Among all renewable sources of energy, solar has a huge potential for power generation in Maharashtra. There are 250-300 days of clear sun with available average radiation of 4 to 6 kWh/sq. metre over a day. However, in a significant development that took place earlier this year, the Maharashtra State Electricity Distribution Company Limited (MSEDCL) proposed considerable grid support charges (GSC) for net metering rooftop solar systems with a capacity of over 10 kW in the state.
In their petition to the Maharashtra Electricity Regulatory Commission (MERC), they said that though net metering helps in meeting renewable purchase obligations (RPO) targets, the adverse impact of net metering is much more on other consumers of MSEDCL due to the under-recovery of its infrastructure costs for such systems.
They added that rooftop solar systems reduce the utilization of MSEDCL’s distribution network and disrupt power planning and cause the stranded tied-up capacity of generation. Consequently, net metering consumers ended up paying much lower charges for the network and generation capacity that was earlier set up for all consumers.
The state DISCOM further argues that this burden of unrecovered expenses gets passed on to other consumers of MSEDCL. A part of the fixed cost is being recovered through wheeling charges on a per-unit basis. Solar energy is generated during the daytime, and after self-consumption by the consumer, the balance of the electricity is fed into the grid. Due to its combined impact, the utility has to back down thermal generation but is obligated to pay the same fixed cost to generators. When there is no solar generation (evening, seasonal change, a technical problem in the system, etc.), the consumer draws full power as required from the grid and the utility has to keep the network and generators ready to feed this demand. The consumer is using the grid as a storage system for his solar rooftop arrangement under net metering and at the same time loading the balance of the costs on other consumers of the distribution utility such as generators fixed cost and infrastructure cost recovery. So, the burden of such unrecovered expenses from net metering systems is passed on to the other consumers of MSEDCL.
The state’s net metering regulations 2019 say that consumers having a sanctioned load up to 10 kW will be exempted from the payment of grid support charges for net metering systems. This is why MSEDCL says that this loss from the exemption should be recovered from the consumers having a sanctioned load above 10 kW to avoid the burden on the consumers who do not have net metering.
Their charges range from INR 4.46 (~$0.06)/kWh to INR 8.66 (~ $0.12)/kWh for domestic consumers and between INR 5.06 (~ $0.07)/kWh and INR 8.76 (~ $0.12)/kWh for commercial consumers. They have also proposed additional fixed/demand charges for rooftop solar consumers who do not opt for net metering or net billing.
Solar installation companies in the state said that if this draft regulation gets approved and implemented, it will result in the death of the rooftop solar industry in the state.
“Developers should challenge the constitutionality of provision which permits MSEDCL to levy grid support charges before High Court. Developers will have to differentiate their case from captive power plants for which APEX Court and Appellate Tribunal have validated grid support charges/parallel operation charges. MERC should not be permitted to do indirectly what it cannot do directly. The bare reading of charges proposed by MSEDCL reflects that it is creating an unreasonable restriction on solar rooftop consumers from installing solar rooftop.”Aditya K Singh
An advocate at HSA Advocates
MERC has since made a series of announcements for rooftop solar markets in the state. In April, it has accepted the demand from MSEDCL to levy grid usage charges on all new installations over 10 kW capacity but only once total installed capacity in the state exceeds 2,000 MW (current estimates are 810 MW). They also approved lower grid usage charges at INR 0.72-1.16/kWh as opposed to INR 3.60-8.76/kWh which was originally sought by MSEDCL.
“As we are seeing around the world, unless utilities take the lead and embrace the shift of power generation from fossil fuel to renewables, they will eventually become obsolete as solar and battery storage costs continue to come down.”Raj Prabhu
CEO of Mercom Capital Group
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Summarized from Mercom India