Net metering concept: revolution in Indian power scenario.

Gupta, Navneet ; Sharma, R.K. ; Jasuja, Ashish 等

Deficit of Power Supply in India

Like other developing countries, there is a wide gap between demand and supply of electricity in India. The deficit in power supply in terms of peak availability and of total energy availability during the current year was 14.8 percent and 9.6 percent respectively. The current per capita power consumption is about 600 kWh per year. There was a deficit of almost 66,000 Million Units in 2007 [1].

Looking at the pattern of electricity generation from various sources as represented in Fig 1, it is evident that it is highly dependent on conventional sources of energy like coal and oil.

This dependence on fossil fuels burdens the economy as most of the quantity required is imported. There is also a considerable environmental pollution and natural resource degradation.

Solar Power--Not a Fully Tapped Source

In India, a variety of choices are available as renewable energy options of power generation like Wind Power, Bio Power, Small level Hydel Power and Solar Power. The most promising option is solar energy which can reduce India's dependence on thermal energy in years to come.

India receives solar energy equivalent to over 5,000 trillion kWh per year. The daily average solar energy incident on earth varies from 4-7 kWh per square meter depending upon the location. The annual average solar radiation incident on India is about 5.5 kWh per square meter per day. With 300 clear sunny days in most parts of the country, India has a huge potential for harnessing sun's energy to produce electricity [2].

Drawbacks of Setting up Solar Power Plants

One of the major hurdles in investment in solar power plants is attracting investment. Solar power is not a preferred electricity source due to its high capital costs. Governments world over face enormous challenges in attracting private sector investment for large-scale grid-connected projects. Secondly, energy back up units (battery) are required to store electricity for night time usage. Also sun rays reach the earth's surface in very dilute form; to reach a useful rate it has to be collected over a large area [3].

The electricity generation from solar energy has been done mainly by installing solar farms, ponds or dishes. There are few inherent disadvantages in such a method of electricity generation. The first being land scarcity. India has limited per capita land available. Dedication of land area for exclusive installation of solar power plants is only possible in areas where there is hardly any population like the Thar Desert. The amount of land required for utility-scale solar power plants is approximately 1 sq km for every 20-60 megawatts (MW) generated.

The conditions in India are more suited to installation of distributed, individual rooftop power generation systems connected to a local grid.

Initiatives to Support Roof-Top Power Generation Systems

To promote rooftop installation various Governments across the Globe have provided financial incentives and have implemented various pricing strategies. Some of the most popular support mechanisms for promoting PV systems around the world include the following schemes:

Capital Subsidies

Under this scheme, National Governments make partial payment for the system and customer pays rest of the amount for buying PV system. With this subsidy, the financial burden falls entirely on tax payers of the country.

Feed in Tariffs (FIT)

Under this scheme, regional or national electricity companies are obligated by governments to buy renewable electricity (electricity generated from renewable sources such as solar, photovoltaic, wind power, biomass, and geothermal power) at a price higher than current market rates. These rates differ across the different forms of power generation, depending on the capital cost and commercial maturity of each technology.

Tax exemption and VAT reduction

Under this scheme, Government offers Income tax benefits on the installments paid to the lending banks for the PV system. Banks offer a lower interest rate on the credit taken by the consumer than current existent rates. To make it even cheaper Government can remove VAT on the manufacturing of the solar modules and related appliances.

Net Metering

Governments provide financial and technical support for Net Metering. "Net Metering" is a simplified method of metering the energy consumed and produced using a renewable energy generator. Net-metering policy has proven itself to be cost effective, sustainable and has encouraged common users to go for greener alternatives and become self sufficient when it comes to power generation.

Net Metering enables customers to use their own generation to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand.

Net Metering--The Concept

Net Metering is a concept which can revolutionize the Indian electricity scenario and encourage rural and urban customers to generate their own electricity through green means. Some of the countries which have implemented Net Metering successfully include Belgium, Czech Republic, Denmark, Italy and USA.

Net Metering is an arrangement in which utility facilitates the connection of renewable energy source to the nearby grid based on the agreement between utility and their customers by using special two--way meters, as depicted in Fig 2. Under Net Metering, excess electricity produced by the PV modules will spin the existing home or business electricity meter backwards, effectively banking the electricity until it is needed by the customer.

[FIGURE 2 OMITTED]

Net Metering customers are charged only for the "net" power that they consume from the electricity service provider that has accumulated over a designated period or, if their renewable energy-generating systems make more electricity than is consumed, they may be credited or paid for the excess electricity contributed to the grid over that same period [4].

This is the most popular type of solar PV system for homes and businesses in the developed world. Connection to the local electricity network allows any excess power produced to be sold to the utility. Electricity is then imported from the network outside daylight hours. An inverter is used to convert the DC power produced by the system to AC power for running normal electrical equipment.

Net Metering In India

India does have feed-in tariffs plans in various states for wind power but they are for wind farms. At the home-owner level, there are no feed-in tariffs that exist. Grid characteristics and distribution sector are not fully ready for implementation of Net Metering. There has not been much attention paid to generate and bank electricity locally using solar power.

Though Photovoltaic systems are expensive but they are easier to use and to install than wind farms. They are motionless, noiseless and pollution free. They can be a part of the building's roof or facade and thus occupy less space.

In the 11th Plan period, 14,500 MW (about 20%) of capacity addition is proposed from renewables. In case these targets are to be met, then there is a need to develop domestic supply options by involving more or more number of people in power generation through renewable sources [1].

Pricing Mechanism Which Can Be Applied In India--A Case Study

One of the factors which can play a major role in popularity of small-scale PV generation is the availability of attractive financing terms and favorable utility metering policies. This analysis tries to present pricing mechanism which can be used to calculate the required minimum electricity rates paid to customer by utility to make net metering attractive for him. It also shows monetary benefits to the customer. Certain assumptions have been made in order to keep the analysis simplified [5].

Analysis and Assumptions

The costing table provided, formulates the pricing mechanism based on the needs of an average household with a requirement of 100 kWh of electricity. In a conventional coal fired system the cost of electricity will be Rs. 4/KWh with the year-on- year increase in cost assumed to be 4.5%.

Here the formulation of pricing mechanism has been done for 180 kWh of electricity generated by customer by means of solar modules out of which 100 kWh is consumed in-house and the excess 80 kWh per month is funneled back to the grid. The module capacity required for generation of 180 kWh of electricity per month is 1.2 kWp. The average cost per module is assumed to be Rs 155,000/kWp. The module cost is assumed to be 90% of total system cost which comprises of the module, the inverter and the charge controller. Since the excess electricity is being fed back to the grid, the model doesn't require energy storage and hence the requirement for batteries is eliminated. Details are tabulated in Table 1.

Result of Analysis

The Net Present Value (NPV) for the coal fired system and the solar powered system is calculated at a discount rate of 8% for a 25 year period. It indicates the present value of all the future expenses and the capital investment over the life time of the system. Sensitivity analysis is represented in Table 2. Our analysis shows that the overall benefit by using net metering system at Rs 13/unit is Rs 3,252 over a 25 year period. A graph of net benefit Vs the net meter tariff (Fig 3) depicts earnings from the system at a cost of electricity above Rs 12.66/unit. Thus the threshold value for the cost of electricity is Rs.12.66 with increased earnings from the net metering system beyond this value for the given capacity of the system.

[FIGURE 3 OMITTED]

Benefits of Net Metering To the Grid

The threshold value of Rs. 12.66/kWh at which Net Metering system becomes economically viable for the consumers is very high as compared to the present electricity costs of Rs. 4/kWh. It may appear that the utility/grid would incur huge losses because of offering excessive prices. But in reality there are several benefits which the utility/grid reaps because of Net Metering. The excess electricity generated will help the utility in bridging the gap between demand and supply of electricity. The utility can generate additional revenues by selling carbon credits. The implementation of a Net Metering system has added benefits of improvement in grid frequency and reduction in transmission and distribution losses.

Improvement in Grid Frequency

Frequency is the most critical parameter in power system operation. All Regional Grids make all possible efforts to ensure that the grid frequency always remains within the 49.0-50.5 Hz band in compliance with norms set by the Indian Electricity Grid Code (IEGC) [10].

Despite of best efforts, regional grids find it very tough to maintain frequency between the desired bands and many times grid frequency falls below 49Hz, as depicted in Table 3. This is a critical situation and is known as low frequency condition and occurs because of low power generation.

If the grid overdraws the power during "Low Frequency Condition", it can result in tripping of the transmission lines and can make the system vulnerable to grid disturbances. Low Frequency can cause damage to the plant and machinery installed at the power generation stations in the entire region in an integrated grid. It can also cause damage to the appliances used by millions of households.

India faces a very serious problem of Low Frequency black outs because of very high mismatch in demand and supply of power. Reduction in withdrawal from the grid or increase in injection to the grid, are the two options available for improving the grid frequency. Consumers through Net Metering can solve this problem by increasing the power in the grid and thereby reducing the chances of Frequency Blackout.

Solar-Hydro-Thermal Coordination

Indian grid has several thermal, gas, hydro, wind based power generation stations. If Net metering concept is implemented excess power can be banked in the grid. If a time comes when supply starts exceeding demand, there will be need to maintain voltage and frequency within range. Load dispatch centre can take controlling actions by shutting of hydro power generating station during non Peak hours and the excess water can be stored in reservoirs (dams). By doing this we can expect higher electricity generation during the time of peak requirement.

In Solar-Hydro-Thermal coordination in a sunny weather more power is generated by solar PV system during day and during night time power is generated by Hydro Stations. Thermal Power Plants work as base load power plant during day and night time. By using Solar-Hydro-Thermal coordination we can utilize renewable natural resources effectively and grids can operate smoothly.

Make Profit by Selling Carbon Credits

Carbon dioxide, which constitutes the highest percentage of greenhouse gases produced by combustion of coal in thermal power plants, has become a cause of global panic as its concentration in the Earth's atmosphere has been rising alarmingly. Typical C[O.sub.2] emission from thermal power plants in India is 0.949665 tonne of C[O.sub.2] per hour per MW of electricity produced [12].

If grids were to use renewable energy sources for generation of electricity, they will be emitting less carbon. The total annual emissions saved can be calculated and converted into carbon credits. One credit is equivalent to one tonne of C[O.sub.2] emissions reduced. These carbon credits can be traded in an exchange. In India, Multi Commodity Exchange, Mumbai (MCX) has already launched futures trading in carbon credits in India. The typical price for one carbon credit is Rs.3499 [13].

Reduction in Transmission and Distribution Losses

According to Central Electricity Authority (CEA), India's electricity grid has the highest transmission and distribution losses in the world. It was a whopping 31.25% in the year 2004-05. This implies that 31.25% of the energy available for sale was lost; this includes losses due to technical reasons, theft and pilferage [14].

When electricity is consumed and produced in the same place, it reduces transmission/ distribution losses as the grid does not have to transfer the amount of electricity produced by the consumers. Also, consumers generating electricity would be more responsible and aware against misuse and theft of electricity.

Conclusion

In order to meet India's energy needs there is a requirement to develop domestic power generation options which can be widespread, require less investment and are financially attractive. Net metering programs serve as important incentives for consumer investment in renewable energy generation as they help in off-setting their own consumption and overall power demand in general. Net metering is low-cost, easily administered and is beneficial to both consumer and utility. With appropriate pricing mechanisms in place for net metering, India's dream of being energy self sufficient cannot be far behind.

References

[1] Infrastructure (n.d.) In Economic Survey 2007-2008. Retrieved July 28, 2008, from http://indiabudget.nic.in/es2007-08/chapt2008/chap92.pdf

[2] Solar power in India (n.d.) In Wikipedia. Retrieved July 26, 2008, from http://en.wikipedia.org

[3] Solar Energy International (2004) Photovoltaics: Design and Installation Manual, New Society Publishers, Carbondale, CO, USA.

[4] American Wind Energy Association (n.d.) In What are "Net Billing" & "Net Metering?. Retrieved August 16, 2008, from http://www.awea.org/faq/netbdef.html

[5] Bhushan, B. Patnaik, S. Jhanji, S. (1996). Innovative tariff and metering for Indian grids, Eighth International Conference on Metering and Tariffs for Energy Supply, Brighton, UK, 3-5 Jul 1996, pp. 44-49

[6] Srinivasan. S. (2005) Segmentation of the Indian photovoltaic market, Renewable and Sustainable Energy Reviews 9 (2), pp. 215-227

[7] Holbert, K.E. (2007) An analysis of Utility Incentives for Residential Photovoltaic Installations in Phoenix, Arizona, 39th North American Power Symposium, 2007, NAPS '07,. Las Cruces, NM, Sept. 30 -Oct. 2 2007, pp. 189-196

[8] Dr. Ragwitz M. Dr. Huber C. (2005) Feed-In Systems in Germany and Spain and a comparison, Fraunhofer Institute for Systems and Innovation research, 2005. Retrieved on 17 April, 2008 from http://www.bmu.de/files/english/renewable_energy/downloads/application/pdf /langfassung_einspeisesysteme_en.pdf

[9] Cook C. Cross J. (1999) A case study: The Economic cost of Net Metering in Maryland: who bears the economic burden?, Prepared by Maryland Energy Administration, Annapolis, MD Retrieved on 18April, 2008 from http://www.e3energy.com/netmeter.pdf

[10] Unscheduled Interchange (UI). Retrieved August 16, 2008, from http://www.indianelectricity.com/ui.htm

[11] Powergrid Corporation of India Limited (n.d.) System Operation Report of Western Region for the month of April, 2008. Retrieved July 28, 2008 from http://www.wrldc.com/monthly_report.aspx

[12] Raghuvanshi S.P. Chandra A. and Raghav A. K. (2006) Carbon dioxide emissions from coal based power generation in India, Energy Conversion and Management 47 (2), pp. 427 - 441

[13] Joseph Massey, Deputy Managing Director, MCX (Interviewee).(Feb.05, 2008). Carbon credit and how you can make money from it [Interview transcript]. Retrieved from http://www.rediff.com/money/2008/feb/05inter1.htm

[14] Central Electricity Authority (n.d.) In Annual Report- 2005 2006. Retrieved July 28, 2008 from http://www.cea.nic.in/about_us/Annual% 20Report/200506/CEA%20AR%202006%20Final.pdf

Navneet Gupta (1), * R.K. Sharma (2) and Ashish Jasuja (3)

(1) School of Electrical and Computer Engineering, RMIT University, Melbourne, Australia,

(2) National Institute of Technology Kurukshetra-India

(3) Geeta Institute of management and Technology Kurukshetra, India

* Corresponding author: rksharna@nitkkr.ac.in

Table 1: Assumptions.

Average annual consumption (kWh)                 1,200
Electricity Rate (Rs./kWh)                         4
Module Capacity (kWp)                             1.2
Module Cost (Rs./kWp)                           155,000
Balance of the System Cost (% of total cost)      10%
Discount Rate                                     8.0%
YoY increase in price of electricity             4.50%
Average annual Power Generated (kWh)             2,160

Table 2: Sensitivity Analysis for Net Metering System.

Net Meter Tariff
      (Rs.)            11         12       12.66        13

    NPV Coal
   Electricity
   Consumption      (71,257)   (71,257)   (71,257)   (71,257)
  NPV net meter     (86,982)   (77,494)   (71,231)   (68,005)
Net Benefit (Rs.)   (15,725)   (6,236)       26       3,252

Net Meter Tariff
      (Rs.)            14         15

    NPV Coal
   Electricity
   Consumption      (71,257)   (71,257)
  NPV net meter     (58,516)   (49,028)
Net Benefit (Rs.)    12,741     22,230

Table 3: Frequency level maintained by Western
Region Grid during April, 2008 [11].

Frequency Profile      % of Time

<49 Hz                   34.5%
49Hz to 49.5Hz           43.25%
49.5 Hz to 50Hz            0%
>50Hz                      0%

Figure 1: Distribution by source generation
of electricity of Installed Capacity in 2007[1].

Thermal   64%
RES       28%
Nuclear    3%
Hydro      5%

Note: Table made from pie chart.