Response to Discussion Paper on Solar Rooftop Tariff for FY 24

The Karnataka Electricity Regulatory Commission (KERC), in the exercise of the enabling powers conferred under the Electricity Act, 2003 has issued a discussion paper on Revision of tariff in respect of solar power plants (including solar rooftop PV projects) for FY 24

The Commission has invited suggestions/comments/ views of the stakeholders and the general public on the topics covered in the discussion paper.

Below are my comments and suggestions on the points mentioned in the discussion paper.

Poor Off Take of Small SRTPV Projects:

(Page 2 of the discussion paper clearly states that off take of small rooftop Projects is rather low and not very encouraging).

 

1.  Almost all the discussion papers issued on this subject so far has pointed out that off take of solar Projects are rather low in the residential /Small scale segment. This points to a need for a fresh look into this subject and perhaps a revision of existing policies to encourage installation of solar rooftop projects.

2.  Some procedural reforms like ease in application process, pre calibration of meters, making a single window clearance, timely approvals and billing etc will encourage both installers and consumers.

3.  Attractive feed in tariff will also help in this regard.

4.  Relook into the procedure for determining the feed-in tariff may also help in this regard.

5.  Installation of solar panels in places other than rooftops like parking areas, balconies, facades should be permitted.

 

Solar rooftop net-metering systems with Battery Storage systems for 1MW to 2 MW

 The proposed discussion paper has suggested allowing battery energy storage systems only for grid-connected solar rooftop systems that are above 1000 KW and below 2000 KW, which would effectively exclude residential consumers from installing grid-connected solar rooftop battery storage systems.

However, this proposal should be reconsidered due to the numerous advantages of allowing residential consumers to install grid-connected solar rooftop battery storage systems.

Firstly, battery storage systems would allow households to store excess solar energy generated during the day and use it during power cuts, reducing their reliance on the grid and lowering their electricity bills. Secondly, this would also help in reducing the load on the grid, resulting in a more stable and efficient electricity supply.

Energy storage is gaining momentum world over and policies must encourage energy storage across any consumer/producer.

Small scale storage units are much safer and affordable.

Page 4 of the discussion paper mentions “Use of energy storage systems through batteries, by residential, commercial or industrial consumers, to store energy generated from renewable energy, has potential to improve power quality and reliability for such consumers”.

Yet, in page 14, the discussion paper explicitly mentions that capacity of grid integrated Solar plants must be between 1000 KW and 2000 KW. This will completely restrict residential and small commercial consumers from opting for storage systems.

Grid Interactive Support Charges or Grid Support Charges (GSC):

 The commission proposes to levy Grid support charges for all the new prosumers. The commission has proposed GSC to recover the cost of transmission infrastructure.

While it is to be acknowledged that the ESCOMS have invested in the grid infrastructure, I request the commission to look at recovering this cost through the feed in tariff or through the fixed cost which is levied even now for prosumers availing net metering.

ESCOMS are currently levying fixed cost for every KW of sanctioned load notwithstanding net metering. This cost should cover some portion of the grid infrastructure cost if not all.

A battery storage system with solar present unique technical challenges in terms of measuring total solar generation for the purposes of levying grid interactive support charges as proposed by the commission. The solar power generated by the panels is stored in the batteries in DC form and is eventually converted to AC power by the inverter for distribution to various loads.

To accurately measure the total solar generation for the purposes of levying grid interactive support charges, approved DC meters need to be installed next to batteries. But there are no DC meters that are approved by the energy supply companies. Also, the batteries are installed inside the building which is inaccessible to ESCOM meter readers. This poses a significant challenge in measuring the total solar generation accurately by energy supply companies. This would completely disallow any consumer from going solar on-grid systems with the batteries.

Rooftop PV Economics with Grid Support Charges (GSC):

Presented below is the solar PV economics incorporating GSC for a typical small scale solar PV unit.

Sl #	Parameter	UOM	Current Policy	New Policy	Remarks	NO SOLAR
1	Sanctioned Load	KW	5	5		5
2	Fixed cost	Rupees	₹ 540.00	₹ 540.00	100 +(110 X4)	₹ 540.00
2	Solar Capacity	KWp	5	5		NA
3	Monthly energy usage	Units or Kwh	500	500	Assumed	500
4	Average Monthly solar energy generation	Units or Kwh	600	600		NA
5	Energy Export	Units or Kwh	100	100	(600 - 500)	NA
6	Feed in tariff	Rupees	₹ 4.02	₹ 4.26		NA
7	Grid Support charges (GSC)	Rupees	₹ 0.00	₹ 1.26		NA
8	Revenue to Prosumer from feed in tariff	Rupees	₹ 402.00	₹ 426.00		NA
9	Grid support expense to Prosumer	Rupees	₹ 0.00	₹ 756.00		NA
10	Total expense to Prosumer	Rupees	₹ 540.00	₹ 1,296.00	Fixed cost + GSC
11	Cost to Consumer	Rupees	₹ 138.00	₹ 870.00	Revenue - Expense	₹ 4,903.00
12	Net Savings to Prosumer	Rupees	₹ 4,765.00	₹ 4,033.00
13	Percentage Loss to Prosumer		18.15%
14	Conclusion		Prosumer is set to gain 18% lower from the new Policy vis-à-vis the old policy

Further remarks on GSC:

1.   It is better to reduce feed in tariff rather than introduce GSC to incorporate grid charges of ESCOMS. This will be easier in billing (Billing for net metering is still an issue) process for ESCOMS and less complicated for end users to understand.

2.   It is almost impossible to incorporate GSC for battery-based systems.

3.   If GSC is introduced, it will be very helpful to keep the GSC fixed for the term of the PPA.

 

Concluding Remarks:

1. There is an urgent need for reform in the procedures for applying, installing and commissioning of SRTPV projects.
2. There is a need for a new paradigm for arriving at feed in tariff. Year after year the same process is followed. But we haven’t seen the desired results (As mentioned in the present discussion paper). A simpler approach is most welcome where the honourable KERC can decide on what price can be paid incorporating past performances, prevailing circumstances and market conditions.
3. Market prices for energy sold by prosumers will encourage more consumers to install solar.
4. Working backwards with an assumption on Plant cost may not be the best way. There is a plethora of technologies with varying commercial, financial and technical ramifications. Assuming lowest cost of the plant to determine the IRR may not be the best way. It also discourages the consumers from opting for the best quality.