Net Metering Gains

BSES demonstrates benefits for utilities and consumers

The installed capacity of solar rooftop systems in India has increased from an insiginificant amount in 2012 to 525 MW as of October 2015. Driven by the decline in the cost of solar panels and the operational success of projects set up so far, the government has decided to promote solar rooftop power generation on a large scale across the country. Of the 100 GW solar power capacity that the government is targeting to achieve by 2022, 40 GW will come up on rooftops. While policies at both the central and the state levels have been supportive for the development of the rooftop solar segment, the major factor that is driving its growth is the rise in power tariffs. Rooftop solar has already achieved grid parity for commercial and industrial consumers in states such as Maharashtra, Karnataka, Andhra Pradesh, Delhi and Odisha.

A key feature that is expected to fuel large-scale capacity addition in the rooftop segment, especially among residential consumers, is net metering. This mechanism allows consumers to generate and consume solar power on their premises and feed the excess power  into the grid. However, the consumer pays only for the net energy imported from the grid. Net metering provides a direct, inexpensive and easily administered mechanism to encourage customers to install small-scale renewable energy facilities on their buildings.

BSES’s experience in net metering

The basic mandate for any power distribution utility is to deliver power efficiently and reliably. While it is important to deliver power at low operational costs and low loss levels to achieve efficiency, the quality and availability of power have to be maintained to achieve reliability.

In the case of Delhi, it has been observed that peak power demand has been increasing in the past few years. Therefore, in order to overcome this problem it is important to not only have more power, but also to manage its availability in a better way. The Delhi Electricity Regulatory Commission had notified net metering regulations in September 2014 in an effort to boost the uptake of rooftop solar systems and address the challenges associated with the availability and planning of power.

Under these regulations, net metering-based rooftop projects can have two distinct types of ownerships: self owned and third-party owned. In the self owned net metering-based rooftop photovoltaic model, the rooftop owners, who are also the electricity consumers, install the system either on their own or with the help of a system supplier and installer. In the third-party ownership model, the developers own the rooftop system and enter into a lease arrangement with the rooftop owner. In both cases, the electricity generated by the system is first used to service the consumer’s captive load within the owner’s premises. The surplus solar power generated is fed into the grid through a net meter, which is a bidirectional energy meter capable of registering both import and export of electricity. This net electricity generated is then credited to the owner’s account and adjusted subsequently against imports from the grid.

Under the net metering arrangement, two meters are installed, one for measuring solar generation and the other for measuring the import and export of electricity. The solar generation meter has to be installed at the generator’s end after the inverter is placed to facilitate easy access for meter reading. The second meter is a bidirectional meter and can be single phase or three phase as per the requirement. Both the meters have to be compliant with the meter reading instrument.

While the general perception is that solar power is unpredictable and can impact power scheduling and, thereby, the business of a power utility, solar power generation coincides with the peak load. If this peak load can be met using solar power generated on a consumer’s premises, it can help bring down the peak load demand on the utility’s side. In fact, the experience of Delhi’s BSES discom shows that for every 1 MW reduction in peak load, the utility was able to save about Rs 75 million in transmission and distribution costs. Apart from cost savings, net metering-based rooftop solar systems can help the discom fulfil its renewable purchase obligations.

In Delhi, there is a tariff differential depending on the peak and off-peak time of day. Further, the fixed charges are based on the maximum demand and not on the sanctioned load. Consumers are given subsidy for up to 400 units of electricity per month. For a typical consumer, the peak tariff rate can go up to as high as Rs 12 per kWh. Given such a tariff schedule, consumers can reduce their overall electricity bill through a net metering arrangement and careful planning. One can bring down peak consumption and the total number of units imported from the grid in a month by meeting the peak demand during afternoon hours through solar power. This will make consumers eligible for lower tariffs and possibly subsidy. Also, consumers can reduce their maximum demand from the grid and thereby bring down the fixed charges levied per month. As of November 2015, BSES had received over 135 net metering applications of which over 50 have been implemented. Further, over 2,600 kW of sanctioned load has been energised and about 5,300 kW of load is in the process of being energised.

The experience in Delhi shows that the gains from net metering-based rooftop solar systems are significant. They can help reduce peak load and generate savings for both distribution utilities and consumers.

Issues and challenges

While there are obvious gains, the net metering arrangement comes with its own set of challenges. The primary challenge associated with net metering is spreading awareness about the regulations and policies at the local level. While many state governments have announced net metering guidelines, they have not done enough to educate local utility officials and the public in general regarding the regulations and their implementation.

Another major concern is that the grid in most parts of the country is not stable. For net metering to work effectively, the grid should be stable and available at all times. Since inverters that can flip the power to be used by a household during load shedding are not available, the consumer has to bear the generation loss during such events. This raises a key question regarding the use of batteries in net metering-based rooftop solar systems. If the system architecture allows the power generated at the time of load shedding to be stored in a battery, power loss can be avoided. However, most of the regulations released so far do not address this issue. In addition, the installation of a net meter is the prerogative of the consumer in almost all state regulations, thereby adding to the cost of the consumer.

BSES has taken several initiatives to deal with these issues. It has tied up with various solar vendors who offer complete solutions for setting up rooftop solar systems and visit consumer premises to resolve complaints. It has set up a dedicated team to deal with net metering applications and has laid down detailed procedures to apply for a net metering arrangement. There is also a customer portal service where consumers can pay a fee and track their solar generation. BSES also organised a power conclave to interact with research institutes, vendors, regulators and consumers to enhance its own as well as consumers’ understanding of net metering. Such efforts can go a long way in promoting the uptake of rooftop solar projects by residential and commercial consumers.

In sum, efforts are being made by the state and central regulators to establish a strong net metering framework. However, there are certain missing links in the value chain which, if not addressed, can restrict the uptake of rooftop solar projects. Generating awareness and laying down clear policies and directives are imperative for a robust net metering set-up in the country.

Based on a presentation by Vishal Natani, Deputy General Manager, Energy Management Group, BSES Rajdhani Power Limited, at a recent Power Line conference

 

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