: credits apply within each TOU bracket separately.
Energy you export during Standard hours can only offset Standard imports. It cannot offset Peak imports, even if you have a large Standard export surplus sitting on your account.
Here is a practical example. Your site exports 200 kWh during Standard hours in a month. You also import 150 kWh during Peak hours. The Standard export surplus does not reduce your Peak electricity bill at all. The 150 kWh of Peak imports are still billed at the full Peak rate.
This matters significantly on tariffs like Eskom Megaflex, Miniflex, or City of Cape Town LV TOU, where Peak rates can be three to six times the Standard rate. If your solar system generates mostly during midday Standard hours but your highest costs are in morning and evening Peak windows, export credits deliver less value than the raw kilowatt-hour numbers suggest. The Cape Town feed-in tariff avoids this problem because it credits at a flat rate regardless of when you export.
What Net Metering and Feed-In Tariffs Do Not Save You
Export credits reduce your energy charges only. They do not reduce:
- Demand charges (R/kVA/month based on your highest 30-minute kVA in the chargeable window)
- Capacity or NMD charges (your contracted connection size, fixed until formally changed)
- Fixed and administration charges (service fees, network levies, paid regardless of consumption)
On large C&I sites, these non-energy charges can represent 30 to 50 percent of the total bill. A solar proposal that claims net metering will save a set percentage of your total electricity costs without decomposing the bill first is overstating the benefit.
Self-Consumption First
The most reliable principle in South African commercial solar is to size for self-consumption first. Every kilowatt-hour your solar system generates and your building consumes directly displaces grid electricity at whatever rate applied in that hour. No SSEG application required. No bracket matching. No export rate discount. No admin fees.
For sites where solar generation frequently exceeds daytime consumption, battery storage that captures midday surplus and dispatches during evening Peak periods typically delivers stronger returns than exporting that energy at a discounted Standard rate. Export and feed-in credits are a benefit for the occasional surplus, not the primary value driver for most C&I systems.
At Forest Energy, we model export value as part of every solar proposal alongside a full bill decomposition and TOU profile analysis. If you are in Cape Town and want to understand your Cash for Power eligibility, or if you are an Eskom direct customer evaluating Gen-Offset or Banking, contact us to run the numbers for your specific site.
