Net Metering: A Boon or a Bane?

1. What is net metering?

Net metering is a way to bill energy consumption wherein the used energy is charged and the extra unused solar energy that is fed back to the grid is credited back to the consumer. Net Metering allows one to sell excess solar power back to the grid and thus results in maximizing the savings of the solar project.

2. Why net–metering is essential for India to achieve energy security?

Solar is an important source of renewable energy. Given India’s major dependence on imported fossil fuel for its energy needs, increasing renewables share especially solar in the energy mix would be a significant contributor to India’s goal of environment sustainability and providing energy security.

The market potential for solar rooftop (distributed) plants in India is 124 GW (approx.) (Source:MNRE) and the central government has set up an ambitious target of installing 40GW of rooftop (distributed) solar by 2022. But the installed capacity has only crossed the 1GW mark till date. Hence, for quick deployment of the remaining capacity, the supporting market mechanisms must be robust and streamlined. Net metering using solar has the potential to drive widespread implementation of distributed generation by incentivizing end-users to adopt localized power generation. In addition to providing a reliable and sustainable source of power, it helps the end consumers save money on electricity and the distribution companies to reduce system losses since consumption is at the point of generation.

3. Are poor net-metering policies posing major challenges for solar sector?

There are various factors posing a challenge to the rise of solar in India and net metering is just one of them primarily for distributed generation. Unfortunately, despite central government’s best efforts, net-metering has not been readily adopted by all states.

Lack of financial incentives is restricting the end consumers’ adoption of solar rooftop through net metering since in many states, the buying (from the discom) and selling (back to the grid) tariff rates are different. With buying rate, higher in most states, the customer is at a virtual loss by investing in solar net metering project.

Grid unreliability is another issue hampering solar rooftop systems since the electricity generated using solar cannot be used in case of a grid outage due to anti islanding protection.

Discoms are reluctant in adopting net metering guidelines due to loss of business/ profitable customer base. Net metering is beneficial to customers paying high tariffs typically commercial and industrial users and they are also profitable to the discoms.

4. Is net-metering a curse or a blessing for solar sector?

Net metering if properly implemented will prove to be a blessing to the solar (decentralized) sector due to the following reasons:

• Reduced system losses since the consumption is at the point of generation.
• Helps provide monetary savings along with environmental attributes.
• Contributes towards grid stability.
• Reduces need for huge tract of land for upcoming power infrastructure.
• Provides energy independence and sustainability.

Net metering adoption is not a single standing solution such as enforcing RPO requirements but would need a combined effort in terms of making the regulatory environment supportive, in-depth study of grid infrastructure to support banking, long term financial benefits for distribution companies and comprehensive guidelines for users and discoms.

Amplus Solar

February 14, 2017