Unleashing A Solar Rooftop Revolution in India : Article by Mr Reji Kumar Pillai, President, ISGF

India is pursuing an ambitious program for development of 175,000 MW of renewable energy by 2022. This comprises of 40,000 MW from rooftop solar panels installed on 20 million buildings across the country; and year-wise targets were allotted to all the states. While the about 50% of the overall target of 175,000 MW is achieved by December 2019, the performance of the rooftop segment is less than 10%. All the states and union territories in India had issued net-metering policies between 2013 and 2016. Theoretically every electricity consumer can be a “prosumer” – producer and consumer of electricity by installing solar panels at their premises. Initially, electricity distribution companies (DISCOMs) were not enthusiastic about promoting solar rooftops in their service areas owing to the fear of revenue losses. That is fast changing. Now, with the prices of the kilo-watt (kW) scale solar photo-voltaic (PV) systems in the range of INR 50,000/kW (or US$ 700/kW) including installation charges, and many DISCOMs actively promoting solar rooftops, the time has come to unleash a solar rooftop revolution in the country.

Cost of Solar PV Systems

Cost of installing 1kW and 5 kW systems are presented in the Table-1 below:

S. No

Item/Component

Cost (in INR)

Remarks

Cost/Watt

1 kW System

5 kW System

1

Solar PV Panels

₹20

₹20,000

₹1,00,000

 

2

Inverter

₹12

₹12,000

₹50,000

1kW system with a single-phase inverter and the 5kW system with a 3-phase inverter; cost of inverter reduces as size increases

3

Support Structures

₹4

₹4,000

₹20,000

 

4

Balance of System

₹6

₹6,000

₹30,000

 

5

Installation and Commissioning Charges

₹10

₹10,000

₹40,000

For bigger systems installation cost reduces 

 

Total cost

₹52

₹52,000

₹2,40,000

 

In most part of India 1kW panel could generate average 1200-1500 kWh or more of electricity in a year. Commercial customers in the country pay average INR 9 per kWh; and residential customers who consume 500 kWh or more per month pay INR 7 per kWh for the power from the grid, which are likely to increase every year. At the above price levels, the payback period for rooftop solar is about 4-5 years for commercial customers and 6-7 years for residential customers while the life of a PV system is 20-25 years with minimum annual maintenance and performance deterioration.

Net Metering Policies in Various States

Over the years most state electricity regulatory commissions (SERC) have been fine-tuning the net metering policies periodically. Salient features of the latest net metering policies in various states are presented in Table-2 and Table-3 at the Appendix.

Fear of DISCOMs

The DISCOMs have been apprehensive of their revenue loss from rooftop solar as those installing such systems are high volume customers who pay INR 7 or more per kWh whereas the average power purchase cost of the DISCOM is below INR 5/kWh. The profit they make from these categories of customers is what DISCOMs leverage to subsidize the poor customers to whom they supply electricity at INR 2-3/kWh. If large number of high volume customers start producing and consuming electricity from rooftop solar systems, DISCOMs tend to lose revenue; and for buying the electricity from them, DISCOMs have to pay higher than the average power purchase cost. Hence DISCOMs have been viewing rooftop solar as a double-edged sword and this has been the main hurdle in scaling up of rooftop solar. It is time to have a relook at the new market dynamics to see how rooftop solar can help DISCOMs.       

Advantages to DISCOMs from Solar Rooftop Systems

In most urban areas the feeders are mixed use with commercial and residential customers and during the day there is reasonable load on the feeder. So, the electricity generated during the day by rooftop systems gets consumed in the same locality in the low voltage network itself. On many such feeders the maximum load is during the afternoon hours when solar generation is maximum. This is owing to the air-conditioning load in the afternoon hours. Evening time although shops are still open, offices and other business establishments closes. Residential air-conditioning load increases post 9-10pm and by then shops are closed. On such feeders with mixed category of loads, the peak demand is usually during the day while solar rooftop systems generate power. As the load increases in each locality, DISCOMs need to upgrade the distribution system – higher capacity distribution transformers and cables/wires. This is an exercise that DISCOMs do periodically. In certain cases, they need to build bigger substation and the transmission companies have to build high voltage lines to supply to the new substation. In urban India, space for locating new transformers and substations is not easily available. If the peak load is partially met by local generation from solar rooftops, the distribution system upgrade can be delayed by few years.

A recent study by Council on Energy, Environment and Water (CEEW) and BSES Rajadhani Power Ltd (BRPL) in Delhi have calculated a net benefit of INR 0.22 per kWh generated from rooftop solar. They considered following benefits:

  1. Avoided power purchase cost which is the fixed cost paid to generators for the power contracted through long term power purchase agreements
  2. Avoided transmission charges which are fixed transmission charges paid to transmission companies based on the quantity of power contracted
  3. Avoided distribution capacity cost which is capex avoided in enhancing the distribution network capacity to meet the additional load. The rooftop solar power is generated and consumed in the low voltage network itself without any additional enhancements in the medium voltage or low voltage networks to bring that much additional power from elsewhere
  4. Avoided cost of renewable energy certificates. Presently, the renewable energy purchase obligation (RPO) to DISCOMs set by the government is 17.5% of which 7.25% must be from solar energy. Generation from grid-connected rooftop solar systems within the DISCOM service area contributes towards the fulfilment of their RPO targets. DISCOMs are buying renewable energy certificates (REC) at market prices to meet their RPO obligations which is about INR 0.48 per kWh. 
  5. Avoided working capital cost for the 4 items listed above 

On the cost side, the study considered revenue loss, program administration cost and added distribution services cost to the DISCOMs. This study took actual data from ten distribution transformers (DT) connected to residential, commercial, industrial and institutional customers with rooftop solar capacity varying from 10 kW to 220 kW. BRPL is actively promoting rooftop solar in their service and have installed 59 MW so far. This study should be an eye opener for other DISCOMs discouraging rooftop solar.

Peer to Peer Trading of Solar Rooftop Power

In the revised solar policies issued by Uttar Pradesh Electricity Regulatory Commission (UPERC) in December 2018, the Commission advised DISCOMs in Uttar Pradesh to promote P2P trading of solar rooftop through smart contracts on blockchain technology. This P2P trading system will protect the DISCOMs from revenue loss and also open up new revenue streams from wheeling charges (fee for using the DISCOM’s distribution network for transporting the electricity from the rooftop solar to the buyer) and fee for billing and settlement.

Steps to Scale Up of Solar Rooftop Systems

In our view, the primary obstacle in offtake of rooftop systems is the lack of awareness amongst the customers. They do not know what systems to buy, how to get it installed and how to get the net metering connections. The resistance from DISCOMs in giving connections is also often alleged for the slow progress of the solar rooftops. Lack of tested and certified installers is another big issue. Our recommendations are:

  1. Commoditized solar rooftop systems: Like other household appliances such as air-conditioners and washing machines, we do not see advertisement of solar rooftop systems in local papers and social media. We guess the market is ripe for entrepreneurs to launch commoditized full systems that can be bought from local appliances stores. Ministry of New and Renewable Energy (MNRE) and state renewable energy development agencies should work towards this goal. DISCOMs could empanel tested systems that may be made available in local appliance stores.
  2. Testing and Certifications for Installers: DISCOMs and other designated agencies may conduct training programs and certify skilled installers. This could generate millions of new jobs across the country. With smart metering rollouts, thousands of meter readers who will become redundant could be trained and redeployed for solar rooftop installation by DISCOMs themselves for standard fees competitive with market rates.
  3. Government subsidies to DISCOMs: As indicated in the beginning, solar rooftop systems are already economically attractive to customers and they do not require any grant or subsidies. Government’s support should go to DISCOMs who need to upgrade the distribution systems to accommodate increasing share of distributed renewable resources that are intermittent. ISGF modelling studies in 2019 estimated about 10 GWh of battery energy storage systems to integrate the targeted 40 GW solar power with medium voltage and low voltage grid.
  4. Promote P2P Trading: Frame appropriate regulations to promote P2P trading of rooftop solar energy amongst customers across the DISCOM service area. Such energy produced and traded may be counted in the RPO target of the DISCOMs. RPO regulations are silent on this presently which may be amended.
  5. In 2016, Government of Haryana issued an order mandating all new buildings in the state on a plot size of 500 Sq Yard or above to have solar rooftop of minimum 1 kW or 5% of the connected load. However, this order has not been strictly implemented. We propose to make this mandatory all over the country and the cost of rooftop solar system may be included in the total cost of the house for home loans by financial institutions.
  6. Both rooftop solar and electric vehicles (EV) are typically connected to the low voltage grid. The AC charging points for EVs in new buildings may be equipped with vehicle–to–grid (V2G) functionalities. This would help store the solar generation in the EV batteries when local consumption is less than solar generation avoiding curtailment. The EV batteries could also help smoothen the intermittency of solar generation from the rooftop systems thereby improving the power quality in the low voltage. Various incentives schemes could be framed for the EV owners who participate in the V2G program. Many of them could buy electricity from the grid when price is low and sell back to the grid when price on the grid price for electricity is higher.

Download to read complete Article.


Attachment : Please click Here to View the attachment

Smart Grid Bulletin August 2020


View all SMART GRID Bulletins click here