Why is Virtual Net Metering the next big thing in the Indian Rooftop Solar Market?

You’ve heard about Net Metering. What is Virtual Net Metering? Find out here.

Net metering is not a new concept for the developed countries, is implemented since some time now. But for the Indian market although it was introduced in 2013, it has taken momentum recently. What exactly does net metering mean? As per the Solar Energy Industries Association (SEIA) net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. It is also a billing and commercial settlement. For example, if a residential consumer has a PV system on their home’s rooftop, it may generate more electricity than the home uses during daylight hours therefore this energy is pushed to the grid. Given below is pictorial presentation of a net metering works.

Net Metering

Figure 1: Working of net metering

How did net metering come into existence? For years since the beginning of solar energy systems started being deployed, there were economically lesser viable options to store the excess energy generated by the solar system. Traditional gross meters were not compatible to serve the purpose as they were one-directional. A consumer having a gross meter along with a solar PV system would have to manually get the difference calculated for the energy generated. To make the process easy net metering (Bi-directional meters) were introduced. These meters run in both directions (hence the name) as per the need, making DISCOMs as well as the consumer’s work easy.

While net metering is a perfect solution to home-owners, it cannot help serve those consumers who are interested in solar energy but do not own any rooftops. Hence, for those consumers who either do not have roofs, or those who live in apartments without roof access, houses with shaded rooftop etc. can also install a solar rooftop system and get access to solar net metering facilities provided to consumers who do not have a suitable roof for installing a solar system. To encourage solar plants on rooftops of buildings that cannot consume all of the energy generated locally, DISCOMS shall facilitate.

Virtual Net Metering, whereby surplus energy exported to the grid from a solar plant at the location of the solar plant can be adjusted in any other (one or more) electricity service connection(s) of the consumer within the same area; provided these connections are within the same DISCOM territory. This mechanism is a win-win situation for the consumers overall, but can pose a problem to DISCOMs initially, in terms of managing the process.

Virtual Net Metering

Figure 2: Working of virtual net metering

Another similar concept is Group Net Metering. In group net-metering consumers can be part-owners of a collectively owned solar system that is located centrally. All energy produced by a collectively owned solar system will be fed into the grid through an energy meter and the exported energy will be proportionally credited in the electricity bill of each participating consumer on the basis of beneficial ownership.

What are the advantages and disadvantages of Group and Virtual net-metering?

Advantages:

Group net-metering Virtual net-metering
Reduces the up-front capital cost to the consumers as all the consumers only pay for their requirement and so the huge cost is not levied on a single consumer it reduces the upfront capital cost on the consumers since it lessens the burden on individual consumers since it is borne by the group It overcomes the property ownership problem by allowing the customer to receive credit for generation at a single facility.
Larger systems are cheaper, which means group of customers can take advantage of economies of scale Issues such as landlords not authorizing installation of a distributed generation facility on their property, or such as uncertainty over how long the tenant will remain at that location.

 

Disadvantages:

Group net-metering Virtual net-metering
There can be co-ordination issues, as to who will be responsible for the co-ordination between the consumers and DISCOMs. Data collection and billing management can be a tiresome process for the DISCOMs for the first few years
If the DISCOMs decide to payback in cash to the consumers, distribution of the cash to each consumers can lead to coordination issues Tedious application processes may make the DISCOMs not so keen on giving a nod to virtual net metering
In case of a single consumer decides to vacate the house, other consumers will have to pay more due to this.

Hence the regulations need to be very stringent

 

 

Case study: Delhi’s initiative for introducing Virtual net metering

Delhi is the first state in India to introduce virtual net metering, in their Draft Delhi Solar Energy Policy, 2015. The policy talks about a non-capital subsidy model for implementation of the targets specified in the policy.

Instead of Feed in Tariff (FiT) they have introduced Generation based Incentive (GBI) of INR 2.00 per unit for domestic households coming forward for installation of solar panels on first come first served basis that reward actual production in the domestic segment. It will be applicable only to the solar PV plants which generate more than 1100 units per kW per annum and will ensure the deployment of quality solar panels.

Similarly there are various other incentives and subsidies available in the Delhi policy. This is a great initiative taken by the Delhi government, as in the coming time there will be a major shift in the living styles; more apartments will be constructed due to land constraints. In such situations virtual net metering can be a boon for all the stakeholders.

For your further read: A Guide to Community Solar, Utility, Private and Non-profit Project Development

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