Globally every nation is working to develop Clean Energy, and India with abundant sunlight has a huge potential to shift its major energy development share to Solar Energy. Making this a people movement will see this sector thriving, and adding greater value towards generating clean power. Introduction of Net-Metering in UP, Rajasthan, Maharashtra witnessed several stakeholders, especially the corporates, be it small, medium and large investing in installing solar power units in their rooftop, but the recent change in policy by DISCOM, shifting to Net-Billing is not just stopping new entrants, but also the running projects getting non-functional.
Recently in Delhi, the senior members of the Solar Energy Society of India (SESI) met to analyze the situation and urged state governments to continue Net-Billing so that the very purpose of starting this initiative will not get defeated. Established in the year 1978, SESI works towards the overall development of the renewable energy eco-system, supporting all stakeholders to promote the right utilization of renewable non-polluting energy in the country.
Led by V S Verma – Former Member & Chairman of Central Electricity Regulatory Commission the meeting was chaired by Prafulla Pathak, the President of SESI and attended by Ajay Prakash Shrivastava – President of Maharishi Solar Technology Private Limited, Inder Singh and Nakul – S &S Water and Power Projects Pvt Ltd met and discussed about the current challenges faced by the Solar industry.
Prime Minister Narendra Modi set a target of having 175GW installed capacity of clean energy in the country by March 2022, during his first term. India over the period of the last 5 years risen its renewable energy in multifold and seen constructive development in the development of solar energy generation, and by introducing Net-Billing, states like Uttar Pradesh, Rajasthan, Maharashtra was able to induct common man and small businesses adopting to clean energy revolution.
Followed by Uttar Pradesh, recently Maharashtra government proposed a draft to switch from net-metering to net-billing of commercial rooftop solar power projects excluding residential buildings, which might hinder the growth of the solar industry in the state. Slow progress on the net metering policy front can be attributed largely to an inadequate policy framework, opposition from DISCOMs, and lack of appropriate installation training at the local utility level.
Commenting on the subject, Mr. Verma who was the Chairman of Central Electricity Regulatory Commission (CERC) and also the advisory committee of several state governments told, “Further it may not always be possible to separate out the solar installations if industrial/ commercial and residential in the same campus. It will be uneconomical to install solar rooftop on residential units alone due to the disincentive due to the abolishing of net metering in general”. He added, “Accordingly it would be prudent to restore the original provisions to continue incentivizing solar installations”.
Net metering vs. Net billing
Net metering policies allow consumers to receive payment for the net excess electricity that is generated and exported to the grid. Net billing is an alternative approach to net metering. Like net metering, end-users can offset retail electricity purchases under net billing.
The primary difference between net billing and net metering is that there are different rates used to value the excess energy fed to distribution companies and energy received under net billing. That means consumers will supply the power generated by rooftop solar to the grip at lower prices and purchase the same at higher rates. This will give DISCOM, a financial advantage over the consumer.
Following points are proposed under Net Billing Arrangement
- Net Billing Arrangement will be applicable for all industries except residential buildings.
- Consumers will sell the generated electricity to distribution companies (DISCOM) approved grid tariff and will purchase the same at retail tariffs.
- The minimum energy requirement for consumers under the Net Billing Arrangement is 1 KW.
- Based on set tariff the difference is calculated d between the energy produced by a rooftop solar unit and the energy supplied to the consumer. This makes roof-top solar a non-profitable business for consumers.
It may not always be possible to separate out the solar installations if industrial/ commercial and residential in the same campus. It will be uneconomical to install solar rooftop on residential units alone due to the disincentive due to abolishing of net metering in general
V S Verma
Former Member & Chairman
Central Electricity Regulatory Commission, Member SESI
Why DISCOMs are opposing Net-Metering?
In net metering customers generate their electricity through solar panels and feed unused electricity back to the grid and get compensated. As we know residential tariffs are subsidised and lower than the commercial ones with the rate varying from state to state. DISCOMs recover the revenue lost to the residential and agricultural user by implementing extra charges on commercial and industrial users. As DISCOMs are under a financial deficit, lack of financial incentives also restricts end-users adoption of net metering.
With the implementation of Net Billing, the consumer will supply their generated power to the grid at a fixed grid tariff and draw power from the grid at a higher retail tariff, putting the solar power at a financial disadvantage.
22 states in India have the provisions of net metering, mostly in the residential sector. Currently, some states, such as Karnataka, Andhra Pradesh, and Uttar Pradesh, allow consumers to choose between a net-metered and a gross-metered system. Uttar Pradesh has already removed net metering and now, no new rooftop solar projects are coming up there and vendors have stopped operating in that market.
Commenting on the subject Gulabsing Girase, former Vice President of SESI told that the financial health of DISCOMs are very important for sustainable energy management. “The issue here is consumers at large vs commercial and industrial consumers with Rooftop Solar installations. The crux of the matter is cross-subsidy and financial health of Discoms. All of us certainly need healthy Discoms, and the Solar sector needs that most”, added Mr. Gulabsingh. He believes cross-subsidy should phase out over the period as per the Electricity Act.
The renewable energy sector in our country is growing at a pace of 15 % annually and is expected to reach up to $17 Bn. In 2018 Renewable energy contributed to 18 % of total energy generation in the country.
Roof-top solar installations in India account for 4GW of energy generation out of 20 GW of the total utility of solar plants. Central Government’s vision is to set up 175 GW of renewable energy generation by 2022 out of which 40 GW is expected from roof-top solar projects. But with the introduction of the Net Billing Arrangement, this vision seems to be fading.
To connect with Solar Energy Society of India you can visit www.sesi.in
