Michael Kwan considers himself one of the lucky ones.

When he installed his solar PV system five years ago, it cost about $40,000.

But by the end of this year the system will have paid for itself, and just in time too.

Dr Kwan's is one of more than 146,000 NSW households signed up to the NSW solar bonus scheme, which handed homeowners 60¢ or 20¢ "feed-in" tariffs per kilowatt hour for the solar energy they put back into the grid.

"I started on the 60¢ tariff. That was the thing that made it appealing ... [the cost] was just prohibitive before the scheme came in," he said.

The last day of 2016 will mark the close of the lucrative scheme.

For homeowners like Dr Kwan, from Killarney Heights, that will mean tariff rates will drop to around 6¢, which is less than the amount they will be charged for accessing electricity from the grid.

Dr Kwan estimates he will go from being paid $1292 each quarter during the scheme to paying $475 when the scheme ends.

How it works

Before December 31 this year, solar bonus scheme households need to make an important decision. By this time affected households need to make an important switch from a "gross" metering system (in which all power is sold) to a "net" metering system (in which only surplus power is sold).

The question for consumers is how to make the switch and with which electricity retailer to do it.

Once upon a time NSW Network operators were the only approved installers of the new smart meters required for net metering – electricity meters which measure electricity consumption in real time and can be operated remotely.

But to combat the sheer size and the estimated $600 cost of the job, the NSW government announced new laws in March this year, opening the field for retailers offering smart meter solutions.

What is changing

"All that the smart meter is going to do is let a household know their net and gross energy usage for every five minute or 15-minute block in the day," said Professor Tony Vassallo​, the Delta Electricity Chair in Sustainable Energy Development at the University of Sydney.

Professor Vassallo said the new metering system could be worse for consumers, because it would give the option of time of use tariffs, meaning that during a peak period in Sydney, like 2pm to 8pm, a consumer could pay a lot more.

"The idea of the smart meter is to let you know that your consumption during that time block is going to be expensive, so you should be changing your behaviour to avoid using as much power then as you can."

What you need to do

Vincent Selleck, Director of solar technology company Solar Tek, said the first thing affected consumers should do is head online.

"I would go to the Energy Made Easy website and put in the details of a current power bill and then compare the offerings for electricity providers for ongoing power cost and talk to those retailers about their smart meter offers."

For Dr Kwan, finding the best value for money was important when considering his options post-scheme.

"We are a family of five. We have a pool pump, big fridge and freezer, we are high consumers so access to good rates is important."

Dr Kwan elected to go with the smart meter solution offered by Mojo Power, allowing him to continue receiving his solar bonus to midnight on December 31 and giving him access to wholesale electricity prices through the Mojo EnergyPass.

"Mojo is the only energy retailer that does not profit from our customers' electricity consumption," said Mojo CEO James Myatt."For this particular EnergyPass we charge $40 per month, and there are no additional charges to install the smart meter and no lock-in contracts or exit fees."

Powershop, which offers 100 per cent carbon offset on all the power it sells, also offers a smart meter solution, from which customers can leave any time and take the meter with them.

Solutions are also offered by the big retailers, including Origin, who will offer a special solar feed-in tariff from January 1 2017 and Energy Australia, which has not confirmed its smart meter pricing yet.

What if I don't change to a smart meter in time?

Instead of getting credit and not having to pay for your electricity, you will suddenly have a normal bill like everyone else.

Mr Selleck said he was expecting a number of people to "just wait and see".

"Then all the power you generate would go to the grid for the nominal value the retailer was paying, usually between 4¢ and 6¢ a kilowatt," said Mr Selleck.

"I'd be surprised if you don't get lots of people who do forget to change by December 31 ... they won't realise until they get their bill."

To the many households still deciding, Professor Vassallo said they should feel no obligation to stay with their existing retailer.

"Between now and December we are going to see a lot more of these innovative electricity offerings. Some of them, like Mojo will be really designed around the consumer. But I think other retailers are still working on the basis that they are going to try and extract as much profit as they can."

So what if I get solar next year?

Professor Vassallo said just because the bonus and rebate schemes are coming to an end, "it doesn't mean it's not still an advantage for many households to go solar".

"There is the upfront capital cost, but once you've made the investment you should be getting a decade or two of much, much lower electricity prices," he said, adding that greater security will mean "bill shock" could be a thing of the past.

"Solar PV will still make a lot of sense in sunny places. It's still economic ... to generate your power locally."

Dr Kwan said, for him, the smart meter solution was just the next step towards batteries.

"Bring on the batteries when they become available and cheaper. Because I'm actually producing more than I'm using. It would be good to store what I don't use and use it later when I need it."

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