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Impact of recent net-metering changes on Indian solar industry

Background

  • In 2015, the NDA administration announced the ambitious target of 175 GW of renewable energy by the year 2022, and this included 100 GW of solar. Out of the 100 GW of solar power, 40 GW is from the rooftop solar sector.
  • As of March 2020, only 4.6 GW of rooftop solar was installed, where 35.4 GW of solar needs to be installed by 2022 to achieve the goal set by the NDA administration.

  • The NDA govt recently announced effective 1st April the cap for net metering which is currently set at 1 MW will be reduced to 10 KW.

Net-Metering– when a person has installed rooftop solar at his/her residence, office or industry, etc when more no of units of electricity has been generated by roof-top solar than their consumption or which is required for there daily purpose, where excess electricity can be supplied to the electricity board.where they give you a monthly bill based on the units consumed and units supplied. When your supply is more than consumption they pay you as a credit in bills.

Gross-Metering– when you get roof-top solar installed at your residence, office or industry and any other place, etc. you will have to supply the electricity generated from rooftop solar directly to the electricity board without consuming it and the electricity board gives special tariffs to those who have installed the roof-top solar, where the electricity board supply electricity for their suppliers. So gross-metering is not much beneficial to roof-top solar installers.

What are the changes?

  1. Gross-metering mandated for projects over 10KW.
  2. Most commercial & industrial buildings require more than 10KW solar power for their daily consumption.
  3. The Rs.3 feed-in tariff that BESCOM gives will result in a very low ROI, therefore, making rooftop solar much less profitable.
  4. Because rooftop solar is a big investment and there is less return on investment, people will be less enthusiastic about installing solar PV modules.
  5. there is a 25% of ROI on investment with net-metering compared to 6-8% of ROI on gross-metering.
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