The concept of net-metering

Net-metering is a billing arrangement with your utility that determines how you will get credit for any excess renewable electricity delivered by you to the grid. Simply put, you get paid back by your electricity provider for the excess power your solar power system generates. This power is measured using a net-meter, which is a two-way (bi-directional) meter that measures what you draw from the grid and what you feed back. The net-metering process is automatic.

This is a brilliant concept, simply because it is a great way to reduce bills in areas that have high power tariffs such as metropolitan cities. There are a total of 20 states and six union territories with defined net-metering guidelines. Unfortunately solar adoption through net-metering has not picked up, even in 10 states and union-territories where it has been implemented. Both discoms and end-consumers are reluctant to adopt net-metering.

So India does look progressive in achieving its 100GW target for solar! If we look at the northern states of India and compare their tariffs in the commercial and residential sectors, we can clearly see that levelised cost of electricity (LCOE) from solar panels is much less than the tariffs that are being paid by top-slab customers. It is also evident that it makes sense for commercial customers, and residential is catching up, too.

Net-metering can potentially drive widespread implementation of distributed generation by incentivising end-users to adopt localised power generation through technologies such as solar. In theory, net-metering is the proverbial silver bullet designed to help India achieve greater energy security through generation at point of consumption (distributed generation). In addition to helping consumers reduce their energy bills, it is also supposed to help stabilise the national, regional and state grids, provide financial relief to the distribution companies (discoms) through consumer default risk mitigation and reduction of AT&C losses, and help cut down the per-capita energy footprint.

In a nutshell, net-metering is crucial for India if it wants to achieve energy security by 2022.

Authored by:

Shakti Kumar Dubey,
Whole-Time Director,
Icon Solar-En Power Technologies Pvt Ltd