About the Institution of Engineering and Technology (The IET)

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2 About the Institution of Engineering and Technology (The IET) The Institution of Engineering and Technology (The IET) is one of the world s largest professional organisations for engineers and technicians. We have 160,000 members in 127 countries around the world. The IET is working to engineer a better world. We inspire, inform and influence the global engineering community, supporting technology innovation to meet the needs of society. The IET office started operations in India in 2006, in Bangalore. Today, we have over 10,000 members and have the largest membership base for the IET outside of the UK. Our vision is to become the most relevant and therefore the most preferred institution for engineering and technology professionals in India. For more details, please visit us at About the IET India Solar Panel The IET India Solar Panel is a volunteer-led visionary think tank in the solar energy sector, providing unbiased recommendations in the areas of solar energy policy, regulations and technology. The panel s initiatives become pertinent as solar energy is quickly gearing towards becoming a mainstay in India's energy basket. The IET India Solar Panel will bring out quarterly white papers that will analyse recent developments in the solar energy space. The panel also aims to provide suggestions and recommendations to regulators and policymakers on draft policy regulations. Members of the IET India Solar Panel Vineeth Vijayaraghavan, Director -Research & Outreach - Solarillion Foundation (Chairman, IET India Solar Panel) Rajesh Bhat - Managing Director, juwi India Renewables Prasanth Sakhamuri - Director, HHV Solar Vishal Pandya, Director, REConnect Energy Manu Karan- Head- Distributed Generation, SunEdison India Vish Iyer, DGM, West & South India-Solar Business, Sterling & Wilson

3 Dr. E Chandira Sekaran - Associate Professor, Dept. of Electrical & Electronics Engineering, Coimbatore Institute of Technology For more details, please visit

4 Recent Developments in Net-Metering in India & way forward Vishal Pandya 1, Vineeth Vijayraghavan 2, Rajesh Bhat 3 Member, IET India Solar Panel Keywords: Forum of Regulators (FOR), Central Electricity Agency (CEA), Distribution Companies (DISCOMs), Average power purchase cost (APPC), Renewable Purchase Obligation (RPO) Abstract: This paper presents the most recent developments in net-metering scheme for small scale solar projects across India. Tamil Nadu, Andhra Pradesh, Kerala, Punjab, Maharashtra, Uttarakhand and Delhi are select states in which there has been major traction hitherto as far as formulating relevant policies are concerned. Net-Metering has allowed consumers to directly contribute to enhancing the renewable energy capacity of the country by availing state and government subsidies in force. The paper also analyses the case when Renewable Energy Certificates (RECs) are availed by consumers owning roof-top solar systems and concludes that such a case will exasperate the current REC market performance which is already marred by prevailing poor RPO enforcements. India currently, has a GW of solar grid connected capacity as per recent data published by Ministry of New & Renewable Energy (MNRE) upto 31 st January With Gujarat a leader in solar capacity of India, also in advanced stage of formulating its own guidelines for net-metering, the market of small scale solar projects is expected to provide ample opportunities for businesses, government and public at large. 1. INTRODUCTION Globally, the small scale solar projects have been operating using two kinds of metering arrangements namely, Gross Metering and Net-Metering. Gross metering is when a solar roof-top generator injects (entire) power produced into the local distribution grid and enjoys a commercial settlement as per promotional tariff offerings in the region. Whereas, net-metering offers the generator a provision to consume the self-generated power and, at the same time, export the surplus energy generation (if any) by injecting in the distribution network. Net-Metering, unlike gross-metering offers a multitude of opportunities for consumers. It allows a consumer-generator to receive financial credit which in-turn helps in off-setting their electricity bills. As per Andhra Pradesh s analysis on cost economics, a domestic consumer saves upto INR 9000 (approx.) per year by installation of a mere 1 kw rooftop solar system. This manifests that net-metering mechanism assumes greater significance with regards to its application to roof-top solar systems. As per a KPMG report The Rising Sun the Rooftop market segment in India is expected to have a potential of 4,000 MW out of the cumulative solar PV market of 12,500 MW by In light of this, Net Metering for small scale/roof-top solar projects is one such concept which has garnered attention from multiple stake holders. It is essentially a novel way which entrusts responsibility on consumers and brings to them a reliable source of energy even when their solar power generators are not producing energy. In the net-metering arrangement, a bi-directional meter is used. When energy is being produced from roof-top solar power system of a customer, then the meter records the energy that is being fed in the distribution network only if there is some surplus remaining after self-consumption. On the other hand, when the customer uses the energy available from the utility s side, the meter records the consumption. A meter configuration (refer Fig.1) will give an idea about where exactly this bi-directional meter is placed. The customer is then billed against the net energy consumed or fed within a particular settlement period. India has most recently seen states of Tamil Nadu, Andhra Pradesh, Delhi, Kerala, Punjab, Maharashtra, and Uttarakhand issuing guidelines for net-metering of solar small scale projects. This paper aims to bring forth these developments in India.

5 Fig 1: Net-Metering Configuration (Source: TN s relevant order) 2. RECENT DEVELOPMENTS IN INDIA The need for fostering small scale renewable energy projects, off late has been on the rise. Both Centre and States have started putting concerted efforts to bring in relevant policy frameworks. In August 2013, the concept of net-metering in case of small scale/roof top solar projects was taken up for discussions by the Hon ble Forum of Regulators (FOR), followed by which a draft of model regulations was rolled out which will facilitate and expedite the process of putting such regulations in place at state levels. In addition to this development, two southern states: Tamil Nadu (TN) and Andhra Pradesh (A.P.)along with Uttarakhand (UTK) and Punjab (PN)have also come up with relevant orders on net-metering. Both TN and AP have introduced these orders to be effective in conjunction with their state solar policies, respectively. Whereas, AP has gone to the extent of finalizing these orders in March 2013 itself, TN has rolled out draft regulations; comments on which were invited by 30 th September In line with this, the Central Electricity Authority (CEA) also took cognizance of the lack of clarity related to metering arrangements, which are at present hindering the deployment of wide-spread netmetering. CEA has proposed to amend its Installation & Operation of meters Regulations In this draft document, a new term of Renewable Energy Meter has been defined. An explanatory note given by CEA on this can be read as Small renewable plants including roof top Solar plants would be connected to LT level and would require bidirectional meter but no bi-directional meter at LT level has been defined in existing CEA metering Regulations. Accordingly, a new type of energy meter called Renewable Energy Meter is proposed to be introduced in the Regulations for metering & accounting of renewable energy. All stakeholders can be seen employing a proactive approach towards the development of net metering scheme. The scheme is a win-win situation for both distribution companies) and the consumers as highlighted in table 1 (on next page). As per recent orders of Uttarakhand, Tamil Nadu and Andhra Pradesh, the payment towards commercial settlement of excess power fed in the grid will be as per table 2.

6 S No Consumers Savings on average annual electricity bills to the tune of applicable retail tariff per unit of generation. Can generate additional revenue by injecting excess power to the grid (which will be over and above cost of savings). **No charges to be paid towards wheeling, banking, cross subsidy etc. *Benefits for : DISCOMs Can use power procured from these plants towards offsetting solar RPO. Better savings for DISCOMs, on expenditure towards procuring power, as compared to signing PPAs at preferential tariffs. - Table 1: A win-win for Consumers & DISCOMs * Only those eligible consumers have been considered which do not come under the definition of Obligated Consumers in relevant RPO regulations. ** For consumers availing Open-Access for sale of power generated. In recent months several other states have taken steps to develop policies for small scale solar projects. This has involved policies of low tension (LT) connectivity and net-metering. Recent developments on this front have been from states of Maharashtra, Tamil Nadu and Delhi. TN, which has an ambitious solar policy, has now come up with order on LT connectivity & net-metering. In Maharashtra, the state regulator has taken the issues highlighted by a single petitioner to the level of discussion involving greater stakeholder participation. Delhi has also rolled out draft proposal on net-metering and connectivity for rooftop solar PV projects. States Uttarakhand Tamil Nadu Andhra Pradesh Kerala (Draft) Cost (per unit) to be paid by DISCOMs for excess generation Rs per unit. 75% of solar tariff approved by TNERC APPC rate set by APERC from time to time APPC rate of 1.99 per unit. Table 2: Payment to consumers for excess generation as per current drafts/orders 3. HIGHLIGHTS OF TAMIL NADU S ORDER In 2012 Tamil Nadu had framed its state solar policy with an envisaged target of 3000 MW of solar capacity addition by Subject to the, Tamil Nadu Electricity Regulatory Commission (TNERC) has issued an order (dated - 13 Nov 2013) on netmetering, LT connectivity and REC. The order has been drafted based on TANGEDCO s submission on relevant procedures, FOR s model regulations and comments by stakeholders. In this order, clarity on important issues such as eligibility, applicability of RECs, metering, grid penetration has been addressed. The main points and a comparative study (w.r.t Delhi s relevant draft order in Table 1) can be read subsequently.

7 Almost all industrial, commercial and domestic consumers are allowed to avail net-metering. Both existing and new solar rooftop systems are eligible for net metering. A new meter-card has been defined to be introduced by DISCOMs, mainly to record generation readings of both assessor (Distribution Utility) and consumer. This card will also have details of generators account number for disbursement of GBI by Tamil Nadu Energy Development Agency (TEDA). This step highlights TN s holistic consideration of all facets, in formulating these regulations, specific to Local Indian conditions. 4. UPDATES FROM MAHARASHTRA In an order dated 25th Nov 2013, Maharashtra Electricity Regulatory Commission (MERC) has also initiated proceedings for fostering small scale solar capacity addition in the state. The order came in reply to a petition by an individual, which has said the following: In view of the complexities involved in the matter and the far-reaching implications that it would have on the distribution companies and LT level consumers, the Commission has decided to study the issues involved in the matter in detail. Thus, the Commission directs formation of a Working Committee under Director (EE), MERC along with the representatives from all im-pleaded parties (MSEDCL, TPC-D, RInfra-D, BEST, MSETCL, STU & MSLDC), including the Petitioner and Prayas Energy Group to study issues involved in the matter. The Working Committee is further directed to prepare a draft Terms of Reference (ToR) and submit it to the Commission for approval. The Committee shall submit its report to the Commission within period of six months from the date of issuance of this Order, which shall form the basis for formulation of appropriate regulatory framework for exploring grid connectivity of solar generators below 1 MW. Maharashtra s solar policy is also expected in the near future. 5. HIGHLIGHTS OF DELHI S ORDER Delhi had drafted a solar rooftop policy in 2011, but the same was not implemented by Delhi Government owing to speculations that roof-top solar system owners would have accrued wind-fall gains due to higher price offering by DISCOMs to rooftop system owners. The important features of Delhi s draft policy on roof-top solar are 1) it allowed two types of ownership of the roof-top project self-ownership and third-party ownership; 2)power consumed by entities that are not categorized as obligated entities under the RPO regulations can be used by local Discom to offset its own solar RPO this is likely to encourage the local Discom to facilitate setting up roof-top projects, the policy noted. Consequently the power generated and fed into the grid under net-metering arrangement will not be eligible for claiming RECs. 3) the policy noted that power generated under thirdparty ownership model is likely to attract open access rules and charges (like wheeling charge, transmission charge, cross-subsidy). The policy specifically exempted roof-top solar projects from such charges to avoid complexities. A consumer was entitled for a capacity upto the capacity of service line connection i.e. the sanctioned load of the consumer. Along with this individual capacity restriction, based on the area of consumption the cumulative capacity within an area was restricted to 15 % of the capacity of distribution transformer in the distribution area. Metering and energy accounting provisions were exactly in line with that of TN s order. If a consumer fell under the ambit of TOD (Time of Day) tariff, then consumption in a particular time block will be off-set first by solar generation in the same timeblock. Any excess generation will be adjusted at the lowest applicable tariff across the slots to safeguard the interests of the utility. Similarly, applicability of open access charges such as wheeling/banking/cross subsidy charges was exempted to promote widespread deployment of net-metering systems.

8 The future landscape for small scale solar projects offers ample opportunities for consumers to participate in India s solar energy growth story. Not only this, concept of net-metering offers better demand-side management for utilities. The discoms will then be able to better cater the power needs of industries. Particulars Tamil Nadu Andhra Pradesh Punjab Uttarakhand Kerala Eligibity for consumers Cap on Banking of Surplus power Restriction on Grid Penetration Owners eligible for RECs Maximum System Size Date of Order Status of Order Net- Metering Connection Agreement HT Tariff II-A, HT Tariff III, LT Tariff I- A, LT Tariff I-C, LT Tariff II-A, LT Tariff II-B, LT Tariff V as specified in commission's retail tariff order in force. only upto 90 % of electrictity consumption at the end of settlement period. 30% of the local transformer capacity Consumers having 3-phase supply preferred. only upto 90 % of electrictity consumption at the end of settlement period. 50% of the closest distribution transformer rated capacity All consumers only upto 90 % of electrictity consumption at the end of settlement period. Silent All consumers Silent Silent All consumers Not eligible Silent Silent Silent Silent Silent 3 kw for single phase consumers 80 % of the sanctioned load of the consumer on AC side 100 kw project with battery backup, 500 kw capacity without backup 13th November th March 2013 August 2013 August Target Capacity of solar RPO 50% of capacity of distribution transformer 3 MW Final Final Draft Final Draft Available Available Not Available Not Available Table 3: Summary of guidelines on net-metering by select states. 6. NET METERING & REC MECHANISM Not Available On the issue of eligibility to participate under renewable energy certificate mechanism, the draft model regulation of FOR (continued on Page #3) reads as The issuance of renewable energy certificate shall be as per the eligibility criteria specified under Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010 and subsequent amendments thereof. Whereas Tamil Nadu has asserted strongly in its draft order that the injection of excess power (if any) will not qualify for RECs, to abrogate a case of double

9 accounting as the distribution company will be claiming the same towards RPO compliance. Uttarkhand, AP, and Punjab on the contrary are silent on the issue. Currently, RPO for domestic and commercial consumers are being met by DISCOMs or in other words, DISCOMs meet RPO on these consumers behalf. Therefore, in a case where consumers themselves start contributing to REC inventory by claiming RECs for the excess power injected in the distribution network, the supply of RECs is eventually going to increase as more consumers eye RECs as a. 7. CONCLUSION lucrative option. In the present condition of the market, this case definitely is going to exacerbate the market dynamics, which is already suffering from poor demand. Unless, market prices rise after strict RPO compliance measures, the decision to allow netmetering consumers to claim RECs will fall out of place. Likewise, if industrial consumers (coming under the definition of Obligated Entity ) also claim RECs with net-metering, even then demand side of RECs will be significantly impacted. We assume that it will be in the best interest of the market that currently, excess injection be disqualified for RECs as is the case in Tamil Nadu. With more proactive steps expected by states like Delhi and West Bengal (assessing the results of a pilot project on net metering), the wide-spread application of this scheme is imminent, which has proven records for fostering renewable growth, in countries like USA, Canada etc. This new concept is innovative as it inspires consumers and gives an opportunity to contribute in the green growth story of the country. Net-metering will add significant value to the solar generation capacity of the nation. The scheme is, at the same time, innovative as it vests more responsibility on consumers. For the consumers it provides benefits in term of savings, and a channel for additional revenue from excess power generated and RECs (if allowed). With more states realizing the benefits of net-metering and rolling out appropriate state specific regulations, the landscape of net-metering across the nation is going to gain clarity. Going forward, it will surely support and encourage more investor participation. 8. ACKNOWLEDGEMENTS The authors would like to acknowledge Mr. Nalin Deshpande, REConnect Energy Solutions (P) Ltd. for his contributions during this study. The authors are also grateful for the support extended by various state power utilities in the form reports/documents available in public domains, which were referred throughout. 9. REFRENCES [1] New & Renewable Energy Development Corporation of Andhra Pradesh Ltd. (NREDCAP) Indicative cost economics analysis, [2] KPMG Report The Rising Sun, [3] TNERC Order on LT connectivity & Net Metering, in regard to Tamil Nadu Solar Energy Policy [4] Forum of Regulator s draft model regulations for rooftop solar grid interactive systems based on net-metering, [5] Central Electricity Authority (Installation & Operation of meters) Regulations [6] AP s guidelines for implementation of net-metering for roof-top solar power system, [7] Schemes for grid interacted rooftop and small SPV power plants in Uttarakhand. [8] Draft - Kerala State Electricity Regulatory Commission (Grid Interactive Distributed Solar Energy Systems) Regulations,2014. [9] DERC proposal on net-metering & connectivity in respect of rooftop solar PV projects. [10] MERC s order in case no. 86 of 2013, pdf.

10 About the authors VINEETH VIJAYARAGHAVAN Vineeth Vijayaraghavan is the founding editor of Panchabuta, one of India's leading Renewable Energy and Cleantech Industry focused information and intelligence Provider. As the editor, Vineeth covers the sector with the intent to bring to the local and global audience, news, insightful analysis and commentary in this space. As an independent online resource, Panchabuta also focuses and contributes to policy making in the Cleantech and renewable energy space in India by providing valuable inputs to various organisations and stakeholders in the ecosystem. Vineeth is also the Director (Research and Outreach) at Solarillion Foundation, a non-profit research and outreach foundation working on research, outreach and implementation of sustainable energy and engineering solutions for emerging markets. Vineeth, has represented national and international forums in the capacity of clean energy industry expert and has been quoted in the national and international media. He was nominated from India for the BRIC Clean Energy and Exchange program in the US in October A thought leader in the space, he has been speaking and moderating industry and stakeholder panel discussions on subjects ranging from renewable energy financing, projects and its viability in the Indian context and often assisting stake holders with critical inputs in shaping policies relating to renewable energy, specifically solar, wind and bio energy in India. He is also actively involved in sustainable initiatives, energy security and next generation energy efficiency and management solutions including smart grid, rural micro grid and distributed generation solutions. Prior to founding Panchabuta, he was a consultant to project developers in the field of thermal energy for projects in South Tami l Nadu. He has also been associated with captive wind farm projects and energy plantation initiatives. Vineeth holds a Master of Science degree in Electrical Engineering from the Ohio State University, Columbus, Ohio and a bachelor s degree in Engineering in Electronics and Communications from the University of Madras.

11 VISHAL PANDYA Vishal is a founding member and the Director of REConnect Energy India s largest Renewable Energy Certificate (REC) trading company. Within a short span of 3 years, he led REConnect to become India s largest REC trading company with renewable energy portfolio of over 2500 MW capacity under management spanning across 16 states in India. Prior to REConnect, he worked with Indian Energy Exchange (IEX) India s first electricity trading platform, where he spearheaded business development activity for Southern India. He has over 6 years of experience in power market restructuring, electricity trading, wind power forecasting & scheduling & REC markets. He is an electrical engineer with specialisation in Power Systems from IIT Bombay. He has also published various research papers and articles on restructured power systems, renewable energy markets etc., and has been closely working with institutions like CII and various industrial associations in areas like energy sustainability and market reforms. RAJESHWARA BHAT Rajesh Bhat has been promoting clean energy, Renewable Energy and solar power for last 20 year and currently leads juwi India team as Managing Director. Rajesh is responsible for operations for India and SAARC countries. He has worked with EPC, Development of Large Grid connect PV project. Under his guidance, teams have executed many Green and clean energy projects to the tune of 83 Mwp in India, Malaysia for the last three years. These projects have resulted in substantial saving of Carbon dioxide ( tonnes per year). Rajesh has 30 years of national and international experience in with various assignments including Photo Voltaic systems, Integrated solutions, Marketing, sales, Project management in diverse product range including, Renewable energy system, UPS systems,, Power systems, Enterprise solution / Telecom Accessories. Some of his earlier roles include heading the operations of SunTechnics / Conergy India as CEO & Director responsible for the On grid & Off Grid projects, all India projects including sites for Remote Telecom power, Rural electrification, Rural Lighting etc.

12 He has also headed Industrial Sales at Tata BP Solar, worked as an Electrical Engineer with Supervisory management course from Cornell University, USA and consulted to UNIDO for projects in Africa. For his invaluable contributions to the Indian economy, he has been awarded the Udyog Rattan award by Institute of economic studies, Delhi. juwi India was also conferred excellent company award under his leadership.