Punjab Proposes Net Metering Rules to Restrict Rooftop Solar Installations

The Punjab State Electricity Regulatory Commission (PSERC) has said that it will come up with a staff paper suggesting amendments to the net metering regulations, 2015. It said that the draft amendments would be put up for public comments, and all the stakeholders will get another opportunity to submit their suggestions to the proposed amendments.

The Punjab State Power Corporation Limited (PSPCL) filed a petition seeking amendments to the grid-interactive rooftop solar systems based on net metering regulations, 2015.

Context

In its submission, PSPCL said that the net metering regulations were notified to promote renewable power by installing rooftop systems at consumers’ premises. The state DISCOM noted that the cost of producing solar power had come down significantly, and solar power was available at about ₹2.60 (~$0.035)/kWh plus the trading margin. Thus, procuring cheap solar power from the market and distributing it to the consumers would be more beneficial than rooftop solar projects under the present net metering regulations.


The state DISCOM said that with the increasing number of consumers opting for rooftop solar systems under the net metering program, it was losing on revenues due to lower sales and ended up paying stranded power purchase costs. This was affecting the financial viability of the DISCOM.

The DISCOM proposed some amendments to the existing net metering regulations:

  • There will be no settlement period beyond the billing cycle, and the surplus at the end of a billing cycle injected into the distribution system should be procured at a specified rate
  • At least 90% of the electricity generated from a project in a financial year should have to be consumed, i.e., surplus power to be procured by the DISCOM should not be more than 10% of the total generation in a financial year
  • Surplus power may be procured at the nominal rate of ₹2.25 (~$0.031)/kWh from domestic or government consumers and ₹1.75 (~$0.023)/kWh from other consumers
  • The capacity limit for domestic or government consumers maybe 80% of the sanctioned load or demand and 50% for other consumers

The ‘Renewable Energy Members Welfare Association (REMA),’ in its submission, said that the existing regulations had been framed based on net metering policy 2015. The proposed amendments were contrary to the policy. It further added that the proposed rate of ₹2.25 (~$0.031)/kWh to the domestic consumers and ₹1.75 (~$0.023)/kWh to other consumers for the surplus power exported to PSPCL had not been determined transparently.

The Punjab Energy Development Agency (PEDA), in its reply, said that changing the settlement period from 12 months to each billing cycle is an attempt to force the prosumers to install lower capacity projects, and the proposed amendment is in-fact replacing the concept of monthly banking to daily banking.

It further added that PSPCL had a shortfall of non-solar power, and to meet the non-solar renewable purchase obligation (RPO), the Commission permitted adjustment of excess solar power (above the solar RPO) against non-solar RPO. PSPCL needs to allow the rooftop solar capacity with a subsidy from the Ministry of New and Renewable Energy (MNRE) to utilize the sector entirely.

Stressing the need for banking facility, the nodal agency said that the banking facility was an essential and integral part of rooftop projects under net metering. PSPCL has a large consumer base and meets the maximum demand varying from 13 GW in summer to 6 GW in winter. The addition of 100 to 200 MW of solar power by consumers should not be as big a problem as what is projected.

Commission’s Analysis

After going through the data submitted by PSPCL, the Commission noted that as of March 31, 2020, 7,516 consumers had installed the rooftop solar systems under the net metering program with a total capacity of about 85 MW. The total solar generation during FY 2019-20 was 113.86 MU, which is just 0.25% of the total power purchase of 45,298 MU approved by the Commission for FY 2019-20.

The state regulator added that PSPCL had not considered the savings in power purchase cost, reduced distribution losses, and benefits accrued due to the RPO while calculating the financial impact. If all these factors were taken into account, then the net financial impact on PSPCL due to rooftop projects under net metering was likely to be lower.

“However, it has also been observed that 58% of the solar generation under net metering is from subsidized categories of consumers. As per PSPCL’s data, there are 7,629 pending applications with a combined capacity of 94.6 MW, out of which 49.8 MW (52.64%) relates to the large industrial and commercial category of consumers, which are the subsidizing category of consumers. Any reduction in billed energy to these categories of consumers will surely have an impact on the revenue of the licensee, which may, in turn, put additional burden on the subsidized category of small consumers,” the Commission added.

The Commission added that a balance was required to safeguard all the stakeholders’ interests, including the DISCOM.

After considering the views of all the parties involved, the Commission asked the officers of the Commission to come up with amendments regarding the net metering regulations, 2015.

In March last year, REMA had written to PSPCL, expressing its concerns about the pricing of rooftop solar systems in the state. The state had announced subsidies for grid-connected rooftop solar systems ranging between 1 and 10 kW in the residential sector, which brought prices down to as low as ₹22,200 (~$299.5)/kW, including subsidies.

Net metering regulations have been a bone of contention in most states. The recent rules by the center mandating gross metering for rooftop solar systems above 10 kW has shook the industry. As the opposition from the industry mounted, the ministry of power has agreed to relook the net metering rules.

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