Solar Net Metering: Need of The Hour for The Indian Solar Sector

India’s Solar Scenario

The Government of India has set up an ambitious target of 100 GW Solar capacity addition by 2022, under its Solar Mission. Within this, 40 GW of capacity is expected to be installed under the Rooftop Solar projects category.

The analysis of the data on the installed solar capacities in the country shows that the sector has indeed achieved an impressive growth in large, ground mounted projects category till date. (~ 29 GW)

However, the data on the installed grid-interactive rooftop solar capacity shows cumulatively only 2,238 MW of projects have been installed. This clearly indicates that a significant amount of Solar Rooftop projects is needed to be added in the country in a very short time, if we seek to achieve the Centre’s target.

Benefits of Rooftop Solar

Grid-connected rooftop solar projects are important as they offer many advantages to the utility customers as well as to the grid system. In these projects, the available roof area can be effectively used for power generation, thereby avoiding the requirement of separate land area. Importantly, the consumer can use the energy from such projects for their own consumption to reduce dependence on power from the grid. The distributed nature of power generation will also help the utility in reducing tail-end losses which generally occur while supplying power over long distances to the consumer’s premises.

Several promotional policy and regulatory measures have already been implemented in the country to promote Rooftop solar sector which include capital subsidies, cheaper finance, and gross & Net-Metering.

Importance of Net Metering

The analysis of the Rooftop solar sector shows consumers using net metering provisions have been primarily instrumental for the installed capacity so far.

In net metering, the solar generation is first utilized by the consumer for its captive requirements. Excess solar units generated, if any, are exported to the grid. The consumers can then utilize these banked units in a stipulated time, or it ends up being paid for by the utility.

The main driver behind installing rooftop solar projects under net metering has been to minimize the usage of costly grid power through onsite solar consumption. Understandably, all the states in the country have their net metering regulations in place and it is slowly being implemented. Despite this, the restricted growth of the rooftop solar sector so far, prompts us to think about the challenges and the effective implementation of net metering in the country.

Challenges in Implementation of Net Metering

The main challenges in net metering implementation include

  • Restricted consumer categories and project capacities allowed under the state regulations
  • Significant delays in application processing by utilities
  • Stringent technical requirements
  • Delays in passing on benefits for the banked units to the consumers

All the states, excluding Odisha and Madhya Pradesh have a cap of 1 MW project size in order to qualify for net metering. Additionally, there are restrictions on project sizes based on the percentages of consumer sanctioned loads and distribution transformer capacities.

In states like Uttar Pradesh, Tamil Nadu and Karnataka, net metering is allowed only to restricted (low tension/residential) categories of utility consumers.

Uttar Pradesh Electricity Regulatory Commission (UPERC) recently notified their state regulations which negated earlier Net Metering provisions to commercial and industrial consumers. Instead Gross Metering mechanism is applicable to these consumers in the State. The latest draft by Maharashtra Electricity Regulatory Commission (MERC) on proposed grid-interactive Rooftop renewable energy generating systems regulations, 2019 also suggests only residential consumers to be allowed under Net Metering in the State. All other consumer categories have been directed to install projects under ‘Net Billing’ mechanism.

Gross Metering v/s Net Metering

These recent trends indicating state electricity regulators favoring gross metering over net metering for high paying (particularly C&I) consumers could prove a setback to the rooftop solar sector. In gross metering, the entire electricity generated from a rooftop solar project is fed into the grid. Thus, its captive usage towards fulfilling onsite demand is not possible. Instead, the power supplied by the utilities is used to cater to the local loads. The main challenge in this from a consumer’s perspective is that the rates (feed-in tariffs) which he is paid by the utility for exported solar units are generally substantially lower than the tariff which he pays for the grid power consumption.

Typically, the feed-in rates are in the range of ₹3-5 per unit in most States, while commercial grid tariffs are substantially higher than this range. For a high grid tariff paying consumer, it proves no incentive as his savings in the utility bills through rooftop solar is severely restricted.

On the other hand, utilities are concerned about the substantial negative impact on their revenues if premium consumers install rooftop projects under net metering; and believe that the revenue lost could otherwise be used in maintaining grid infrastructure and cross-subsidizing other consumer tariff categories. Thus, a balance is needed in addressing the concerns of all the stakeholders.

On the backdrop of the need to accelerate renewable energy generation while tackling the issues of climate change and rapidly increasing power demand – some urgent corrective measures are required in India’s solar sector. Especially, in the rooftop solar segment, where the growth has been slow for a while, net metering can bring in the much-needed push for C&I players to seriously consider transitioning to clean energy. This is most certainly the need of the hour to win back the confidence of large-scale consumers and the entire solar industry. 


| Article published on 04/12/2019 by Moulin

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