The debate between net-metering and gross metering for Rooftop Solar

February 2021

Rooftop Solar in India: A Snapshot

India’s cumulative installed rooftop solar capacity is currently around 6 GW. The target of the government is 40 GW by 2022. Over 70% of rooftop solar is installed by the C&I (commercial and industrial) segments.

One of the key drivers for continued growth of the Commercial and Industrial rooftop segment in India is the provision of net-metering. The simple premise is many facilities and factories remain shut on Sundays and holidays; Without net metering, all the energy generated on off-days would go to waste. We have seen robust growth and enthusiasm by customers in states where net-metering provisions are available, as it helps customer reduce costs while meeting sustainability targets. We strongly recommend that the choice between gross metering and net-metering lie with the end user.

Gross metering further implies that all energy will be mandatorily purchased by Discoms at the price decided by the state regulatory commissions. There is also no clarity on whether this price will be fixed or liable to change over the years. Solar economics warrant a viable fixed price over the life of the project, especially since majority of the lifetime costs are in upfront capex.

Net versus Gross Metering: A consumer’s choice?

It is very important to remember that distributed or rooftop solar is the easiest way to adopt clean energy, in our country where land is expensive and scarcely available. The value proposition to the user lies in this model being low-carbon and low-cost, while converting idle space into revenue-generating assets. Moreover, the rooftop solar sector creates numerous permanent and contract jobs – which can positively impact the Indian economy, especially post the pandemic.

Fourth Partner Energy along with fellow renewable energy developers have urged the ministry to rethink this provision. As part of the industry body DISPA, we have sent in ourconcerns to MNRE officials. We understand the perspective on safeguarding the financial health of Discoms, but an overarching cap on net-metering above 10 kWp will be detrimental to this segment. We have indicated that the new Electricity Rules, if adopted by different states will lead to substantial contraction in the rooftop business, impacting the livelihoods of lakhs of people employed in the sector. It will also kill any opportunity to meet the government target of 40 GW rooftop solar.

Ministry officials have kindly agreed to review this provision and we are hopeful of a long-term policy that will benefit all stakeholders – while enabling consumers to choose between gross and net-metering.