Net Metering Regulations for renewable energy

India has set an ambitious target for renewable energy installation of 160 GW out of which 100 GW will be through solar energy, further within this 100 GW, 40 GW is targeted through rooftop solar plant. As per an estimate, the renewable energy market potential for rooftop solar system alone is around 124 GW (MNRE). The net metering regulation provides an instrument to realise this potential. The policy also facilitates the DISCOMs in sourcing renewable energy for meeting the Renewable Purchase Obligation (RPO) targets.

Net metering policy was introduced to promote onsite renewable energy generation and consumption. It enables the maximum capacity utilization of renewable energy system and cost reduction by eliminating the need for energy storage.

The aim of the policy is to promote renewable energy generation for self-consumption of consumer. It facilitates the grid interconnection of renewable energy generators. Regulations are provided for implementation of the grid connection. Main implementation body are DISCOMs, which purchase the power generated by the renewable system. The consumer is billed based on the net energy consumption after offsetting the energy generated. A direct incentive for consumer is that the cost of renewable power generation is less than the grid electricity, which is being offset.

The policy is implemented by local body (DISCOM) and regulations are formed by the state governments as per the guidelines of central government.

India is observing the unprecedented growth across all sectors and as results there is an increase in energy demand. Also the country has always faced energy deficit in terms of both energy generation and capacity. The adoption of renewable energy at distributed level will contribute in satisfying the increasing energy demand as well as reduction in the overall carbon footprint. The net metering regulation is the key instrument in wider adoption of renewable energy systems at building level.

These regulations will promote the renewable energy generation and the grid connected systems which have better efficiency and financial viability compared to stand alone systems based on storage.

The DISCOMs are the implementing agency for the net metering connection and they have to conduct the technical feasibility and report the minimum and maximum capacity of all distribution transformers available for connection of renewable energy systems.

The renewable energy are eligible for net metering connection if they are an existing consumer of the DISCOM. The regulations also provide the minimum technical and safety requirements for grid connection which has to be adhered by the consumer and verified by the DISCOMs.

Relevant target groups

• Energy company DISCOMs are targeted towards meeting their renewable purchase obligation by providing a framework and guidelines to connect renewable generator to grid.

Direct beneficiaries

• User

  The regulation promoting the effective and efficient utilization of renewable energy, providing access to the grid as infinite load for the system, avoiding the need of additional storage capacity making the system more efficient and economical and directly benefitting the end user.

• Energy company

  DISCOMs are the direct beneficiaries as the policy helps DISCOMs in meeting their renewable purchase obligation by providing a framework and guidelines to connect renewable generator to grid.

Indirect beneficiaries

• Manufacturer

  Renewable energy equipment manufacturers, installers and consultants have benefited as the adoption of net metering system has push the renewable energy market with increase in business opportunities.

Relevant barriers

• Technical barriers: The policy provides technical guidelines for implementation of net metering system with existing infrastructure.
• Economic and financial barriers: Implementation of net metering system reduces the renewable energy system cost as the energy storage is not required. This results in a better financial viability of renewable energy systems. Also energy tariff can be reduced to lower tariff slab by offsetting the energy demand through solar energy system.

Relevant incentives

• Saved energy costs: Direct savings on energy costs.
• Unique selling proposition for suppliers: Electricity distribution companies (DISCOMs) can include renewable power in their renewable purchase obligation (RPO); onsite energy generation reduces demand peaks and distribution losses.
• Contribution to protection of the environment:

Agencies or other actors responsible for implementation
DISCOM (Electricity Distribution company or Distribution licensee).

Other pre-conditions
To implement net metering the applicant must be the buyer of electricity from a Distribution licensee.

Actors responsible for design

Central and State Electricity Regulatory commission (regulatory body).

Monitoring

Energy generated by renewable energy system and net energy consumption of the consumer is recorded by the DISCOMs for energy billing purpose.

Actors responsible for implementation

Electricity distribution companies (DISCOMs) (public or private companies).

Dynamic market transformation and or innovation
The policy drives consumers towards implementation of renewable energy systems and enables the energy producers to connect to the electricity grid.

Minimising rebound effects
Probable rebound effects will occur in the areas where the grid availability is very low. The energy consumption could increase due to the availability of electricity. However, this is a desirable impact.

Creating spill-over effects
The net metering regulations drive the market towards adoption of renewable power by providing the instrument for efficient and economic use of renewable energy system. Also the policy is facilitating general interest towards renewable energy into releasing the actual implementation of such systems through net metering path.

Design for sustainability aspects
Increase in renewable power in energy mix will reduce the environmental impact per unit of energy consumption. Another indirect benefit are energy savings due to avoided distribution losses.

The following barriers have been experienced during the implementation of the policy:

There is a technical limitations of the existing infrastructure (technical and financial concerns of DISCOMs to integrate renewable systems into grid).

The following measures have been undertaken to overcome the barriers:

• Provision of technical feasibility for each consumer before accepting the application of net metering connection.
• Inclusion of net metered systems in renewable purchase obligations.
• The government is also planning to amend the national tariff policy 2006 to allow the bundling of renewable power with thermal power for the purpose of determination of tariff and onward sale.

The regulations will support achieving national target of 160 GW of renewable energy installations by 2022 of which 40GW are rooftop solar photovoltaic capacity installation. The policy itself does not specify any target but it will help to achieve this targets by accelerating the adoption of renewable energy systems at building level. 

As per MNRE report total 2.5 GW rooftop capacity has been sanctioned out of which 166 GW has been installed as on Feb 2016 (MNRE, 2016).

Concrete figures in energy savings/year
Net metering regulations is not part of the energy saving / generation targets. This policy only provides regulations and guidelines for grid interconnection of distributed renewable energy systems (specifically rooftop solar PV systems).

Average electricity cost paid by end user in India is around 10 to 12 Rs/unit (data obtained from various energy audits conducted pan India).

For small and medium sized solar PV systems levelized cost of electricity generation is around 6 to 7 Rs/unit thus providing the opportunity for net benefit of INR 3 to 5 per unit of electricity used for end user.