Net Metering in India: Issues and Analysis

Net metering {imagine gross and net} is a billing mechanism which not only encourages the consumers to generate power for their own needs but also pays them for the excess power generated by their solar PV systems. The energy generated by Solar PV cells fulfils the immediate energy needs of the consumer’s home/office / building and slashes his electricity bill. Any extra power generated is exported back to the electric grid. The net metering would credit the electricity thus exported to the grid. In summary, consumers are bill only for their net energy use.

Advantages

Advantages of net metering are many. It promotes clean energy production {and reduced carbon footprint} because it reduces dependence on conventional energy sources. It motivates consumers to adopt solar PVs and also promotes investment in this field.

Comments & Observations

Net-metering is a potential tool to drive power generation through renewable technologies such as solar energy. It is looked upon as a ‘silver bullet’ to meet energy security targets of India by 2022. It will enable the reduction of consumer energy bills and also help stabilise the national, regional and state grids by providing financial relief to the distribution companies (DISCOMs) through consumer default risk mitigation and reduction of AT&C losses, and help cut down the per-capita energy footprint.

This concept is quite popular in developed countries but not in developing countries. Among developing countries, Thailand was the first country to initiate net metering. This concept is not very old in India and some states such as Andhra Pradesh, Tamil Nadu, Uttarakhand, Maharashtra and also Delhi have come up with their policies of net metering. However, there are several issues around the same. Firstly, both the DISCOMS and end-consumers in India are reluctant towards Net Metering. From consumers’ end, the reluctance stems from tariff structure and grid reliability. Tariff structure so far does not offer much motivating incentives. With respect to grid reliability, India suffers from excessive load shedding, which may result in waste of power from solar PV during outages. There needs to be anti-islanding protection in grids which enables the invertors to it shut off and stop feeding the power into grid when there is power outage.

The reluctance from discoms stems from potential loss of profit (solar PVs would reduce their profits); demand supply gaps (they need greater energy during peak hours), grid balancing (too many PVs will create problems of managing load on local transformers); and policy issues (no clear installation guidelines and processes from central and state regulatory authorities).

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