The recent proposal from the Kerala State Electricity Regulatory Commission to limit net metering for rooftop solar systems up to 3 kW is likely to slow down the rooftop solar installations in the state.

According to the draft regulations, net metering will only be permitted for rooftop solar systems with a capacity between 3 kW and 5 kW, provided they include energy storage systems (ESS) that account for up to 30% of the rooftop solar capacity.

The Commission proposed limits on net metering and a mandate for ESS for rooftop solar projects in its draft order titled ‘Renewable Energy and Related Matters Regulations, 2025.’

The state aims to meet 50% of its power consumption through renewable energy by 2030 and 100% by 2040. However, these policy changes can potentially hinder its goals.

Rooftop solar installers in Kerala feel that the proposal could threaten the state’s momentum in rooftop solar installations.

Kerala has positioned itself as a frontrunner in residential rooftop solar adoption, driven largely by the momentum generated through the PM Surya Ghar program. As of November 2024, the state recorded a 60.13 % application-to-installation conversion rate, second only to Gujarat. This strong conversion rate reflects the active participation of distribution companies (DISCOMs) and empaneled vendors.

Mohamed Shaffeeq N, General Secretary, Kerala Renewable Energy Entrepreneurs and Promoters Association (KREEPA), told Mercom India that capping net metering at 3 kW and expanding it to 5 kW with ESS could exclude installations from many mid-sized residential, institutional, and micro, small, and medium enterprises (MSMEs).

He added that Kerala is on the verge of failing in one of its most successful public-participation solar adoption models.

“The state-sponsored Soura program, followed by installations through the national portal, had positioned Kerala on the path to energy self-sufficiency. But capping net metering at just 3 kW will shut out most middle-class households, who require slightly larger systems to offset their actual consumption,” said Shaffeeq.

He also stated that systems above the cap would have to adopt net billing, which would undervalue exported energy, making most rooftop solar projects financially unviable.

Shaffeeq expressed concerns that the new grid support charges and time-of-day penalization included in the draft will undermine the value proposition of solar energy and penalize existing prosumers.

These provisions will also reduce the financial viability of housing societies and apartment groups that depend on virtual net-metering models.

KREEPA also fears that an estimated 50,000 jobs and ₹6 billion (~$69.39 million) in annual GST revenue are at risk. The expected 1,000 MW yearly addition in the next five years could also drop.

Another rooftop solar installer concurred with Shaffeeq that the new draft from KSERC will negatively affect Kerala’s progress in solar installations.

He said the policy changes would benefit the DISCOMs but harm the consumers.

Explaining the rationale behind the net metering limitations, he added that DISCOMs claim to incur losses due to net metering and prosumers utilizing energy generated during peak hours, which impacts the tariff for non-solar users.

Rooftop solar installers argue that, even though the grid has not yet been upgraded, the current level of solar adoption in the state is not sufficient to cause grid instability. They feel that the net metering limitations will deal a significant blow to new solar prosumers, as only 1.25% of the state’s consumers are currently procuring solar power.

“Battery storage is the best solution to meet peak load, but it could be done on a large scale by DISCOM. Requiring consumers to install 3 kW rooftop solar with 30% battery storage will only result in lower interest in solar, as it will not be financially viable,” added the Kerala-based solar installer.

Another rooftop solar solutions provider stated that the proposed rules will impact domestic and small commercial users the most, as 3 kW rooftop solar systems are most popular with them. Switching to net billing or installing costly batteries will dissuade them from going solar, as the payback period for these systems will be extended by a couple of months or years.

But the policy shift will encourage customers with a single-phase supply, which requires larger rooftop solar systems, to upgrade to a three-phase supply.

“The transformer level hosting capacity will be capped at 90%, with a 30% per-phase cap. In areas with overloaded transformers, this will result in new applications being rejected or delayed. Single-phase inverters will be restricted to a maximum of 3 kW. Previously, for systems with a capacity of up to 5 kW, the installation of three-phase inverters was permitted. Now, customers with single-phase supply wanting larger rooftop solar systems must upgrade to a three-phase supply, increasing the cost significantly,” said the solar solutions provider.

Fearing a slowdown in rooftop solar growth in the state, KREEPA has urged the state to align KSERC’s regulations with its policy vision. The association also urged the state government to create a truly sustainable, equitable, and investible ecosystem for clean energy in Kerala.