Policy Dilemmas plaguing Roof-top Solar in India
October 13 2020

Policy Dilemmas plaguing Roof-top Solar in India

With the proposed cap of power generated via net metering going down from 1000 to a mere 5 KW - our industry will be in an even more grim state than before. 

Solar has been one of India's sunshine sectors as it has contributed to boosting the Indian economy significantly over the last decade. The financial benefits consumers receive from Solar are extensive. We even calculated the notional financial loss a consumer suffers due to delays in setting up these projects and finding a significant impact. Read about it here.

A one-year delay in project execution adds Rs 0.30 ps to the cost of power procured from solar. However, considering the Draft electricity rights of consumers of 2020, it's essential to address the Elephant in the room, Government Policy. 

How Expected Policy Changes can affect Solar:   

The Central Government has supported the renewable sector over the last decade as it aimed to curb carbon emissions and fulfil its promises made at the Paris Summit. However, as India gets closer to hitting its solar capacity targets, there is less government incentive to support building new capacities.  

Here's what happened with the Wind Sector previously, which leads me to believe the same will happen with the Solar Sector.  

Initially, the Government proposed multiple incentives to encourage projects for new Wind Turbine installations making them an attractive new venture to explore.  

Some of the schemes included -  

  •  Generation Based Incentives (GBI) 
  •  Accelerated Depreciation (AD) benefits of 80% in the first year
  • 80IA benefits
  • Feed-in tariff regime (FIT)  

India quickly built a capacity of 35000 MW in less than 20 years. Once Wind Energy reached a capacity of 35GW, these incentives were quickly withdrawn, which is why we have barely seen new wind installations in the last few years. 

Current Wind Project owners are pleased with their investments as they did so at the right time. Since we do not think the Government will re-introduce any more incentives, those who were interested but failed to take action are still sitting on the side-lines. This is why, in my opinion, we will witness this trend occur with Solar as well.  

Proposed changes in net-metering: 

The draft electricity consumer rights of 2020 propose that consumers can avail Net-metering for loads up to 5KW. For loads above 5 KW, can opt for Gross-metering.  

Net-metering is a vital policy wherein consumer can export their excess generation from Solar with their DISCOM. The exported units can be set-off against the consumption of units from the DISCOM.

Workings of a Solar Panel; Image courtesy: Solar Craft

For instance, Karnataka and Uttar Pradesh do not allow for the net-metering of new roof-top solar projects. This one change has proved to make solar projects unviable for those consumers who have a weekly holiday at their factory. In December 2019, when Karantaka announced the removal of net-metering the total installed roof-top capacity was 234MW in the state and as of August 2020 the total roof-top capacity is only 244MW. A clear indication of what lies ahead for the country if the Karnataka model is followed.

Maharashtra announced that it would levy Grid Support Charges on roof-top installations that use the net-metering systems after a 2,000 MW capacity is achieved in the state. This policy is practical as it allows for the Rooftop Solar segment to grow to a certain size. After achieving that capacity, it has right by the DISCOM’s and the consumer by levying Grid Support Charges on the exported units.  

Such a policy allows the excess Power Generated by Roof-Top Solar Plants to be consumed and helps DISCOM’s make a fee off of these Plants for using their distribution network and infrastructure.  

 In Conclusion:  

As Solar is no longer in its early days, the Government's proposed new caps on net-metering clearly indicate that the trend of policies against solar has already begun.  

 If the Capacity is cut from 1,000 to 5 KW then roof-top system is only capable of powering a two-ton Air-Conditioner for ten hours daily which is a waste of resources and investment. It’s a blow to advocates who are constantly fighting against climate change.  

The standard was that as we reach closer to targeted capacities, the Government would withdraw incentives slowly. However, this is not the case anymore.  

In my opinion, the Proposed Draft Electricity Consumer Rights of 2020 is a rude joke on electricity consumers' rights. We hope this article reaches many consumers, and they start becoming an active participant for their electricity rights. In a democracy like India, our opinions and voice matters, and if we collectively ask for change, the Government can overturn their verdict. 

I am going to end this piece with a quote that comes to mind. If you want to get solar installations done, then do so now. "Life gives us choices. You either grab with both hands and just go for it, or you sit on the side-lines" - Unknown. 

If you are a consumer and have questions about Rooftop Solar Installations, kindly drop us an email at [email protected], we would be glad to be of assistance!