Why DISCOMs Cap Net Metering for Solar Rooftop Systems at 1 MW

Solar rooftop systems are dependent to a large extent on the state net metering regulations. Most of the states cap the net metering connections at 1 MW. Though there has been a major push for solar installations but the Solar Rooftop segment has not grown the way the ground mounted solar installations have in past 5 years.

Solar Rooftop systems are deployed at the last end of the Power Trail, power distribution generally managed by DISCOMs. By the time power gets distributed to the residences or establishments, the AT&C losses already gets factored in. At that point of connections, the losses have already been accounted and effective tariffs i.e. the tariff at which the power is sold, are at a level of Rs 7-9 per kwh. This primarily means that if net metering is deployed then the power being fed in to the grid is resulting in to losses for DISCOMs at the rate of Rs 7-9 per kwh. If one compares this with cost of generation for a pit head thermal power plant, the tariff is Rs 2-3 per kwh. Allowing net metering connections is in fact akin to arrangements of “avoided generation” at the rate of Rs 7-9 per kwh.

With this analysis due to increased net effective rate of tariff, the DISCOMs’ financial health is bound to get adversely impacted. DISCOMs are already reeling under severe financial strains across the country. Lifting the cap of 1 MW in solar rooftop installations would severely dent the financial health of the power distribution segment.

Net Metering
Rooftop Solar Plant

This is precisely the reason that solar ground mounted installations which are generally not governed by net metering regulations have grown at much faster rate as compared to solar rooftop installations. However for the country as a whole the rationale point would be to not to have any cap on solar installations. As distributed power generated at the load centers where AT&C losses are rendered insignificant, is always cheaper for the country and its economy. The DISCOMs will have to explore other avenues to keep their accounting books in green. DISCOMs should allow the net metering up to whatever limit, it is technically possible for the system. Commercial decision shouldn’t guide the capping of net metering connections.

The reasons why the 40 GW solar rooftop targets of 2022 are still far away is primarily the financial conditions of DISCOMs.

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