Net metering explained, and why the 5MW threshold changes the investment case

It attracts little attention because it is administrative rather than announceable. There is no ribbon to cut. But the revision of the participation threshold from 100 kilowatts to 5 megawatts converted net metering from a domestic rooftop scheme into a mechanism capable of underwriting industrial-scale generation, and it did so without requiring a power purchase agreement with a utility that cannot reliably pay in hard currency.

That is the whole argument. The rest of this note sets out how the mechanism works, what the threshold change means, and where it does not help.

What net metering actually is

The Electricity (Net Metering) Regulations, Statutory Instrument 86 of 2018, permit a consumer who generates electricity from renewable sources to feed surplus power into the national grid, and to set that exported energy off against the energy they draw from the utility at times when their own generation falls short of demand.

The metering arrangement records flow in both directions. Where you export more than you import over a settlement period, you accrue a credit. Where you import more than you export, you pay the difference at the retail tariff.

The Zimbabwe Electricity Transmission and Distribution Company introduced its net metering programme in 2019, requiring a grid-tied inverter and a bi-directional meter at the point of connection.

What it is not

Three distinctions matter, and conflating them is the most common error we encounter.

Net metering is not a power purchase agreement. Under a PPA, you sell electricity to an off-taker and they pay you cash. Under net metering, you offset your own consumption and receive a credit. No cash changes hands in your favour. This is the single most important difference, and, counter-intuitively, it is the source of the mechanism’s principal advantage, for reasons set out below.

Net metering is not wheeling. Wheeling uses the transmission network to move power from your generator to a third-party consumer at a different location, under a use-of-system agreement. Net metering offsets consumption at your own meter, or across meters within a defined arrangement.

Net metering is not a one-for-one exchange. Exported units are credited at less than the retail rate, currently in the order of 0.8 to 0.9 of a unit credited for each unit exported. Every unit you export rather than consume yourself therefore loses value. This has direct design consequences, discussed below.

Why the threshold change matters

Under the original framework, participation was capped at 100 kilowatts. That is a large house or a small office block. It made net metering a domestic and light-commercial instrument.

ZERA subsequently revised the participation threshold to 5 megawatts per household or business. Generation above that level continues to require the full independent power producer route, a ZERA generation licence, a negotiated power purchase agreement, and tariff approval.

The distinction between 100 kilowatts and 5 megawatts is not one of degree. It is a change of category.

Five megawatts is a genuine industrial load. It covers the daytime demand of a substantial commercial property portfolio, a mid-sized mine, an agro-processing plant, a shopping centre, an industrial park or a hospital campus. It sits above the consumption of almost every commercial and industrial consumer in the country that is not a primary metals producer.

Which means that a very large share of Zimbabwe’s private electricity demand can now be met by self-generation, at scale, using the grid as a balancing mechanism, without entering the licensing and PPA process at all.

Why that is worth more than a tariff

Zimbabwe’s structural problem in renewable energy has never been resource or capital appetite. The country receives solar irradiation averaging 20 megajoules per square metre across roughly 3,000 sunshine hours a year. Institutional capital is available and, as we have written elsewhere, is under regulatory pressure to deploy.

The problem is the off-taker. ZETDC has a legacy debt position, a history of sub-economic tariffs, and, most materially, a constrained ability to pay independent power producers reliably in United States dollars. A twenty-five-year PPA is only as good as twenty-five years of counterparty performance. This is why Zimbabwe has 174 licensed independent power producers and only 68 that are generating: licences are obtainable, bankable off-take is not.

The Government Project Support Agreement, introduced in 2024, was designed to address exactly this, providing a standardised implementation agreement with a government guarantee on bankability, cost-reflective tariffs, an off-take commitment and offshore repatriation of funds. It is a material improvement. It is also, by construction, a sovereign guarantee in a country that has been in default to multilateral lenders for more than twenty-five years.

Net metering sidesteps the question entirely.

If you are offsetting your own consumption, you are not selling to a distressed counterparty. You are avoiding a cost. The economic value of a generated unit is the retail tariff you no longer pay, ZETDC currently supplies at approximately US$180 per megawatt-hour, rather than a wholesale tariff you hope to be paid. And the reliability of that value depends on your own continued operation, not on the utility’s balance sheet.

For an investor, this is the difference between counterparty credit risk and demand risk. Demand risk is far easier to underwrite.

Designing to the mechanism

The credit haircut on exports drives the engineering. Because an exported unit is worth less than a self-consumed unit, plant should be sized to the consumption profile rather than to the available roof or land area. The objective is to maximise the proportion of generation consumed on site, with export as an overflow rather than a strategy.

In practice this means matching capacity to daytime base load; investigating storage where the load profile is materially evening-weighted; and, where multiple properties are involved, examining whether the arrangement can be structured across the portfolio.

Three constraints remain live and should be treated as conditions precedent on any investment decision:

• Grid connection approval. The point of connection, and the capacity the network can accept, are determined by ZETDC, not by the developer. Secure the connection offer before committing to construction.

• Metering. Bi-directional metering must be installed and commissioned. This is routine but not instantaneous.

• Credit treatment. Accrued credits are not generally settled in cash and may not roll forward indefinitely. Model the value of export at zero and treat any credit as upside.

Where this leads

ZERA has been actively encouraging enrolment and, as at July 2026, has signalled a nationwide survey of self-generation, an acknowledgement that a meaningful share of Zimbabwe’s electricity is now produced behind the meter and outside the national statistics.

We expect that survey to reveal a larger distributed generation fleet than official figures suggest, and we expect that finding to shape policy. The most likely direction of travel is towards a more formalised net billing framework with clearer settlement terms, which would improve the value of export and, in doing so, change plant sizing economics again.

For now, the position is straightforward. Zimbabwe has a legislative mechanism that allows commercial and industrial consumers to generate up to 5 megawatts, offset it against a retail tariff of roughly US$180 per megawatt-hour, and do so without a power purchase agreement. That is a better risk-adjusted proposition than a great many grid-connected IPP structures currently being marketed.

*This article is provided for general information and does not constitute legal, regulatory or investment advice. Regulatory positions should be confirmed with ZERA and ZETDC before any commitment.*

Sources: Electricity (Net Metering) Regulations, Statutory Instrument 86 of 2018; ZERA public statements on the revised participation threshold and net metering enrolment; Intela, *IPP Market Intelligence Report*, March 2026.

Net metering is the least glamorous instrument in Zimbabwe’s energy policy toolkit and, for commercial and industrial property owners, very probably the most consequential.

It attracts little attention because it is administrative rather than announceable. There is no ribbon to cut. But the revision of the participation threshold from 100 kilowatts to 5 megawatts converted net metering from a domestic rooftop scheme into a mechanism capable of underwriting industrial-scale generation, and it did so without requiring a power purchase agreement with a utility that cannot reliably pay in hard currency.

That is the whole argument. The rest of this note sets out how the mechanism works, what the threshold change means, and where it does not help.

What net metering actually is

The Electricity (Net Metering) Regulations, Statutory Instrument 86 of 2018, permit a consumer who generates electricity from renewable sources to feed surplus power into the national grid, and to set that exported energy off against the energy they draw from the utility at times when their own generation falls short of demand.

The metering arrangement records flow in both directions. Where you export more than you import over a settlement period, you accrue a credit. Where you import more than you export, you pay the difference at the retail tariff.

The Zimbabwe Electricity Transmission and Distribution Company introduced its net metering programme in 2019, requiring a grid-tied inverter and a bi-directional meter at the point of connection.

What it is not

Three distinctions matter, and conflating them is the most common error we encounter.

Net metering is not a power purchase agreement. Under a PPA, you sell electricity to an off-taker and they pay you cash. Under net metering, you offset your own consumption and receive a credit. No cash changes hands in your favour. This is the single most important difference, and, counter-intuitively, it is the source of the mechanism’s principal advantage, for reasons set out below.

Net metering is not wheeling. Wheeling uses the transmission network to move power from your generator to a third-party consumer at a different location, under a use-of-system agreement. Net metering offsets consumption at your own meter, or across meters within a defined arrangement.

Net metering is not a one-for-one exchange. Exported units are credited at less than the retail rate, currently in the order of 0.8 to 0.9 of a unit credited for each unit exported. Every unit you export rather than consume yourself therefore loses value. This has direct design consequences, discussed below.

Why the threshold change matters

Under the original framework, participation was capped at 100 kilowatts. That is a large house or a small office block. It made net metering a domestic and light-commercial instrument.

ZERA subsequently revised the participation threshold to 5 megawatts per household or business. Generation above that level continues to require the full independent power producer route, a ZERA generation licence, a negotiated power purchase agreement, and tariff approval.

The distinction between 100 kilowatts and 5 megawatts is not one of degree. It is a change of category.

Five megawatts is a genuine industrial load. It covers the daytime demand of a substantial commercial property portfolio, a mid-sized mine, an agro-processing plant, a shopping centre, an industrial park or a hospital campus. It sits above the consumption of almost every commercial and industrial consumer in the country that is not a primary metals producer.

Which means that a very large share of Zimbabwe’s private electricity demand can now be met by self-generation, at scale, using the grid as a balancing mechanism, without entering the licensing and PPA process at all.

Why that is worth more than a tariff

Zimbabwe’s structural problem in renewable energy has never been resource or capital appetite. The country receives solar irradiation averaging 20 megajoules per square metre across roughly 3,000 sunshine hours a year. Institutional capital is available and, as we have written elsewhere, is under regulatory pressure to deploy.

The problem is the off-taker. ZETDC has a legacy debt position, a history of sub-economic tariffs, and, most materially, a constrained ability to pay independent power producers reliably in United States dollars. A twenty-five-year PPA is only as good as twenty-five years of counterparty performance. This is why Zimbabwe has 174 licensed independent power producers and only 68 that are generating: licences are obtainable, bankable off-take is not.

The Government Project Support Agreement, introduced in 2024, was designed to address exactly this, providing a standardised implementation agreement with a government guarantee on bankability, cost-reflective tariffs, an off-take commitment and offshore repatriation of funds. It is a material improvement. It is also, by construction, a sovereign guarantee in a country that has been in default to multilateral lenders for more than twenty-five years.

Net metering sidesteps the question entirely.

If you are offsetting your own consumption, you are not selling to a distressed counterparty. You are avoiding a cost. The economic value of a generated unit is the retail tariff you no longer pay, ZETDC currently supplies at approximately US$180 per megawatt-hour, rather than a wholesale tariff you hope to be paid. And the reliability of that value depends on your own continued operation, not on the utility’s balance sheet.

For an investor, this is the difference between counterparty credit risk and demand risk. Demand risk is far easier to underwrite.

Designing to the mechanism

The credit haircut on exports drives the engineering. Because an exported unit is worth less than a self-consumed unit, plant should be sized to the consumption profile rather than to the available roof or land area. The objective is to maximise the proportion of generation consumed on site, with export as an overflow rather than a strategy.

In practice this means matching capacity to daytime base load; investigating storage where the load profile is materially evening-weighted; and, where multiple properties are involved, examining whether the arrangement can be structured across the portfolio.

Three constraints remain live and should be treated as conditions precedent on any investment decision:

• Grid connection approval. The point of connection, and the capacity the network can accept, are determined by ZETDC, not by the developer. Secure the connection offer before committing to construction.

• Metering. Bi-directional metering must be installed and commissioned. This is routine but not instantaneous.

• Credit treatment. Accrued credits are not generally settled in cash and may not roll forward indefinitely. Model the value of export at zero and treat any credit as upside.

Where this leads

ZERA has been actively encouraging enrolment and, as at July 2026, has signalled a nationwide survey of self-generation, an acknowledgement that a meaningful share of Zimbabwe’s electricity is now produced behind the meter and outside the national statistics.

We expect that survey to reveal a larger distributed generation fleet than official figures suggest, and we expect that finding to shape policy. The most likely direction of travel is towards a more formalised net billing framework with clearer settlement terms, which would improve the value of export and, in doing so, change plant sizing economics again.

For now, the position is straightforward. Zimbabwe has a legislative mechanism that allows commercial and industrial consumers to generate up to 5 megawatts, offset it against a retail tariff of roughly US$180 per megawatt-hour, and do so without a power purchase agreement. That is a better risk-adjusted proposition than a great many grid-connected IPP structures currently being marketed.

*This article is provided for general information and does not constitute legal, regulatory or investment advice. Regulatory positions should be confirmed with ZERA and ZETDC before any commitment.*

Sources: Electricity (Net Metering) Regulations, Statutory Instrument 86 of 2018; ZERA public statements on the revised participation threshold and net metering enrolment; Intela, *IPP Market Intelligence Report*, March 2026.