The Chhattisgarh State Electricity Regulatory Commission (CSERC) has clarified that a solar project operating under the virtual net metering framework can be located at a site different from the premises of the consumer.

It held that technical limitations such as inadequate capacity of the local distribution transformer, cannot be used as grounds for rejecting an application. Instead, the distribution licensee (DISCOM) is expected to augment transformer capacity, when necessary, provided the project complies with other regulatory norms.

Background

Sadbhav Renewables sought clarification on the interpretation of the Chhattisgarh State Distributed Renewable Energy Grid Interactive Systems Regulations of 2019, together with the 2022 Guidelines, regarding group net metering and virtual net metering.

Sadbhav argued that the concept of virtual net metering, by its very nature, implies that the power project need not be situated on the premises of each participating consumer. The company noted that the 2022 Guidelines were introduced to ensure that consumers without roof rights or with limited space could still benefit from renewable energy.

It therefore requested the Commission to confirm that a solar power project set up under virtual net metering may be located at a different site while still enabling the allocation of generation credits to multiple consumers connected to the same DISCOM.

Chhattisgarh State Power Distribution Company (CSPDCL) argued that several clauses of the Guidelines suggested an implicit requirement of co-location. Its primary contention was that the total renewable energy capacity that can be connected to a distribution transformer is limited to the transformer’s capacity.

According to CSPDCL, this limitation makes sense only if generation and consumption occur on the same transformer. It relied on the definition of prosumer contained in the 2019 Regulations, which describes a prosumer as an eligible consumer with a renewable energy system at the consumer’s premises, interacting with the distribution network at a single point.

CSPDCL maintained that virtual net metering should not be interpreted as a broader category that permits remote generation, because the associated exemptions, such as the waiver of wheeling charges and the cross-subsidy surcharge, were granted on the assumption that the system would be co-located.

The DISCOM, therefore, requested that the Commission not expand the scope of virtual net metering to include remotely situated generating units.

Sadbhav Renewables responded by emphasizing the ambiguity created by the language in the guidelines. It submitted that some provisions appeared to assume installation at the consumer premises. In contrast, others, particularly the definition of virtual net metering and the billing mechanism, clearly contemplated a distinct location for the energy injection point.

Commission Analysis

The Commission examined the relevant provisions of the 2019 Regulations and the 2022 Guidelines. It began with the definition of virtual net metering, which describes a system in which the energy generated by a renewable project is injected into the distribution network via a gross meter and subsequently allocated to participating consumers to adjust their electricity bills.

This definition does not in any way link the power project to the individual consumer premises. Instead, it establishes a structure in which energy is exported from one point and then virtually credited to several consumers.

The regulator then considered the clause that states that the installed capacity at any eligible consumer premises should not exceed the consumer’s sanctioned load or contract demand. It noted that this clause applies when the project is actually placed on the consumer’s premises, but does not preclude the project from being located elsewhere. It viewed the clause as a technical safeguard rather than a mandatory requirement of co-location.

The Commission also reviewed the provision limiting total installed renewable capacity on a distribution transformer to its own rated capacity. It described this limitation as a general technical requirement applicable irrespective of the location of participating consumers.

It held that this technical limit cannot be interpreted to prohibit remotely located virtual net metering projects and that the DISCOM is obligated to upgrade the transformer capacity if the proposed project otherwise meets regulatory norms.

The Commission highlighted that virtual net metering was introduced specifically to assist consumers who lack adequate rooftop space. Apartment residents and small consumers who cannot install solar plants on their private premises were meant to benefit from a system that allows generation at a common or remote location while receiving credits against their electricity consumption.

It criticized the respondent for failing to take this policy intent into account. It emphasized that exemptions from wheeling charges and other surcharges were extended to virtual net metering precisely because it extends conventional net metering. The only change is the project’s physical location, while the billing mechanism remains structurally similar.

After considering all relevant clauses, the Commission concluded that the Guidelines clearly permit a power project under virtual net metering to be located outside the consumer premises.

It reiterated that the determining factors are compliance with technical standards, availability of adequate distribution transformer capacity, and the cumulative sanctioned load or contract demand of participating consumers, subject to a ceiling of 500 kW.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.