Proposed rules for power consumers could hurt solar rooftop sector

  • The government of India has proposed a new set of rules for electricity consumers that fixes automatic compensation to consumers for lacunae in service and also proposes several regulations for the grid-interactive solar rooftop sector.
  • Although energy experts and those associated with the civil society groups welcome the proposed rules they emphasise that most of them already exist in various rules and regulations specified by various states and proper implementation is more the need.
  • The experts also stressed that the government will need to further clarify rules proposed for the solar rooftop sector otherwise in their current form the rules could impact the sector’s growth.

The government of India has proposed a new set of rules for electricity consumers in the country. Among the notable ones proposed are fixing automatic compensation to consumers for delayed service and regulations for grid-interactive solar rooftop systems – a proposal that has raised concerns for the solar rooftop sector in the country.

The draft Electricity (Rights of Consumers) Rules, 2020 which were unveiled by Union Ministry of Power on September 9 stated that the State Electricity Regulatory Commissions (SERC) shall come out with “regulations on grid-interactive rooftop solar PV (photovoltaic) system” and its related matters with timelines within six months of notification of these rules in case the same has not been notified. 

The draft rules said these regulations shall provide for “net metering for loads up to five kW (kilowatt) and for gross metering for loads above five KW.” The ministry has sought comments and views from all stakeholders by September 30.

Under the net metering mechanism, the bills of electricity consumers, who also have solar rooftop power systems, are adjusted against the solar power they add to the grid. While in the gross metering mechanism, a consumer is compensated at a fixed feed-in-tariff for the total number of units of solar energy generated and exported to the grid and has to pay the power distribution company at retail supply tariff for the electricity consumed from the grid. The feed-in-tariff and retail supply tariff are typically different rates.

However, this could become problematic. 

Shantanu Dixit of Prayas, a Pune-based non-governmental organisation working on energy issues, emphasised that if these draft rules come into implementation as they are, they will have a severe impact on the solar rooftop sector.

“There needs to be a wider debate about provisions for the solar rooftop sector in these rules. If they are accepted as it is then effectively the solar rooftop sector will come to a grinding halt. They are talking about net metering of only upto five KW whereas the central government’s intention (in many other plans) and many state governments’ focus is to have a larger solar rooftop sector. These rules in present form could have a serious negative impact on the growth of the solar rooftop sector,” Dixit told Mongabay-India.

India has a target of 100,000 megawatts (MW) of solar power by 2022 and of that 40,000 MW is targeted from the solar rooftop. At present (till June 30), according to a Bridge to India report, India’s installed solar rooftop capacity is about 5,953 MW.

Read more: Parliamentary committee concerned whether India will achieve its solar power target

Vibhuti Garg, energy economist with the Institute of Energy Economics and Financial Analysis (IEEFA), welcomed the focus on the solar rooftop. “Promotion of solar rooftop is also very positive. However, the issue of the net and gross metering needs to be properly evaluated,” Garg told Mongabay-India.

Meanwhile, the draft rules said that renewable energy units may also be set up on other parts of the premises of the prosumers, apart from the roof. However, the total generation capacity of the renewable unit shall not exceed the limit as prescribed by the SERCs. Prosumer means a person which consumes electricity from the grid and can also inject electricity into the grid using the same point of connection. It also said the power distribution companies shall pass on the financial incentives to the prosumers as may be provided under various schemes and programmes of the central and state government. 

Compensation for poor service

Apart from the solar rooftop sector, the draft rules also specify the details regarding the services and compensation that a consumer is entitled to. For instance, the draft rules said SERCs shall specify the maximum time period not exceeding seven days in metro cities, 15 days in other municipal areas and 30 days in rural areas, within which the power distribution companies shall provide new connections and modify an existing connection.

It also said that no connection shall be given without a meter which shall be the smart prepayment meter or prepayment meter. It clarified that any exception to this shall be duly approved by the SERCs which shall record proper justification for allowing so. 

India has an ambitious target of 40,000 megawatts of the solar rooftop by 2022. Photo by Hjl/Flickr.

The draft rules further said that if any bill is served with a delay of a period of 60 days or more, the consumers shall be given a rebate of 2-5 percent as specified by the state commissions. However, it noted that a bill amount of more than Rs 1,000 or an amount specified by the commission shall mandatorily be paid online and SERCs shall specify a suitable incentive rebate for payment through an online system.

It also said the distribution licensee shall supply 24X7 power to all consumers. However, the Commission may specify lower hours of supply for some categories of consumers like agriculture.

On these proposals, Prayas’s Shantanu Dixit said that the draft rules are a welcome step but many of the provisions mentioned in them already exist in rules and regulations framed by various states.

“There is an urgent need to focus on the quality of the services given to electricity consumers. Many of the provisions proposed in these draft rules already exist … so, what is required is the proper implementation of these provisions in letter and spirit. Secondly, what is important to know is how these rules will be binding on states or not. There needs to be clarity on the legal status of these rules,” Dixit told Mongabay-India.

He further explained that there are some useful provisions as well in the draft rules like automatic compensation for distributing companies not following basic service standards but “to implement them significant infrastructure and technology integration” will be required.

Read more: Innovative aerial survey project maps rooftop solar energy potential for Bengaluru

The draft rules proposed that the SERCs shall also notify the standards of performance for the power distribution companies and shall specify the compensation amount to be paid to the consumers for violations of those standards. The standards of performance for which compensation will be required to the paid to the consumer could include factors like no supply to a consumer beyond a particular duration (to be specified by the state Commissions), the number of interruptions in supply beyond the limits as specified by the commissions, time taken for connection, disconnection, reconnection, shifting, change in the consumer category, load, time taken for changes in consumer details, replacement of defective meters, the time period within which bills are to be served, time period of resolving voltage-related and bill-related complaints etc.

Karthik Ganesan, who is a research fellow at the Council on Energy, Environment and Water (CEEW), said the draft of these new rights for consumers, is akin to old wine in a new bottle but hopefully the packaging will allure those who have abstained from exercising their rights. 

“Much of the content in this new draft is covered under the electricity supply codes that various state regulators have notified early in the last decade. Electricity is a commodity that is either priced too high that it deters consumption and payments or well below the value it provides to its consumers. Either case is not conducive to get consumers to exercise these rights or for utilities to actually make the effort to fulfil their obligations. The poor will continue to face poor levels of service and the rich (relatively) will turn to options beyond the discoms (distribution companies) when they see services floundering. In finding the right value for electricity lies the success of any effort to enforce accountability on part of both consumers and utilities,” Ganesan told Mongabay-India.

Vibhuti Garg echoed similar views. “The Electricity Act mandates a reliable and quality supply of power to consumers. However, their rights have been ignored and no compensation is provided to them in case of non-compliance of standards. The proposed consumer rules recognise this fact and have put consumer rights at the centre. It will help push distribution companies to provide quality supply as else it will attract penalties, which will further increase pressure on their financial health. The consumers need to be made aware of their rights and start demanding it,” said Garg while adding that a shift to online payments will help in achieving government’s goal of digitalisation and ease the pressure of discoms on collection. 

Atul Goyal, who is President of the United Residents Joint Action, a network of about 2,500 resident welfare associations in Delhi and non-governmental organisations, stated that by limiting cash payment deposits for bills to Rs 1,000, which is not in good taste, it appears that middle and lower-middle-class consumers are pushed towards adopting the digital mode of payment only assuming that everyone is equipped with an email and a smartphone in hand.

“Although renewable solar energy net metering is welcome the document does not speak of the accountability of executives and the citizen charter applicability fixing timelines for action on various aspects by state agencies,” Goyal told Mongabay-India.


Banner image: At present, the installed solar rooftop capacity in India is about 6,000 megawatts. Photo by Anna da Costa/Flickr.

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