Red Tapes in DISCOM shadowing on solar plants
Power distribution companies are concerned that the growing popularity of rooftop solar power will reduce their revenues from conventional power supply.
This, along with red tape, is stifling the growth of a sector that has numerous advantages.
The Nagpur Municipal Corporation (NMC) offers a 5% property tax rebate to residents who install rooftop solar systems in order to encourage the use of clean energy.
However, the corporation's own buildings and facilities have an annual power bill of around Rs 100 crore (Rs 10,000.58 lakh, to be exact), according to corporation documents we obtained.
Its biggest energy hogs, we discovered, are water treatment plants, pumping stations, and street lights, all of which can be powered by rooftop solar panels. According to Sunil S. Navghare, an engineer with the NMC's electricity department, the city corporation planned a 42-megawatt peak capacity solar photovoltaic installation in 2018 to be distributed between its water treatment plants, pumping stations, streetlights, buildings, and gardens.
However, the project has been delayed for nearly two years.
"We have almost all issues ironed out now, and we hope to have it up and running this year," Navghare said.
The lack of interest in clean energy is notable given that Nagpur has 300 days of sunshine per year and was designated as one of India's 60 solar cities in an effort to promote sustainable energy.
It also explains why India has been slow to meet its rooftop solar energy target, despite its push for a significant shift to sustainable energy.
India has set a target of 175 GW renewable energy under its Nationally Determined Contributions pledged in 2015 to combat climate change.
The government is well aware that the rooftop solar industry is far from meeting this goal.
The Ministry of New and Renewable Energy notified the Lok Sabha in February 2021 that 2,071 MW had been installed during the first phase (2015-2020), with a target of 4,200 MW by January 31, 2021.
What are the reasons for the slow expansion of solar rooftop systems, despite their numerous benefits?
The first half of our two-part study into this subject focused on consumer concerns about subsidy payment, application, and installation processes, as well as price and red tape.
We describe how state government red tape and electricity distribution firms' unwillingness to push rooftop solar power are holding the market back in this last section.
For example, in Nagpur, public sector units, central government offices, corporate offices, industrial units, commercial units, and even large hospitals have installed rooftop solar systems over the last decade, with or without funds provided by the Central Financial Assistance (CFA) to promote solar energy.
The Reserve Bank of India, for example, installed a rooftop grid-interactive 55 KWp SPV system for its staff quarters in the capital last year.
Nagpur Metro has also installed rooftop solar systems at a number of stations.
To date, the government has relied on incentives to private households to promote solar rooftop.
This strategy ignores the main bottlenecks: high upfront costs and a lack of funding; discoms' reluctance to support installations; a lack of comfort with technology; and bureaucratic roadblocks "According to a 2019 report from the Centre for Science and Energy, renewable energy service companies (RESCOS) should be established to offer long-term supply contracts to households.
The Modi government sanctioned the construction of 1,000 MW grid-connected solar photovoltaic (PV) power plants with viability gap fund support of Rs 1,000 crore six months after taking office in 2014, on the condition that all PV cells and modules be manufactured in India.
It also approved the establishment of 25 solar parks with a capacity of 500 MW each, as well as an ultra-mega solar power project with a central financial support of Rs 4,050 crore.
As previously stated, India has set a target of 175 GW for renewable energy by 2022, including 40 GW coming from rooftop solar.
According to MNRE data, cumulative installed RE capacity was 94.43 GW as of March 31, 2021, including 40.09 GW solar capacity.
(There is no breakdown of rooftop solar.)
These goals are broken down into state-level goals, which are broken down further into city-level goals and sector-level goals—rooftop solar, wind turbines, and huge solar panels.
The MNRE declared that 40,000 MW of grid-connected rooftop solar PV projects in the residential sector would be set up under the CFA scheme by 2022 as part of phase II of its grid-connected rooftop solar PV programme.
It established a target for Maharashtra of 4,700 MW rooftop solar by 2022, the largest for any state or union territory, as well as annual and state-specific targets.
The state's primary discom, Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL), or Mahavitaran, was to receive 25 MW of subsidies under the second phase of the CFA scheme.
Rooftop solar systems with and without subsidies in residential and commercial/industrial structures were included in the package.
Maharashtra's State Renewable Energy Policy 2020, which was unveiled on December 31, 2020, set an ambitious target of 2,000 MW for grid-connected rooftop solar installations by 2025.
Despite this, according to the MNRE's 2019-20 annual report, the state ranks seventh in solar installations.
In MNRE's 'SARAL: State Rooftop Solar Attractiveness Index 2018-2019,' it received a score of 52.0 (out of 100) and was ranked ninth.
The Maharashtra government has failed to make rooftop solar mandatory in new buildings, despite a major recommendation in the Parliamentary Standing Committee on Energy's 28th report, National Solar Mission – An Appraisal (2016-17).
"By changing building byelaws, the Ministry (MNRE) should pursue all States/UTs to make Rooftop Solar mandatory on new structures," the report stated.
No new objective was set for 2020-21 because the previous year's aim had not been met, and no subsidy had been disbursed as of October 11, 2020 because none of the projects had been finished by then.
The role of discoms comes up regularly in conversations about the issues that the rooftop sector is facing. We discussed charges made by the Maharashtra Solar Manufacturers' Association (MASMA) and others that MSEDCL is hindering the sector's growth in part one of this series. Inconsistent policies, administrative hurdles, and a slow responsiveness to consumer requirements are only a few of the issues raised by MASMA.
Why are discoms so important in the rooftop industry? Consumers pay power discoms for the electricity they provide via grids. Because rooftop installations are unable to provide continuous electricity for a variety of reasons, consumers find it advantageous to connect to the grid via a method known as net metering. If a customer generates extra solar power, the amount is deducted from the discom's next month's use.
The rise of the rooftop sector, according to discoms, could result in revenue losses. Despite the fact that no official from the MSEDCL was ready to speak on the record about the matter, the agency has made enough public statements to convey its concerns.
In its comments on the 2018 change to the net metering law, the MSEDCL stated, "Large levels of rooftop solar make it difficult for utilities to maintain the stability of the local grid." "To offer reliable power to its customers, utilities keep the distribution voltage within set limits. Traditional networks, on the other hand, were not built with solar in mind, and several solar characteristics, such as intermittent output and safety-triggered circuit excursions, exacerbate voltage instability."
The MSEDCL also expressed concern about income loss due to cross-subsidization of the rooftop sector. "Only high-end users are opting for roof top RE through net metering arrangements at the moment, and while this is good to these consumers (sic), it limits the Distribution Licensee's ability to support low-end consumers. The same could jeopardise the Energy Act 2003's sensitive cross-subsidy balance mechanism, bringing the cost of electricity for small and low-income consumers dangerously close to the average cost of supply."
The bills of high-paying consumers are used to cross-subsidize low-paying or no-returns consumers, such as agricultural consumers or those in the lowest consumption band, according to MSEDCL. So, who will cover the expense of the cross-subsidy if these high-paying customers start adopting solar electricity, effectively lowering their regular power bills?
It's not that the government is unaware of the challenges that the rooftop industry faces. The under-achievements of the National Solar Mission were addressed in the Parliamentary Standing Committee on Energy's 28th report, titled 'National Solar Mission – An Appraisal' (2016-17). "Reluctance of DISCOMs to operationalize net-metering regulations as rooftop solar systems may reduce their income from high-paying customers; lack of consumer awareness; tedious process for project commissioning and subsidy disbursement; and frequent changes in Government Policies," the MNRE had said in response to the appraisal.
Grid support charges (GSC) will be imposed on consumers whenever the state's solar power capacity surpasses 2,000 MW.
What is a grid support charge, and how does it work? A discom's earnings are reduced if high-use power consumers switch to solar power. MSEDCL proposed an additional price, the grid support charge, to compensate for the loss. For high tension (HT) users, the GSC was suggested to be Rs 3.60-Rs 4.08 per unit, with a maximum of Rs 8.60 per unit for low tension (LT) consumers.
Stakeholders expressed their displeasure, claiming that this would make solar rooftops uneconomical for users. The MERC also rejected the plan, but in order to compensate MSEDCL, it permitted the discom to levy a banking charge—7.5 percent for high tension (HT) customers and 12 percent for low tension (LT) customers. Banking fees would only be applied to customers that have a net installed capacity of more than 10 kW. The problem, however, has not been fixed.
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