Net Metering: The Need of the Hour!

Net metering

When one considers all the different sources of renewable energy, solar is coming up to be the most viable and sustainable source, both at institutional as well as at individual levels. A simple rooftop could be converted into a solar power plant. It is that easy!

These days, not only can you generate and use the energy, you could also transfer the excess production to the grid and earn credit, something in industrial terms called “net metering”. Before we go further, here’s everything you need to know about the net metering system in India.

Net metering: The concept

Net metering is an electricity policy for utility customers who operate their own on-site self-generation solar power systems. It allows consumers to feed surplus solar power into the grid when they don’t need it, and receive a credit on their electricity bill. This takes care of the problem of matching power supply and demand, which will never match perfectly for any building. Net metering effectively uses the grid as a huge battery, which helps to balance this demand/supply mismatch.

Without net metering, many rooftop solar plants – and residential ones in particular – would require a battery backup to even out the power consumption through the day. Battery costs have been falling rapidly, and will become an important part of the solar industry someday – but today, very few solar plants would be financially attractive once battery costs are built in.

Although, the concept of net metering first emerged in United States in 1979 as a way to compensate customers for their investment in renewable energy, it makes much more sense than just being a financial implication.

How it works

The solar power systems are connected to the utility grid via the customers’ main service panel and meter and, when generating more power than is needed at the site, return excess electricity to the grid through the power meter, reversing the meter from its usual direction. Thus, a bi-directional meter is needed to avail net metering.

Since the meter works in both directions (i.e.  bi-directional meter)– one way to measure power purchased (when on-site demand is greater than on-site power production), and the other way to measure power returned to the grid – the customer pays the “net” of both transactions.

It changes the game

The net metering policy makes solar energy more attractive and affordable for users. In can help users save a huge amount of money, and it makes the process of accounting for the energy flowing to and from the utility simpler and easier to administer.

For example, if you live in a state which has implemented the net metering policy, then you get credited for the electricity you deliver back to the grid at the same retail price that you pay for the electricity you take from the grid. The banking happens for a period of time, usually annually. This not only brings down the energy cost drastically, but helps create small power generation units in almost every nook and corner of the country.

Net Metering: The challenges

With fundamental economics getting stronger, solar doesn’t require subsidies so much as enabling policies like net metering.

Many states have now created net metering policies, although implementation has been slow in most cases, and in others there are arbitrary constraints and limits. For example, net metering in Tamil Nadu is not allowed for high-tension consumers, which are the largest consumers. In many states, there is a cap on the size of the project which can avail net metering, which prevents large customers from fully using their rooftops. For example, in Maharshtra, there is an artificial capacity constraint of 1 MWp. This means that even if the consumer has the space to accommodate more than 1 MWp system, net metering policy would allow only 1 MWp system to be installed under its scheme.

“Rooftop solar sector has not really taken off mainly due to the poor implementation of net metering policy,” Kuldeep Jain, Managing Director, CleanMax Solar recently stated in The Hindu. He further suggested that the net metering policies in most states are not being implemented. There is a lack of follow-through. For example, in Maharashtra, no forms have been released and no processes have been put in place on how to implement net metering.

The way ahead

Agreed, a greener environment is the biggest benefit one could have because of solar energy adoption but complimenting it with additional monetary benefit always helps. As the union government is extending all help to expand the solar base, it must come up with better ways to implement the policy framework on net metering so that the ambitious national targets can be met.

CleanMax Solar has helped 50+ of the largest corporates in India in their solar journey. It’s the largest rooftop solar provider in India. Connect with us to know more about solar energy at www.cleanmaxsolar.com or write to info@cleanmaxsolar.com.

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