Net Metering Uptake

Essential for driving rooftop solar installations

Of the 100 GW of solar capacity target by 2022, 40 GW is to come from rooftop solar. Net metering could play a key role in the uptake of rooftop solar installations.

Net metering means “spinning the meter backwards”. The net metering mechanism allows for a two-way flow of power, wherein excess electricity generated from a rooftop solar photovoltaic (PV) system can be fed back into the grid, while electricity from the grid can be procured when the solar plant is not producing power. The consumer is billed only for the “net” electricity (total consumption minus own PV production) supplied by the discom, which depends on the type of consumer and the size of the rooftop project.

Net metering regulations vary across states in terms of subsidy, applicability, plant size and grid penetration. In Gujarat, there is a provision for subsidy for the installation of rooftop solar plants, while Delhi provides generation-based incentives to promote rooftop solar with net metering. The net metering regulations in most states allow up to 1 MW of installations, with individual system sizes ranging from 30 per cent to 150 per cent of the sanctioned load. Karnataka allows 150 per cent of the sanctioned load, while Delhi and Himachal Pradesh are on the lower side of the range. Moreover, the grid penetration percentage of rooftop solar power should be in the range of 15-18 per cent of the distribution transformer’s rated capacity. On this parameter, Karnataka allows the highest grid penetration while Delhi allows the lowest. The price at which the electricity is fed into the grid differs as well. It is nil in the case of Tamil Nadu, the average power purchase cost in Maharashtra and Delhi, the average cost in Andhra Pradesh and there is a fixed tariff in Karnataka.

Key issues

Although several developments are under way on the distributed generation front, the country has a long way to go in terms of rooftop solar capacity. As per the Rooftop Solar Policy Coalition Report released in 2015-16, the industry is still behind its 40 GW target. The complexity of the net metering mechanism, utilities’ reluctance to implement net metering and inadequate incentives for residential consumers are the key challenges. Most utilities have limited awareness of the net metering regulatory framework and its implementation. There is limited awareness at the consumer level as well, especially in the residential category.

The net metering regulations in some states mandate the utilities to procure meters that comply with the technical specifications of the Central Electricity Authority. However, a number of utilities have not yet procured these and therefore project owners and engineering, procurement and construction companies have to procure the meters themselves.

While the cost of setting up rooftop solar projects has come down, it is still relatively high, deterring consumers from implementing such projects. Moreover, rooftop solar systems need battery-powered inverters for backup power when the grid is not available and to absorb any surplus power generated by the system. But most grid-tied inverters cannot meet the full load requirement of a home in case of a power outage. A battery raises costs by 70-90 per cent and efficiency losses are also quite high in inverters.

Tariff slabs for selling power to a utility are different for each consumer category, thereby reducing the incentive for setting such projects. Also, peak power is always more expensive (Rs 7-Rs 8 per kWh) than average cost power, thus discouraging utilities from buying it back from consumers.

The way forward

Apart from net metering facilities, improvements in inverter technology and battery storage are necessary to promote the rooftop solar segment. In addition, policy changes should include guidelines for availing of renewable energy certificates, meeting solar purchase obligations, etc. There has to be a proper flow of information to the discoms regarding the role of net metering in ensuring grid stability and improving the value chain. n

Based on presentations by Anvesha Thakkar, Adviser, KPMG India; and Rahul Tongia, PhD, Fellow, Brookings India/Brookings Institution, and Adviser, India Smart Grid Forum

 

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