Whenever one speaks of rooftop solar (RTS), what immediately comes to mind is the subject of gross-metering and net-metering. For years on end, this issue has become the focal point of debate among stakeholders—RTS owners, discoms, policy makers, consultants, and independent think-tanks. In this exclusive conversation, we have Animesh Damani, Managing Partner, Artha Energy Resources, explaining all that needs to be known on this highly interesting but controversial subject. Damani is of the view that among all solar-centric states, Maharashtra has a sound policy framework when it comes to metering of rooftop solar projects. An interview by Venugopal Pillai.
When it comes to rooftop solar (RTS) installations, what is the basic difference between net and gross metering?
The basic difference between gross metering and net-metering is how the discom accounts for the units generated from the RTS plant. Under gross metering, the entire generation from the solar plant is paid by the discom at a certain tariff. The consumer is unable to utilize the generation for its own captive use. The discom will bill the consumer for the units it has supplied and for the units generated from the RTS plant at its tariff. In most scenarios, the discom tariff is almost 2-3 times the tariff paid for RTS units.
Under net-metering, the consumer utilizes the power generated from the RTS plant for its own captive use and exports any extra unit generated to the discom. The discom will set-off these exported units against the units it has supplied to the consumer.
“The impact of full-scale net metering on discom revenues in not more than 3-4 per cent.”
With solar tariffs generally falling, what adverse impact could net metering have on utilities?
On average, consumers that have installed RTS are able to set off 20-25 per cent of their annual day-time consumption through RTS. However, many industries are unable to install RTS due to multiple factors. Some have weak roofs; others have a corrosive environment amongst other factors.
Residential and commercial societies suffer major space constraints; moreover, they can set-off only common utility bills. Individual house or office meters are unable to take benefits of RTS. Hence, the RTS plant can set off no more than 0.5-1 per cent of the entire consumption of a society. Therefore, on average the net impact is very minimal but the noise around it is very loud.
Utilities are naturally in favour of gross metering. What disadvantages does gross metering have for RTS owners?
Gross metering is an outright monopolistic policy. The expectation that someone will invest in a RTS plant, and then get paid ₹2-3 per unit and have to buy their own electricity at ₹7-9 is an idea that is not only absurd but also ethically wrong.
“There is a lack of uniformity amongst states that have net-metering policies.”
It is said that states show disparity with respect to their net metering policies. What is your view?
There is a lack of uniformity amongst states that have net-metering policies. The capacity constraints are different, types of approvals required are different, and charges grossly vary from state to state. It makes it very difficult for EPCs, developers and consumers in having to deal with different policies, and a constant flip-flop in policy measures. Policy instability and complexity are some of the other tools to slow the adoption of RTS.
Can you cite some examples of such disparity in policies?
For example, Tamil Nadu does not have a net-metering policy. Its discom has now come up with a petition that makes gross metering compulsory for RTS above 10kW. Until the petition is resolved, many consumers are holding back. It has already been four months and we do not have clarity on the closure of the same. Another example is Gujarat where, in December 2020, the state announced an impressive net-metering policy that allowed for unlimited capacity in RTS but introduced charges for RTS plants ranging for Rs.2-4 per unit. In July 2021, there is now a petition to limit net-metering to system of up to 10KW only.
Given such a policy environment, it is very difficult to invest in RTS when the policy regime is averse to its adoption.
“Maharashtra, I believe, is on the right track with respect to net metering policies.”
Based on your experience, which solar-centric state has the best (or progressive) net metering policies?
I believe Maharashtra is on the right track with its approach to net metering. They have clearly announced a policy that will allow RTS to grow to 2 GW. This ensures that many consumers can take benefit of the existing policy. Post achievement of the 2 GW capacity, they have a plan to levy grid-support charges on RTS.
Now, If the grid-support charges are levied on exported units and are reflective of the real cost implication for the discom, it is a step in the right direction. I believe a figure of not more Rs.1 per unit should be sufficient.
Would it be possible for the Centre (MNRE) to enforce uniform net metering policies for all states? Is this not feasible because power distribution is a state government-related matter?
Yes, in our federal system, electricity is a state subject. However, if we could come together on GST, why not for electricity? Every state has been impacted by climate change with clearer warnings given through extreme weather events like floods, cyclones in the last 12 months.
Rooftop solar has not picked up as expected. What could be the reasons for this, in your opinion? Could issues in net metering also be a cause for lower adoption of rooftop solar?
Rooftop solar had a slow start. The initial investment is high and there were doubts on its efficiency and life. Given that a few years have passed, many consumers are now confident on RTS, as they have references from friends and families and can see RTS plants more often. However, the constant flip-flop in net-metering policies and inordinate delays in processing by discoms vastly affects the consumer mindset. More than 25 per cent of the consumers report net-metering policy as a key deterrent, even in states where there are already active net-metering policies.
Please orient us with recent Central government schemes to promote rooftop solar.
“The cap of 500kW handicaps the rooftop solar segment.”
Recently, there was a cap of 500-kwh imposed on net metering – a step that you strongly felt was retrograde. Please elaborate.
The net-metering policy was already in effect across majority states in India. However, the reduction of the cap to 500kW, at the behest of the discoms, handicaps the rooftop solar segment drastically. It becomes a lose-lose situation for developers and consumers both.
Three states – Punjab, Tamil Nadu and Gujarat – are already following the notification, and we can soon expect the other states to follow as well. The states that already have an existing net metering policy will now reduce the capacity limit, and those that do not have the policy are not obligated. In addition, the arbitrary charges that are imposed along with the policy are decided by the states themselves and are expected to further have an adverse impact on the growth of rooftop solar adoption in the country. The impact will majorly be felt by the MSME sector and small developers, as it will directly impact the margins, and we can expect multiple exits.
Lastly, what could be the contours of an ideal net metering policy that would be in the overall interest of both utilities and consumers, and the rooftop solar industry?
I would say: go the Maharashtra way!
(Images of rooftop solar installations in this interview are for illustration only)
