Andhra Pradesh’s solar development has not had a smooth run since the past year. In a recent development, renewable developers and stakeholders in the state are now up in arms against the proposed amendments by the state distribution companies (DISCOMs) to the solar rooftop policy.
The state had issued its solar policy last year, aiming to achieve 5 GW of solar capacity in the next five years. In May last year, the Andhra Pradesh Electricity Regulatory Commission (APERC) approved the guidelines for the state’s Solar Rooftop Policy 2018. According to the policy, the state government was to promote solar rooftop projects on public buildings, domestic, commercial, and industrial establishments on a gross or net metering basis.
Then, recently, the DISCOMs proposed amendments to the solar rooftop policy, and a hearing on this was held on March 23, 2020. The proposal states that the applicable tariff for solar rooftop projects for either net or gross metering should not exceed the difference of pooled variable cost and balancing cost or the applicable tariff at the time of commercial operation date, whichever is less. The distribution companies have also proposed an agreement period of 10 years and suggested that the metering should be done either as gross or net metering. According to the existing solar policy released in January 2019, the consumers are free to choose either net or gross metering options for the sale of power to DISCOMs. The applicable tariff for either of the cases was decided to be equal to the average pooled power purchase cost agreed to by the Commission for the year during which the project is synchronized with the grid. The existing policy also says that the applicable tariff at the time of commissioning date will be paid for 25 years in case of projects executed under both net metering and gross metering basis.
Many developers and associations like Solar CITI, Renewable Energy Developers Association of Andhra Pradesh, Prayas Energy Group, Andhra Pradesh Solar Integrators Welfare Association (APSIWA), and Rockland Energy, among others, have joined the chorus against the proposed amendments.
The stakeholders have requested the Commission that net metering should be continued for the benefit of the consumers, and the tenure of the agreement should be valid for 25 years.
According to developers and solar associations, there are only 110 MW of solar rooftop projects installed in the state, which is equivalent to 0.027% of the national solar rooftop target. India’s rooftop solar target for 2022 stands at 40 GW.
The developers said that the subsidies for solar power projects under the net metering program had been removed except for those consumers who have consumption lesser than 200 units.
“Solar power project set up with bank finance with an interest rate of 12%, will take at least 10 to 12 years for the breakeven period. Any benefit from the solar power project can be realized only after 12 years. So, the limited tenure of 10 years will be a big setback for the project, and no one will be interested in setting up a project,” asserted the letter.
“AP DISCOMs are trying to create hurdles in all possible ways to stop setting up solar energy systems without having any awareness of the benefits of distributed solar systems,” it added.
The letter further noted that gross metering was not in favor of the consumers and that net metering should be allowed as it has created an excellent distribution system, where the utilized power from the project is exported to the grid.
Further, the letter explained that in the gross metering system, the DISCOMs pay for the net exported units based on the average pooled purchase cost. Now, the DISCOMs are proposing that the difference of pooled purchase cost and the balancing cost should be paid for the net exported units. The letter further illustrated the example of a domestic consumer who installs a 1 kW solar power system that generates five units every day with three net exported units per day. Considering this, the breakeven period for the solar power system will be more than 40 years, making the proposition of a rooftop solar system unattractive.
Rallying for net metering, the developers also added that the excess energy exported by the solar power projects would be consumed in nearby places by other consumers in the locality or within the feeder level for high tension (HT) consumers. This would be more beneficial to DISCOMS, as there will be no need to procure additional energy from the other feeders.
Mercom has previously reported how inconsistent net metering policies continue to be a drag on India’s rooftop solar sector, calling for serious policy push by the government to get the market to the next level.
The developers have claimed that the with all the incentives in the last five years, only 110 MW of solar net metering projects have been introduced in entire state and DISCOMs are misleading APERC by projecting high figure of installed capacity.
The demand for the roll-back of the net-metering mechanism has also been raised in other states.
For instance, in December last year, the KERC had issued an order which proposes various business models for rooftop solar. The Commission also felt that there was a need for a proactive and constructive role by the distribution licensees to facilitate smaller consumers to install solar systems at optimal cost, either through investment form the consumers or through third party investments by the distribution licensees themselves.
The story is similar in the state of Maharashtra. Maharashtra State Electricity Distribution Company Limited (MSEDCL) earlier proposed considerable grid support charges for net metering rooftop solar systems with a capacity of over 10 kW.
Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU).