Webinar Insights: “Impact of limiting Net metering connections (<=10 kW) on Rooftop solar market”

On 21st December 2020, the Ministry of Power (MoP) promulgated the “Electricity (Rights of Consumers) Rules, 2020”, thereby, laying down the rights of the Electricity Consumers of India. The Electricity (Rights of consumers) Rules cover 11 key areas from Rights of consumers and Obligations of Distribution licensees to Metering arrangement to Billing and Payment to Grievance redressal mechanism. Under the “Consumer as prosumer” section, the new enactment mandates net metering for loads up to 10 kW and gross metering for loads above 10 kW.

Institute of Energy Economics and Financial Analysis (IEEFA) and JMK Research hosted a webinar to discuss the “Impact of limiting Net metering connections (<=10 kW) on Rooftop solar market” on 20th January. The eminent panellists included:

  1. Mr. Ravinder Singh, Chief Solar Rooftop Business, Tata Power
  2. Ms. Ritu Lal, Sr. VP, Institutional Relations, Amplus Solar
  3. Mr. AK Sinha, AGM, SECI
  4. Mr. Abhinav Goyal, Energy Consultant, World Bank
  5. Mr. Tristan Edis, Director, Green Energy Markets, Australia
  6. Ms. Vibhuti Garg, Energy Economist, IEEFA
  7. Ms. Jyoti Gulia, Founder, JMK Research (Moderator)

Ms. Ritu Lal, who initiated among the guest speakers, highlighted, firstly, the different aspects around gross metering in India. Even though the gross metering arrangement has existed for many years in the country, it has found very few takers. Stating the reasons behind this, Ms. Ritu pointed out the complexities related to distribution companies (Discoms) such as inconsistency in payments, administrative process as well as unattractive feed-in tariff offering. If the net metering arrangement would be limited for rooftop solar systems upto 10 kW, consumer categories, barring small-medium households, would be left with the only option of gross metering arrangement. This could prove to be disastrous to the rooftop solar market which has just started to pick-up pace in India. Ms. Ritu added that there would be a similar negative effect on the market if there is imposition of high DISCOM charges to avail net metering facility. She quoted the recent example of Gujarat solar policy where charges as high as Rs4.5/kWh are imposed to avail net metering facility. She also touched upon the point that if India were to achieve the national rooftop solar target of 40 GW, it would only contribute to about 3-4% of the entire energy production in the country. This is a miniscule revenue share for the DISCOMS to even consider to restrict rooftop solar market at this juncture.

Mr. Ravinder Singh acknowledged the growing uncertainty looming the industry and highlighted the highly damaging risk posed by the current net metering format on the rooftop solar market. Commenting on the impact of the relevant amendment, he mentioned that the consumers who would be largely affected will be those who come under the captive use segment. Mr. Singh also remarked that there is an ambiguity around the implementation of the concerned guidelines in the Rooftop Solar (RTS) market. In addition, he mentioned that it is imperative to evaluate the true cost incurred by discoms for storing electricity and for providing subsidized power to residential and agricultural consumers. If these costs are to be borne by rooftop solar consumers/ developers, installing rooftop solar plants would still be an economical option.   

Mr. Abhinav Goyal put forth his views, providing the lender’s perspective, on the latest market development. Speaking on the status of the World Bank’s USD 625 Million credit line to State Bank of India (SBI), he informed that only about 50% of the loan amount has been on-lent by SBI, with just a year left until the grid connected rooftop solar PV programme (GCRSPV) ends. While concurring with the fellow panellists’ opinion on the larger negative impact of the recent NMA guideline, Mr. Goyal further implied that it is very crucial to have a policy environment which is conducive for loan disbursements under the GCRSPV project. The delays attributed to policy inconsistency over a period of time manifests into increment in the overall cost of project financing. Opining on the possible solutions, he suggested that net metering arrangement within a state may be permitted until the state-determined rooftop solar target is achieved for example what is adopted by Maharashtra, wherein until 2 GW of rooftop solar target is achieved, no grid support charges will be applicable.

Mr. Tristan Edis presented brief insights into the Australian RTS market. He noted that the (<50 kW) RTS systems in residential and commercial segments operate under the net metering arrangement. Shedding light on the Australian rooftop solar landscape, Tristan stated that the rooftop solar capacity is expected to exceed that of gas-powered plants by this year and also surpass coal-based thermal power capacity by 2025 in the east coast main grid. The high penetration of RE in the overall power supply for east coast main grid was also illustrated. Tristan showed that in the recent days, RTS regularly reached 25% of supply around midday period. Further, it was mentioned that the industry’s shift to larger systems (average size of 2 kW (2010) to 8 kW (2020)) was pivotal to the growth of RTS capacity. In Australia, the peak load on transmission and distribution (T&D) networks serving commercial districts is arrived at between 10 AM to 4 PM on hot days. Incidentally, with RTS system generating significant output during that period, the load on the T&D network can be reduced, meanwhile, realizing savings on the network infrastructure cost. Moreover, a large installed base of RTS would allow for the value of batteries to be fully exploited in capacity reduction as well as sharper lowering of network infrastructure cost. As per Green Energy Markets, almost every new solar system from 2029 onwards in Australia will be installed with a battery system.

Mr. AK Sinha expressed that as coordinated deliberations with government and industry players continue, he firmly believes that there would be more refinement and clarifications pertaining to the net metering guidelines in the due course of time. Mr. Sinha admitted that it is important to find a middle ground between all the stakeholders in the industry in order to accomplish the national rooftop solar target of 40 GW.

Click here for webinar recording.