Bill of Rights or the Hangman’s Noose for the Solar Rooftop Sector?
The Ministry of Power formally notified the Electricity Consumer rights yesterday. It is a laudable initiative and brings a much needed customer centricity to the Power eco-system. It is more like a binding customers’ charter or a “bill of rights” and articulates the service levels and timelines for services by the Discoms and specifies penalties for not meeting them. As these are issued as Rules under section 176(2)(z) of the Electricity Act 2003, they have the force of law and not merely advisory in nature.
One has to read the fine print, though, to see a more insidious aspect to such a well-meaning initiative. Take for example the provisions related to “Prosumers” . Prosumers are defined as customers connected to Grid who wish to use the same connection both for for consuming power and injecting/exporting power into the Grid , with on-site power generation using Renewable resources like rooftops. The rights of Consumers are articulated separately in Rule 11. Gist of the provisions of the Rules for prosumers are given below:
a) Total RE generation capacity is to be decided by the respective Regulatory commission
b) Solar rooftop regulations to be issued , if they have not already been issued.
c) Disclosure norms about empanelled installers, financial benefits etc., to be notified online, by the Discoms
d) Online process defined and mandated for requests for solar rooftop installations and tracking of the same till closure
e) Timelines prescribed for completion of technical feasibility, issue of meters, and strengthening the distribution system where necessary.
f) Option to the consumer to buy the meter instead of procuring it from the discom
g) Compensation for each day of delay by Discom
h) Net-metering mandated for systems with capacity <=10 KW . Gross metering for system exceeding 10 KW capacity.
i) Energy generated by the Prosumer to be adjusted in against energy consumption for net-metering and against bill value for gross metering.
The last two provisions of the “Bill of rights” are not actually rights , though they are articulated as such. They have the potential to deal a a death-blow to the solar rooftop segment as we know it. Let us unpack the last two provisions for a minute.
As of last count around 19–20 States have already issued net-metering regulations which allow allowed customers to enjoy net-metering for upto solar rooftops of 1000 KW capacity. Now with a single stroke of the pen, this limit has been brought down drastically from 1000 KW to 10Kw. Only residential and some low end commercial customers, would fall in these limits, and only this class of customers, can now avail net-metering. Others are forced to opt for gross metering as the only option.
Now under net-metering , the customers get a credit for net- exported power — as a quantity credit (in kwh) in the next month’s bill . This usually serves C&I customers quite well , as solar tariffs are cheaper than the grid tariffs they face. For example 1 unit of net-exported solar power would cost the customer around Rs 3.8–4.2 Rs/kwh to generate and typically the “Energy Charge” for Grid power , for most C&I customer, s would be north of Rs 6 per unit. So this is a considerable benefit for the C&I customers to export surplus power , after meeting their internal requirements. Under Gross metering , the energy generated on the premises cannot be netted off against the Customers internal energy demand and all the energy generated would need to be exported to the Grid. The tariff for the same would be determined by the Regulatory Body. The Rupee value for such exported power would be credited to the Customer’s bill in the subsequent month as a credit of Value. Industry has been asking for Average cost of Service (ACoS) as the basis for tariffs for gross-metering , but rarely this has been accepted. Discoms are more comfortable in paying the much lower APPC (Average power purchase cost) for energy under gross metering.
The provisions ofcourse are not as attractive to Prosumers and have the potential to deal a death-blow to the rooftop sector as we know it.
With net-metering limited to only customers below 10KW , there would be little or no interest in going solar by LT and HT customers — as there would be absolutely no savings on the power exported to the Grid.
Our record of capacity addition in Rooftop solar segment , against the 40GW target is already abysmally low and this provision in the newly enacted Rules, is bound to deepen the shortfall against the target.
Net-metering will now be restricted only to residential rooftops below 10 KW and to small LT customers. For all other customers, on-the-premise solar rooftop capacity will now go “behind-the-meter” and will no longer Grid Connected. One of the great benefits of rooftop solar in offering Grid support and lessening the load on the last mile distribution systems and to lower expenditures in distribution system augmentation , will now be a chimera.
Also expect a bunch of amendments to the Net-metering regulations across 20+ states to align themselves with these restrictive “rights for Prosumers” — making them more draconian and restrictive.
Now most of the states have not notified tariffs for Gross metering. We may lose close a year for Regulatory commissions to notify tariffs for gross metering. Till then C&I customs would pause all purchase decisions and this would impact both the opex and capex rooftop markets which have been growing at a steady pace of late.
It will drive most of the distributed capacity to go “Off-Grid” and “Behind the meter” without being Grid interactive. This has implications and would reduce overall contracted demand for discoms pushing them further into the Red , as this behind the meter capacity addition would increase requests for scaling down of contracted capacity.
Also large scale financing like the World Bank credit line for rooftops which has been one of the drivers for growth of Grid connected solar rooftop in India would need to pause as Customers would find Gross metering un-appealing.
Will this boost the residential segment <10 kw which continues to enjoy net-metering? I doubt that very much as they already enjoy subsidies in the form of Central Financial Assistance (CFA) and they already enjoy net-metering. So it does nothing to increase the appeal of residential segment , while choking the C&I/Corporate segment.
It is strange how net-metering, as a concept has been virtually decimated by a single swathe of the pen and by a set of Rules masquerading as “Bill of rights” offering succour and relief to beleaguered Electricity Customers. Pure Kafka again ??
Notes:
(1) Read the Press note issued by PIB here: https://pib.gov.in/PressReleasePage.aspx?PRID=1682384
(2) PIB’s link to the MoP Notification:
https://static.pib.gov.in/WriteReadData/userfiles/final%20-%20Copy%202.pdf
(3) Copy of the notification also avaiable at:
https://drive.google.com/file/d/1xTR-G6OVZOEdKoUazgWw5NJzcqTBNsaK/view?usp=sharing
