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After half a dozen state governments introduced net metering for renewable energy, Delhi took the plunge last month to launch a scheme where individual establishments can generate power in their premises.
Although the scheme is being pitched as an environment-friendly move for promoting clean energy, doubts are being cast on the viability of the scheme for the distribution companies. On a standalone basis, the scheme has the potential to succeed but it cannot replace conventional power that is available 24x7, said Praveer Sinha, chief executive officer and executive director, Tata Power Delhi Distribution.
According to Kameswara Rao, leader — energy utilities and mining practice, PricewaterhouseCoopers, said net metering programmes should not be seen as generation sources that improve power availability. Instead, they optimise land resources and minimise losses otherwise incurred in wheeling power from say a solar park via transmission and distribution lines, to the consuming load centres.
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In northern India, there are 300 days of sunlight and peak requirement of power is in the summer season. “To that extent, the scheme is beneficial for us, since it will cater to the extra load. Besides, since it locally generates power, we do not have to bring it over a long distance,” said Sinha.
Experts, however, said rewarding high-end consumers with net metering scheme benefits only the rich and could cost the distribution companies their most viable customers. “In normal circumstances, higher bracket consumers cross-subsidise lower-end consumers. We would want that instead of net metering, capital subsidy is provided by the government so that the aggregate purchase price can be kept low,” said Sinha.
The industry cites the example of Germany, where the government provides €23 billion annually as subsidy for renewable energy. Since wind and solar output has priority in grid access under law, sometimes such power floods the market on sunny and breezy days, curbing running hours for nuclear, coal and gas plants. Renewable power generation, in fact, is blamed for bringing down the profit margin for eight utilities in Germany to 5.4 per cent last year from 15 per cent a decade ago.
Rao, however, differed and said the impacton distribution companies depends on how the scheme is designed. “Residential consumers, in general, consume more than their rooftops can generate, and contribute little cross-subsidy. Commercial consumers will definitely be interested, as they have a significant tariff arbitrage, and the discom takes the corresponding hit in revenue. However, discoms will save in capital spend, as they can set off this generation by consumers' facility in their renewable purchase obligations,” he said. Rao said net metering had the benefit of giving incentive on actual production and not as a subsidy for setting up a facility. Second, it optimally uses the facilities of consumers thus avoiding capital investment into land and equipment, and avoids losses incurred in transmission and distribution.
Under net metering, the consumer generates solar power for self-consumption and feed excess power to the grid. In-built in it is the system of net metering, which records net energy between export of generated energy and import of energy from the distribution company for a billing month. Besides Delhi, Andhra Pradesh, Karnataka, Bihar, Gujarat, West Bengal and Maharashtra have also made moves towards such a system. The regulations for net metering for renewable energy, notified by the Delhi Electricity Regulatory Commission, specify that the capacity of renewable energy system to be installed at the premises of any consumer should not be less than one kilowatt peak.
Sinha supports the feed-in tariff mechanism, which can be linked to the average purchase price for distribution companies. The difference between fee-in tariff and the cost of generation could be made up by capital subsidy. Cost of solar power has come down to Rs 7-7.50 aunit (kilo watt per hour) from Rs 11-12. It is projected to further come down to Rs 6. For setting up a 4-5 kilowatt renewable energy generating unit, the expenditure would be Rs 5-4 lakh. If 30 per cent subsidy is provided, the payback period could begin in three to four years. The schemes is workable especially in rural areas, where it can be put on a standalone basis at a flat rate. Another problem, which Sinha pointed out, relates to the equipment. Net metering would require bi-directional meters or two unidirectional meters. The power equipment, too, should be able to take load from two directions. At present, BIS-certified such instruments are not available. It will take two to three years to happen.
Under the scheme, the distribution licensee has to show separately, the energy units exported, the energy units imported, the net energy units billed and/or the energy units carried forward, if any, to the consumer in their bill for the respective billing period.
If during the billing period, the export of units exceeds the import of units consumed, the surplus units injected by the consumer will be carried forward, as energy credit for adjustment against the energy consumed in subsequent billing periods within the settlement period.
During any billing cycle, the distribution licensee raises invoice for the net electricity consumption only after adjusting or netting off of the unadjusted energy credits of the previous billing cycle(s). At the end of the each financial year, any net energy credits, which remain unadjusted, would be paid for by the distribution licensee to the consumers, according to the rates notified by the regulatory commission. In Delhi, these rates are yet to be notified.
