According to the recent BP Statistical Review of World Energy 2020, globally, renewables account for 10.4 per cent of power generation. In India, in 2019-20, renewables, excluding large hydro, accounted for around 10 per cent of electricity generation (as opposed to installed capacity) and within this, solar accounted for 3.6 per cent, contributed mostly by utility scale solar PV such as solar parks, whereas the share of rooftop PV was negligible.

Rooftop solar PV is a low-hanging fruit. Recognising this, the Centre has set a target of 40 gigawatts by 2022. Yet, by September 2019, India had reached a rooftop solar capacity of only 349 MW, of which Karnataka alone accounted for 240 MW, set up mostly by institutions and government offices, rather than individual homeowners, which is disappointing for a tropical country enjoying more than 300 days of sunshine.

The proliferation of high-rises in cities is certainly a factor in the lukewarm response to the solar rooftop PV programme. That apart, despite the generous capital and interest subsidy offered under Central and State schemes for installation of rooftop PV, homeowners have been reluctant to adopt this technology although it could slash their power bills. There are many factors behind this reluctance.

Standalone off-grid solar PV is favoured in remote, unconnected areas. The rest are envisaged to be connected to the grid, obviating the need for installing batteries for storage, giving the homeowner the flexibility to draw power at any hour, even when the sun does not shine. Rooftop PV homeowners are referred to as prosumers — producers and consumers rolled into one — and they receive payments for power generated in excess of own consumption.

Power-purchase agreement

When a homeowner installs a rooftop panel, the discom enters into a power-purchase agreement for 25 years, at the prevailing rates fixed by the regulator. Homeowners are given the option of net or gross metering.

In the case of gross metering, the discom pays the rooftop solar PV homeowner for the power injected into the grid at the PPA rate and charges the homeowner for the power drawn from the grid at rates applicable to all consumers in the category, offering little incentive to homeowners.

In the case of net-metering, the prosumer is paid for the surplus power injected into the grid, if her consumption is less than generation. If the prosumer consumes more than what she generates, she is billed by the discom for the power consumed in excess of own generation at the applicable rates.

Discoms have an issue with net-metering for valid reasons. Firstly, the homeowner generates power during off-peak hours when the sun shines, but consumes most of her power after sunset during peak hours when utility power tariff is steepest. During daylight hours, all the utility scale and other renewable power plants including big solar parks which generate power at no fuel cost, must be dispatched under the Centre’s must-run policy.

When the sun goes down, however, power generation entails use of fossil fuels like coal or gas which come at a price that is pass-through in the tariff. Discoms already pay a fixed cost to thermal plants which are on standby during the day. This, in addition to fuel costs for night time generation from fossil fuel plants, pushes up the share of power purchase cost in the final bill of the consumer to as much as 85 per cent. Yet, a homeowner with rooftop solar PV opting for net metering enjoys the rent from expensive peak power entailing a corresponding loss to the discom.

Second, there are inherent T&D losses in any discom network and these are factored into the tariff determined by State Electricity Regulatory Commissions whereas the rooftop prosumer gets full credit for all the power fed into the grid to be adjusted against her consumption, without accounting for T&D losses.

Third, prosumers are usually the more affluent residential consumers who pay their substantial bills promptly and discoms are reluctant to lose them. However, discoms are happy to buy all the power generated by them at the pooled price of power purchase and bill them for consumption same as other consumers in the area. For the homeowner though, this model gives no advantage. Herein lies a conundrum.

Smart meters coupled with time-of-the day tariffs could be the answer. While the meter records power fed into the grid and power drawn by the consumer separately, billing for the consumer can be done on the basis of peak hour tariffs for net consumption.

During off-peak hours, the smart meter could record the net feed-in to the grid and pay the homeowner for the power injected at PPA or wholesale power purchase rates (adjusted for T&D losses?). During peak hours, the meter could be calibrated (or a new meter installed) to measure the power supplied to the household which will be charged at peak-hour tariffs, at par with the rest of the consumers in the same category allowing for slab benefits applicable to other consumers.

This will also incentivise homeowners to use their gadgets during daylight hours to the extent possible to minimise their power bills. The homeowner can then decide whether to buy power from the discom in the evenings or install a storage battery, based on the economics. Restrictions such as ceiling based on connected load, etc., can be done away with. The way forward need not be a binary of gross or net metering, but an equitable and fair modification to utilise the substantial potential offered by rooftop solar PV .

The writer is Raja Ramanna Chair Professor, in the Energy and Environment Programme at National Institute of Advanced Studies, Bengaluru