Over the past 12 months, there has been a growing impetus to rooftop solar deployments, which has translated into a sharp increase in installed capacity. According to BRIDGE TO INDIA, the installed rooftop solar capacity has reached 1,396 MW as of March 2017. Around 678 MW was added during 2016-17 and another 1,232 MW is expected to be added in 2017-18. However, despite the high growth, the segment is nowhere near the targets specified by the government. While there are various reasons for the low uptake of this technology, patchy implementation of the net metering policy remains a primary constraint.
All the states have announced their net metering policies, which is noteworthy. However, implementing the policy in letter and spirit is a major challenge for most states. According to BRIDGE TO INDIA, only Gujarat, Karnataka, Andhra Pradesh and Telangana have executed the policy well. Considering that these states have significant solar potential, good policy implementation will promote larger capacity additions in the coming years.
Meanwhile, states like Rajasthan, Punjab, Odisha, Uttarakhand, Haryana, Chhattisgarh and the north-eastern states have shown average progress in implementing the net metering policy. And states such as Uttar Pradesh, Bihar, Tamil Nadu, Madhya Pradesh and Maharashtra have displayed poor policy execution.
The progress has been slow owing to a poor policy framework, lack of interest among discoms and inadequate awareness. Policies in non-performing states were formulated on the back of guidelines issued by the Central Electricity Regulatory Commission in 2013. Since then, even though the market has progressed significantly, there has been no consequent amendment to the guidelines. This has been the key reason for the delayed implementation of the net metering policy. Moreover, the net metering norms are restrictive in nature, with a cap on system capacity and other limitations with regard to deployment. The lack of an incentive mechanism has also worked against the adoption of this policy. Another major challenge faced by discoms is the unavailability of bidirectional meters. Moreover, resistance from discoms to the installation of rooftop solar and net metering has also been a major impediment to its implementation.
Besides, several states are still using the gross metering policy for rooftop solar systems. These include Karnataka, Andhra Pradesh, Odisha, Jharkhand, Uttar Pradesh, the north-eastern states and Chandigarh. Gross metering has not been entirely successful as a metering policy for rooftop systems. Therefore, its existence in these states has impeded the progress of net metering.
Wide variations in norms across states
Net metering systems are primarily aimed at giving consumers an opportunity to offset their electricity bills. They involve a single meter that records both the import of conventional energy from distribution grids and the export of solar energy into distribution grids. Net metering allows the final user to credit the energy produced in the grid and is therefore promoted as a preferable option.
On the other hand, gross metering systems are aimed at rooftop owners/third-party investors who would like to sell energy to the discoms. Gross metering is also referred to as feed-in metering wherein all the energy generated from the system is exported to the grid and is separately recorded through a different “feed-in meter”. The developer exports the solar energy to the utility at a predetermined feed-in tariff approved by the regulator, and the third-party investor/renewable energy service company enters into a long-term power purchase agreement (PPA) with the utility.
Renewable Watch takes a look at the multiple variations of the net metering policy that exist across states. The difference is owing to the lack of uniformity in grid conditions, solar power potential and irradiation, the financial condition of the state discoms and agencies, as well as policy objectives.
The sanctioned/contracted load for rooftop systems as a percentage of total load is one such parameter that differs across states. In this regard, Karnataka remains an outlier with the limit exceeding 150 per cent of the sanctioned load. Gujarat, on the other hand, allows solar capacity to be installed for only 50 per cent of the sanctioned load. Chhattisgarh permits the maximum capacity to be equivalent to 49 per cent of the annual net generation while Assam allows it for 40 per cent of the contracted load.
The restrictive nature of the policy is evident in states like Uttarakhand where the policy is applicable to rooftop solar plants only up to 500 kW capacity or Chhattisgarh where the policy is not applicable to systems of less than 50 MW capacity. Besides, the policy limits the capacity of rooftop systems in the case of some states.
While the net metering policy for most states extends to residential, industrial and commercial customers, Karnataka’s net metering policy framework does not include domestic customers. This could lead to stunted growth in the rooftop solar segment, skewed towards only industrial and commercial consumers. Apart from Karnataka, Kerala restricts consumer eligibility to loads of only up to 11 kV, whereas West Bengal’s net metering policy extends only to institutional consumers like hospitals, government departments and academic institutions.
Other issues and challenges
There are several other teething troubles in the implementation of the net metering policy as the rooftop segment is an emerging area that needs to be streamlined. The key challenges include delays in approvals from discoms and the lack of responsibility for bearing the upfront costs of net metering systems. A case in point is Maharashtra State Electricity Distribution Company Limited (MSEDCL), which asked its customers to purchase bidirectional net meters from the market since it was unable to procure the meters. While the meters were available in the market at a cost of Rs 12,000-Rs 20,000, the reimbursements from MSEDCL were expected to be at the subsidised cost at which discoms usually procure the meters. Such instances deter customers from adopting rooftop solar systems.
Moreover, cumbersome interconnections often cause delays in the net metering process. Most regulations predict a gap of 60 to 90 days between the filing of the application and interconnection approval; the timelines, however, are unclear. Discoms are not properly educated regarding the net metering framework, which results in awareness issues among customers and lack of policy implementation.
The restrictive nature of net metering regulations across states often prevents its standardised implementation. These restrictions vary from project size to eligibility and tariffs offered for overall project deployment. For instance, the policy in Gujarat is valid for only operational projects, which restricts developers from approaching the discoms for net metering facilities until the project becomes operational. The unwillingness of discoms to adopt rooftop solar and net metering policies has also been a significant roadblock in the adoption of this policy.
The way forward
Net metering is key for the development of the rooftop solar segment. As the deployment of rooftop systems increases, the pressure of implementing the net metering policy will grow in order to ensure the economic feasibility of rooftop solar systems. While there has been progress regarding the notification of policies and frameworks, the implementation of net metering has been stagnant for a long time, except in a handful of states. Incentivising the adoption of rooftop solar through better provisions in the net metering framework would help the segment. In addition, increasing the scope of the policy in states would make it less restrictive. Moreover, standardisation of the net metering framework across the country could lead to its successful implementation.