With the addition of 24.5 GW of new solar power capacity in 2024, India's total installed renewable energy (RE) capacity reached 209.44 GW as of December 2024. Solar energy accounts for approximately 47 percent of the total RE segment, making it the most significant contributor among renewable sources. 

India added around 18.5 GW of new solar capacity, in 2024, an increase of 280 per cent  over 2023, in the utility-scale solar segment. The surge in the solar power sector is mainly attributed to the falling module prices and subsequent growth in the commercial and industrial sector installations. 
India added around 4.59 GW of new solar capacity, in 2024, an increase of 53 per cent, in the rooftop solar sector, thanks to the launch of the 'PM Surya Ghar Muft Bijli Yojana'.  Also in the off-grid or distributed segment, solar capacity of 1.48 GW was added in 2024, and increase of 197 per cent. 

The above table shows that India's   CO2 emissions  has increased by 197% in 2023 in comparison to the year 2000.  India is also having the largest increase in  CO2 emissions in relative terms (+6.1%) in 2023 when compared to 2022.  

So why isn't the total installed renewable energy (RE) capacity (of 209.44 GW as of December 2024) helping in reducing the  CO2 emissions?  The answer is simple. The renewable energy is used to fuel additional load from new growth in infrastructure in industrial, commercial, agricultural and residential sectors. The renewables are not at all effective in reducing the fossil fuel consumption of the installations that existed in the year 2000. India is arguing that its emissions should be analysed in terms of amount of CO2 per capita. The growth of India's population is also used as a justification for the increase in  India's CO2 emissions.  Whatever the reason for the increase in India's CO2 emissions, it cannot be a justification for failure to achieve its goal of net zero emissions  in order to  limit global warming to 1.5 ℃.   

Our analysis of the solar installations show that the government subsidies for solar are causing more damage than good to the environment. The consumers who are opting for solar rooftop installations by availing the solar subsidy are doing so only to offset their more expensive fossil fuel based units imported against the cheaper solar units earlier exported, under the Net-metering tariff . In this manner, the consumer is able to charge their Electric Vehicles at night with fossil fuel based energy from the utility, practically free of cost.  The EVs are also available to the consumer at a lower price thanks to the EV subsidy offered by the government. All put together, the consumer is able to significantly reduce his own utility bills and enjoy the luxury of driving an EV, at the cost of the environment. An audit of the consumer's fossil fuel units imported before and after the solar roof top installation would show that the imported units have actually increased post installation. Unfortunately, this audit is never carried out and all that is visible to the happy consumer is the reduction in his electricity bills. 

One may argue that the solar units exported by a customer can be used to feed a fossil fuel driven load, hence it would result in reduction in CO2 emissions. This is also not true since maximum solar units are generated and exported usually at noon.  The Indian utilities wonder what to do with the excess solar generation that they are unable to store and the best option open to the utilities is to offer them practically free of cost to the agricultural sector where much of the energy goes unmetered and gets consumed on a HorsePower (HP) based tariff. Farmers are often seen to keep their pumps in the 'always ON state' on the agricultural feeders; hence, when they are energised by the utilities with solar energy,  this results in overdrawal of water and fall in level of the water table.  Fall in water level means that more powerful pumps need to be deployed that consume more energy. Thus it results in more damage in terms of CO2 emissions.

 It should be noted that manufacturing solar cells also result in CO2 emissions. Hence, if these  CO2 emissions cannot be recovered through the generation of electricity  from these very solar cells, then  a typical 4 kW solar rooftop installation over a residential consumer's premises that use thousands of these solar cells thus can result in more damage in terms of CO2 emissions, than good.

On the other hand, the solar bicycles that are fitted with 40 W solar panel substitutes an EV (or an ICE engine).  The 40W solar panel represents just 1/100 of the 4 kW solar panels that are found over a typical rooftop installation. When the EV or the car with an ICE is parked at home, the solar bicycle rider would be saving in terms of  CO2 emissions significantly.   Every kilometer run by a solar bicycle represents a direct saving of  0.133 kg or 0.08 kg of CO2eq., assuming that the vehicle that it substitutes is an SUV with an ICE engine of 1600 cc or an electric motor of 60 kWh respectively. 

Implementing Net Billing for CO2 Mitigation

Dr. Vithal N. Kamat

Desperate Need for CO2 Mitigation 

WWF’s Living Planet Report-2022 highlights a devastating 69% drop in 48 years in monitored wildlife populations - mammals, birds, amphibians, reptiles and fish. Calls for action to reverse biodiversity loss by 2030 and keep global warming to 1.5℃.  

COP27 - Conference of the Parties of the UNFCCC (The United Nations Framework Convention on Climate Change), Egypt, November 2022 sought renewed solidarity between countries to deliver on the landmark Paris Agreement, both for the people and the planet. India is a signatory to the international environmental treaty for "stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic [i.e., human-caused] interference with the climate system"[1] Article 2 of the convention says this "should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner".[1] 

In 1992, in India, the CO2 emissions per capita was 0.74 metric tonnes MT. In the following decade, the CO2 emissions have increased linearly  (to 0.96 MT in 2002). However, thereafter, in the next two decades, the C02 emissions in India have increased exponentially. In 2022, it is around 1.9 MT per capita. India’s population has increased from 0.9093 billion in 1992 to 1.093 billion in 2002 to 1.417 billion in 2022. India is ranked right at the bottom (ranked 180) amongst 180 countries in the Environmental Performance Index (EPI), 2022 that is based on performance across parameters related to mitigating climate change, improving environmental health and protecting ecosystem vitality. India has rejected the EPI saying that it uses ‘biased metrics and weights’. However, it is a fact that India ranks fourth in terms of fossil fuel based CO2 emissions (2.7 billion tonnes).

Unless all the countries adhere to their individual commitments to reduce CO2 emissions, the mitigation work programme (MWP) will be unable to achieve collective reduction by 50% in 2030 from the 2010 levels - considered necessary if the climate goal of keeping global warming within 1.5℃ by the end of the century. 

The Energy industry tops the list for the most polluting sector. Oil, gas and especially coal emits exorbitant amounts of CO2. Processing, refining and combusting them also cause water, soil and noise pollution. 

The Transportation industry  - road, rail and sea travel make up almost a quarter of the CO2 emissions around the world. Roads are the most polluting. Each private vehicle spits out some 4.6 metric tonnes of CO2 annually. 

The signatory states have been unable to adhere to their individual commitments in reducing the emission of carbon dioxide since its adoption at the UNFCCC. This comes as no surprise since the countries find it difficult to curb economic development that is inextricably linked with energy consumption and hence CO2 emission.    

GDP, life expectancy and energy consumption are directly linked through a positive linear correlation. Many economies are dependent on the exploitation of fossil fuel resources for their own consumption and for generating income for their societies. A transition to renewable energy sources will take decades, if at all possible. Yet the effects of climate change related to fossil fuel-based energy resources and their consumption are threatening life on earth as we know it. Researchers such as Prof.  Volker Vahrenkamp have been trying to answer this question ‘The Conundrum of Fossil Fuel Exploitation, Climate Change & Energy Security - What Can We Do?’

Tariff as an Enabler for CO2 Mitigation 

Tariffs can play a major role as an enabler to direct large populations to adopt measures that reduce CO2 emissions particularly in developing countries. All other measures, such as enacting laws, are seen to have had very little effect. 

Apparent Energy Tariffs 

Today, the role of Apparent Energy (kVAh) Tariffs, in eliminating low power factor loads (inductive & ‘harmonic’ loads) in the electrical distribution system and thereby line loss reduction, is well understood.  Replacing a 0.5 PF load with that of unity PF would lower an electric utility’s line losses due to that load by 75%. When other measures such as imposing fines on consumers operating loads operating at poor PF failed to yield results, the kVAh tariff enabled a quiet transition by offering incentives to the consumers directly in their bills of the more efficient consumers operating high PF loads. The single meter reading based kVAh tariff was also easy to implement.     

Center for Apparent Energy Research, an R&D unit of Baroda Electric Meters Ltd, made a significant contribution in the field of kVAh Metering and Tariffs, for loss reduction in all the major electric utilities of Gujarat for the Street Lighting (SL) tariff category by bagging landmark tariff orders from Gujarat Energy Regulatory Commission (GERC) in the years 2001 and 2010.  The Street Lighting Project implemented at Nandesari GIDC, District Vadodara, Gujarat, yielded amazing line loss reduction and was well appreciated by the technical community. Currently many states in India have adopted kVAh tariff particularly for the industrial consumers to ensure that they operate high PF loads. More than ₹20,000 crores/annum in loss savings through improvement in PF have been achieved through a simple tariff implementation. 

Tariffs for DER 

Taking inspiration from the success of kVAh tariffs, here we once again design a tariff for DERs, particularly for solar PV, that can help us reduce CO2 emissions in India.  Let us understand the problem and state the problem definition in the following section.

Misuse of Subsidies 

Subsidies offered by central and local (state) governments have a major impact in shifting consumer behaviour and usage pattern to a direction away from the normal.  Unless used wisely, subsidies could have a damaging effect and kill innovations that could yield better results than those achieved through changes driven by subsidies. The subsidies also open scope for exploitation in ways that was not originally intended.  

Here, we consider one such example of an ill designed combination of subsidy and tariff for Solar RoofTops that is being exploited and misused by the Electric Vehicle (EV) owners. 

In Gujarat, subsidies are given  at the time of (a) purchase of an EV ( 2 or 4 wheeler) and (b) installation of Solar RoofTop. A consumer who avails both these subsidies is further also entitled the benefit of Net metering - a billing mechanism covered later below.

On the other hand, a recent innovation - solar bicycles - the only green vehicles that are truly sustainable and yet not offered subsidy in Gujarat. The EV subsidy is impeding the sales and growth of solar bicycles that we have launched recently.   

Problem Definition 

In India, EVs are mostly charged after dusk  when the power plants are burning precious and scarce fossil fuels - coal or gas. Net metering permits an EV owner to conveniently offset her night EV consumption from her daytime solar RoofTop generation.

Grid Parity 

Since the past decade, Distributed Energy Resource (DER) systems, particularly Photovoltaic Solar generation, have been playing an increasingly important role in modern electric power distribution systems. In sharp contrast to the conventional centralised coal-fired, hydro or nuclear power plants, DER are  small grid connected decentralised energy generators, typically using renewable energy sources such as biomass, solar and wind power, located close to the load and using modular, flexible technologies. DER exploits small size for lower cost (possible to mass produce small systems), reduced T&D losses (due to local generation), low pollution, lower maintenance, lesser complexity and cost of regulatory oversight, tariff administration, metering and billing. 

Since 2010, DERs, particularly solar and wind, have reached grid parity – a point at which the DER can generate electricity at a Levelized Cost of Electricity (LCOE) that is less than or equal to the end consumer’s retail price. Reaching grid parity is essential for an energy source to be a contender for widespread development without subsidies or government support. Grid parity with drop in LCOE for solar photovoltaics have been a catalyst for growth of DER systems in a number of markets such as Europe, Australia, and U.S. We fail to understand why India is continuing to offer subsidies for solar today when grid parity was reached more than 10 years ago?

Compensation Mechanisms for DER 

Next to grid parity, the success of DER systems may be attributed to the associated tariff policies, tariff mechanisms, compensation and purchase arrangements that play a vital role in sending clear signals to the public for their involvement. There are three primary compensation mechanisms designed to accelerate investments in DER systems:

1. Power Purchase Agreement (PPA), also known as the ‘Standard Offer Program’ offers compensation that is generally below retail. It could be above retail, particularly in case of solar where generation is close to peak demand.  

2. Feed-in Tariff (FiT) which is usually set initially above retail and reduces down to retail as the percentage of DER adopters increase.[3]

3. Net Energy Metering (NM) which is always at retail [4]. Since the DER is mostly used for own consumption, technically, it cannot be termed as compensation, although it may be considered so if there is excess generation and if utility is allowed to make payments for the same.

Power Purchase Agreement (PPA)

PPA compensation mechanism allows agencies to fund onsite renewable DER projects with no up-front capital costs incurred. With the PPA, a developer installs a DER on agency property under an agreement that the agency will purchase the power generated by the system. The agency pays for the system through these power payments for the life of the contract, while the developer installs, owns, operates, and maintains the DER system over the same contract life. 

Figure 1. Parallel Connected Power Purchase Agreement (PPA) Meter

Under the PPA mechanism, the energy generated by the DER and the energy consumed are separately metered using two meters -  PPA meter and Standard (consumer) meter respectively (see Figure 1). Due to this independence, under the PPA, neither the agency who pays for the power generated by the DER system nor the developer who owns and operates the DER system need to be a consumer of electricity. 

Recently there have been two other terminologies used for the PPA compensation mechanism - (a) ‘Buy All, Sell All’ popularly known in California as BASA, and (b) Gross Metering. Globally the terminology used is 'PPA Meter' instead of 'Gross Meter', hence the term, ‘Gross Metering’ is redundant and confusing. We prefer the name ‘BASA’ if change in terminology is at all required. 

Feed-in Tariff (FiT) System

Feed-in Tariff (FiT) schemes are typically based on a 15-20 year long contract where prices are pre-defined above retail with a tariff degression, which effectively reduces the earnings over time. In the FiT, you get paid for every kWh you generate under an FiT contract.  

The FiT system uses a separate ‘FiT’ meter (see Figure 2) in order to measure the outflow of electricity generated from renewable energy on the consumer’s premises independently.

The electricity consumption is measured by the Standard meter which is compulsorily a bi-directional meter. The separation of electricity generation and consumption using two meters enables each to be priced differently. 

Unlike PPA, in the case of FiT, it is possible to identify the number of kWh units, (generated by his own DER), self-consumed.  Since only the surplus energy generated by the DER at any instant of time gets exported through the Standard meter, it is possible

to have a tariff rate applied to the surplus energy that is different from the rate applied to the total energy generated by the DER system.

Figure 2. Series Connected Feed-in-Tariff (FiT) Meter Connections

FiT systems are popular for solar generation in several European countries including Germany. In order to boost solar power, German utilities once paid several times the retail rate for solar, but have successfully reduced the rates drastically while actual installation of solar has grown exponentially at the same time due to installed cost reductions. Due to these measures, Germany was a leader in terms of PV installed capacity with over 70% in the rooftop segment. 

Net Energy Metering 

Net Energy Metering or Net Metering (NM) is a mechanism that allows consumers who export some or all of the energy generated by their DER to import back (use) that energy  anytime, instead of when it is generated. NM allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. 

Figure 3. Net Energy Metering (NM) Meter Connection

Most NM laws involve monthly rollover of kWh credits, a small monthly connection fee, require a monthly payment of normal electricity bill (deficits), and annual settlement of any residual credit. Unlike FiT, net metering uses a single, bi-directional (standard) meter (see Figure 3). In many countries NM needs no licence, can be implemented solely as an accounting procedure, requiring no special metering, or even any prior arrangement or notification. Net metering is an enabling policy designed to foster private investment in renewable energy. The NM policies are far more popular than the FiT policies in the USA and Japan.

Drawbacks of Net Metering

We, too, agree that any consumer interested in generating energy using renewable means should be allowed and encouraged to do so. Electrical energy is a perishable commodity even when generated by renewable means, cannot be stored efficiently and hence we also consider it appropriate to offer the excess generation to the local electrical distribution utility instead of wasting it. However, the intention to generate and ‘bank' solar units only to get them exchanged later in the day or night with fossil fuel units is highly inappropriate.  

EV Charging -  Fossil Fuel Units exchanged against  Solar Units

Net metering is always at retail and was introduced assuming that the DER generation is almost entirely used for own consumption when it gets generated. Hence NM was technically not to be considered as a compensation mechanism. But the subsidy to EVs is fast changing the trend and consumers are increasingly observed to ‘bank’ or export the excess units generated during the day only to be imported back during the night to charge their EVs.   

Why should the DER generated units be exported to the utility at retail price if they are to be imported later in the night? By doing so, are we not permitting exchange of, or equating, the intermittent cheaper solar based generation in the day with expensive fossil fuel based generation at night? 

Grid Maintenance - Who pays? 

Then there is the cost of service to use the grid. The prosumers (consumers with DERs who are also producers) do not pay the full cost of service to use the grid. Electric utilities own and maintain the grid and the major share of service cost of prosumers now gets shifted onto customers (typically low income families) without DERs. 

Most owners of DERs still rely on the grid to receive electricity from utilities at night or when their systems cannot generate sufficient power. Should they not then pay the cost of grid service?

A 2014 report funded by the Institute for Electric Innovation claims that net metering in California offers excessively large subsidies for residential rooftop solar facilities. These subsidies must then be borne by other residential customers, most of whom are less affluent than the solar prosumers. Most of these large subsidies went to the solar leasing companies that accounted for about 75 percent of the solar PV facilities installed in 2013. 

California’s Duck Curve

Excessively large subsidies to solar rooftop, clubbed with the freedom to exchange solar generated units with the units generated by burning fossil fuels through Net Metering mechanism has had a bad impact on the energy demand curve in California since 2015.  

Figure 4. The Duck Curve

The excess solar generation at noon is responsible for the ‘belly’ of the duck, while the excess load after dusk due to EV charging  is responsible for the ‘head’ of the duck (see Figure 4).

In the year 2014, Brad Bouillion, Director - Operations for California Independent System Operator Corporation (CISO) presented a statement before the US Federal Energy Regulatory Commission (FERC) with the ‘duck chart’ shown in Figure 5 to illustrate the difference between forecasted load and expected electricity production from variable generation resources (net load) during a typical March day. They predicted that, year 2014 onwards, a “belly” would appear in the mid-afternoon that quickly ramps up for the evening load pull when solar output ceases. The duck chart highlights over-generation during the middle of the day and not just during low load conditions.    During overgeneration conditions, the generators and motors connected to the grid could get potentially damaged. This condition gets exacerbated by high levels of non-dispatchable generation.   

Figure 5. Predictions of the California’s Duck Curve from 2014 to 2020 (by CISO to FERC) 

CISO even predicted that the belly would get more pronounced over the  five years till 2020. CISO estimated the levels of non-dispatchable generation after 5 years (2020), and identified a shortage of downward dispatchable capacity to balance supply and demand.

The duck curve scenario was predicted to drop below the minimum generation of 15,000 MW. CISO feared that they will be forced to implement curtailment, in which the DERs are scaled back to keep the net load above the minimum generation value, or implement negative energy prices to force net load upwards. As curtailment nullifies the zero-emission benefits of solar and wind power, it is an unfavourable option. 

Figure 6. A breakdown of CAISO’s non-dispatchable resources.

CISO suggested that, to help address grid reliability needs, over-generation conditions and maintaining system frequency, variable energy resources (DERs) having ability to limit production and good frequency response capability, should contribute to the stable and reliable operation of the bulk power system. 

Figure 7. Using Energy Storage to Capture energy (green) and release (red) during peak load hours (U.S. Federal Energy Regulatory Commission, June 2014)

In 2015, a Stanford University student [5] suggested energy storage (see Figure 7) as a way to mitigate overgeneration. In the less ambitious Scenario 1 where only overgeneration mitigation is considered, he calculated that peak charge rate would be 2,290 MW (at 1:30 pm) and that the total energy storage would be roughly 13,720 MWh, and the maximum discharge rate would be 4,820 MW (at 8:30 pm). In a more ambitious/ unrealistic Scenario 2 of complete balancing, that aims to completely flatten the net load to the day’s average of 18,340 MW, the energy storage needed would be approx. 40 GWh. The total initial capital needed to set up sufficient energy storage for scenario 1 ranges from 5 to 20 billion USD, while scenario 2 entails 25 to 95 billion USD. 

Three mechanical storage technologies - Aboveground Compressed Air Energy Storage, CAES (1.21 USD/MW), Zn-Br flow batteries (1.54 USD/MW), and Pump hydropower (1.91 USD/MW) - came out as cheapest, beating out electrochemical technologies (Lead-Acid 2.91 USD/MW) and others.

Post-Net Metering Successor Tariffs

Setting up 40 GWh of energy storage capacity at 25 billion USD, to mitigate overgeneration is not an easy task. A better strategy would be for the policy makers to divert attention to an appropriate tariff mechanism that can drive Demand Side Management concepts. When properly designed, the tariff enables the market forces to put DSM techniques in place. California understood the drawbacks of net metering and decided to implement a successor tariff. A few replicable models have emerged such as (a) Time of Use - TOU, (b) Net Billing and (c ) Buy All - Sell All (BASA) . As of 2018, sixteen states swapped successor tariffs for retail rate net metering programs.  The duck's belly flattened with ease. More on successor tariff implementation in Part 2 (to be published in the forthcoming issue of Electrical India)

Observations

Decarbonizing the power generation sector through renewable energy that is flexible, schedulable and dispatchable is an essential pivot on the path to limit global warming to 1.5 degrees. Flattening the duck curve is one of the greatest challenges facing renewable energy.

As of June 2021, in Gujarat alone, net metering has supported the adoption of solar by more than 2 lakh homes totaling nearly 1.27 GW of installed capacity. Continued growth in generation during day-time solar peak periods creates two challenges: (a) excess generation at the system-level and (b) grid constraints at the distribution-level. At their core, these challenges are the manifestations of misaligned power supply and demand.

Net metering had allowed non-simultaneous netting of vehicle load undermining a principal benefit of vehicle electrification. In the next few years, electric vehicle adoption is forecasted to surge, and a huge class of customers may come to expect low or zero cost service from the grid.

Conclusions in Part 2

In Part 2 of this paper, Net Metering is, therefore, reexamined to understand how to build on its success, for further decarbonization, and also account for location value, fairly recover grid costs, and enable customer choice. Alternative policies are evaluated after applying consistent criteria reflective of State Electricity Regulatory Commission’s (SERC’s) principles. Our analysis identifies Net Billing as a clear successor to Net Metering. We recommend Gujarat policy-makers to move expeditiously to transition the state’s solar compensation framework toward a Net Billing structure with locationally differentiated prices paid for exports that would pave the way for grid friendly transportation electrification. Net Billing would encourage electric vehicle customers to charge while the sun shines, or store their solar-generated energy to charge their vehicles at other times.

References

[1] United Nations - Climate Change : Sharm el-Sheikh Climate Change Conference - November 2022, https://unfccc.int/cop27

[2] Kamat V. N. Metering Systems, Policies and Tariffs for Distributed Renewable Systems, Electrical India, published by Chary Publications, 311, Raikar Chambers, Govandi (E), Mumbai, 400 088, Vol. 54, No. 11, November 2014, pp. 34-49.

[3] Wikipedia, Feed-in tariff, http://en.wikipedia.org/wiki/Feed-in_tariff

[4] Wikipedia, Net Metering, https://en.wikipedia.org/wiki/Net_metering

[5] Michael Burnett, Energy Storage and the California Duck Curve, Coursework for PH240, Fall 2015, Stanford University, Fall, 2015.

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Implementing Net Billing for CO2 Mitigation - Part 2

Dr. Vithal N. Kamat

(Continued from Part 1 published in Electrical India January 2023 issue)

Desperate Need for CO2 Mitigation 

India ranks fourth in terms of fossil fuel based CO2 emissions (2.7 billion tonnes). WWF’s Living Planet Report-2022 highlights a devastating 69% drop in 48 years in monitored wildlife populations. India is a signatory to the international environmental treaty of UNFCCC and the goal is to keep global warming within 1.5℃ by the end of the century. But GDP, life expectancy and energy consumption are directly linked through a positive linear correlation. A transition to renewable energy sources will take decades.. The effects of climate change are threatening life on earth. The Conundrum of Fossil Fuel Exploitation, Climate Change & Energy Security - What Can We Do?

Tariff as an Enabler for CO2 Mitigation 

Tariffs can play a major role as an enabler to direct large populations to adopt measures that reduce CO2 emissions particularly in developing countries. All other measures, such as enacting laws, are seen to have had very little effect. Earlier we have seen the role that Apparent Energy (kVAh) Tariffs played in eliminating low PF loads resulting the savings of more than ₹20,000 crores/annum in loss savings through improvement in PF. 

Taking inspiration from the success of kVAh tariffs, here we design a tariff for DERs, particularly for solar PV, that can help us reduce CO2 emissions in India.

Problem Definition 

In India, EVs are mostly charged after dusk  when the power plants are burning precious and scarce fossil fuels - coal or gas. Net metering permits an EV owner to conveniently offset her night EV consumption from her daytime solar RoofTop generation.

Role of EVs in the Smart Grid Vision

An Electric Vehicle (EV) is a load different from other electrical loads. A fan or a TV operates and consumes energy the same instant that it is drawn from the utility. However, an EV is different as it contains a rechargeable battery - a storage element. The battery allows the user to drive the vehicle or to export the stored energy back to the grid at a later time. The battery also gives a choice to the user to select its charging period. 

This is the age of Internet of Things (IoT). Smart Metering and Smart Grids are part of the IoT revolution. As per the original Smart Grid Vision, the batteries installed in the EVs are expected to help the Electric Utilities in flattening its load curve by offering the stored energy during peak load intervals. In reality, what is happening is the reverse. EVs are posing a threat, with their dangerously high extra burden, when placed on charge in the evening. Since an electric car consumption is equivalent to approx. 15 refrigerators, even an energy surplus state such as Gujarat may face load shedding once again between 7:00 PM to 9:00 PM due to excessively high charging load posed by the EVs.

‘Desirable’ Consumer

Net Metering has a fundamental flaw - it is unable to differentiate between prosumers who export different quantities of solar energy as long as their net difference between the units imported and exported, or ‘netting’, remains the same. Amongst them, we label the one, at one extreme, who exports his entire solar generation during the day while importing an equal amount of units at night to charge his EV,   to be 'totally undesirable'. On the other extreme end, we consider a consumer to be 'desirable', if he consumes his entire solar generation, himself - the way it was originally intended (when NM was introduced). The netting is zero in both the above cases, and NM is unable to identify the two (‘desirable’ and ‘undesirable’ consumers).  

Damage by ‘Undesirable’ Consumer

An 'undesirable EV consumer' creates two major problems for the electric utility. On one side, expensive fossil fuel (coal/ oil) based generation is used to charge EVs. Hence, EVs are responsible for pollution & CO2 emissions (in contrary to claims made by GEDA) - may not be at his doorstep, but at the coal based power generation plants. Regardless of the place where the pollution occurs, the environment does get affected.  

The second problem the 'undesirable EV consumer' creates to the electric utility is for the latter to find another consumer who is willing to receive the solar generation exported by the EV consumer.  Since electrical energy is perishable and needs to be consumed the very same instant it gets generated, the utility has a mammoth job particularly with the rising number of solar rooftops and 950% increase in EVs reported recently. Wouldn’t it be better if the "undesirable EV consumer" prefers to use his solar consumption to charge his own EV?

Duck Curve

Utility companies use models to predict demand and operate as efficiently as possible while supplying more power during times of higher demand. But the introduction of solar power has brought about problems in these demand curve models.

As more solar power is introduced into our grids, electric utilities are grappling with a new problem due to generation versus consumption pattern mismatch.  Take a look at the solar (orange) and the load (blue) characteristics of a solar roof-top prosumer in Figure 4. Solar production peaks around midday. Hence energy demand from traditional sources of energy (coal, nuclear) is typically low. As the sun sets, solar energy production wanes, just as demand for energy typically peaks. Utility companies need to ramp up production to compensate for this gap, often overstressing an existing grid that is not yet set up for these peaks (since solar generation is recent). Moreover, the traditional sources of energy (coal, nuclear) are only economically feasible when they are continuously kept running. They cannot be turned off mid-day because the power is supplied by solar.

Figure 4:  Indian Prosumer’s Solar generation vs. Electricity Consumption

Due to overproduction, solar power is already being wasted in some places where the technology is widely used, like California. The problem is most intense during summer or spring when part of the solar panels has to be turned off to avoid overloading or even damaging the power grid. This discrepancy results in a net demand curve that takes the shape of a duck, and the duck curve gets more pronounced each year as more solar capacity is added and net demand dips lower and lower at midday Take a look at California’s Demand curves between the years 2019 and 2022 in Figure 5. 

In India, with increasing solar, a similar phenomena is happening. In this situation,  when the prosumer charges his electric car, typically after 18:00 hrs, the load curve is seen to further rise after 18:00 hrs, making the ‘duck curve’ even more pronounced (problem worsening). 

Figure 5:  California’s Duck Curve variations from 2019 to 2022

Flattening the Duck

The increasing share of renewables in the power mix brings with it new challenges, including balancing electricity supply and demand, changes in transmission flow patterns, and a decrease in system stability.  As more countries have started to rely on solar power, numerous potential solutions for the duck curve are being explored. 

Overproduction of solar power during the day can be stored in  Long Duration Energy Storage (LDES). LDES can be achieved in vastly different ways, including mechanical, thermal, electrochemical, or chemical storage.

• Pumped hydro storage (PHS): is a proven mature technology which is cost-effective and suitable for many developing countries if they have a reasonably integrated grid. Excess solar energy is used to pump water uphill to a higher reservoir and later, when power is needed, release the water downhill through turbines to the lower reservoir(see Figure 6). In India, significant investments that strengthen and integrate the grid have been made in the last decade and some additional interventions are necessary to overcome the geographical limitations of PHS solutions.

• Batteries : Considerable improvement in battery technology has helped their deployment in homes, power stations and electric vehicles for storage upto a few hours.  

Figure 6:  Pumped Hydro Storage as an LDES

However, the cheapest and most effective way to flatten the duck curve is through use of ‘demand side management’ (DSM) techniques. One of the best DSM techniques is “Application of Appropriate Tariff Policies and Mechanisms”.  

Post-net metering successor tariffs

In the USA, utility companies have always contended that solar prosumers get their bills reduced by too much under net metering. This shifts costs for keeping up the grid infrastructure to the rest of the customers, particularly the low income non-solar customers. The report funded by the Institute for Electric Innovation (IEI), too,  claimed net metering to be offering excessively large subsidies.

On a nationwide basis, energy officials have debated replacement programs for net metering for several years. The key challenge faced while constructing pricing and rebate schemes in a post-net metering environment is how to compensate rooftop solar customers fairly while not imposing costs on non-solar customers. Experts have said that a good "successor tariff," as the post-net metering policies have been called, is one that supports the growth of distributed energy resources in a way where both customers and the grid benefit. As of 2018, few "replicable models'' have emerged. The IEI report concluded that changes are needed in California, ranging from Time of Use (TOU), Net Billing to a separate BASA ("Buy All - Sell All") arrangement.

Time of Use (TOU)

This option reflects the status quo - Net Metering with TOU rates that more specifically reflect grid conditions, including (a) peak-to-off-peak rate differentials, (b) locational rate specificity, and (c) shifts in TOU periods on daily or seasonal basis. 

Net Billing

The second alternative structure is ‘Net Billing’ that awards credit to exports at a specified price which is different from the consumption charge for imports. Such a billing construct preserves the Net Metering structure and essence, namely, self-supply, that is, compensating the customer for the self-supplied portion of her production at the consumption charge.  Credits awarded to exports are at a price other than the grid consumption charge, which may count against subsequent charges or be monetized. 

No change is required in the metering system. The meter reader is expected to take both the import and export readings from the standard bi-directional meter (see Figure 3) for application of their corresponding rates while billing.  

Net billing pays the retail rate for customer-consumed PV generation and a below retail rate for exported generation. 

Buy All - Sell All (BASA)

The third alternative core structure is ‘Buy All, Sell All’ (BASA), which relies on a dual-meter system to meter all production and all consumption separately. The meter connections under BASA are similar to those under PPA mechanism.  All production receives compensation at a price other than the consumption charge. Unlike Net Metering, there is no direct connection for self-supply under a BASA framework. Hence, self-supply does not offset the customer’s charges for consumption. 

Under BASA, the utility both charges and compensates at a below-retail rate.

Such a formulation of core structures creates an important distinction between a compensation structure and the underlying rate design. In practice the two are intertwined, but the focus of this evaluation is how the overlaying compensation structure may be adapted. 

Successor Implementations

In the US alone, sixteen states swapped successor tariffs for retail rate net metering programs in 2018. For example, compensation in Nevada will go down over time though the compensation today is at the retail rate. In Arizona, the new solar rate is ten percent below the retail rate.

Since the Indian electric utilities have installed a Solar / FiT  Meter and a Standard Bidirectional Meter on each prosumer’s installation, it is easy to migrate to any of the above post-net metering successor tariff structures. 

Suggestions

In the interest of fairness, our suggestion is that State Regulatory Commissions (GERC) and electric utilities should make a very simple shift from Net Metering to Net Billing as a successor tariff. Net Billing preserves consumer’s right to self-supply, the main  advantage of Net Metering in a democratic country. Moreover, utilities can make this shift without making changes at consumer premises. Under this new successor Tariff, a 'desirable' consumer, who consumes his entire solar generation himself, say to charge his EV, would stand to benefit with lower bills and this is help alter the habit of  'undesirable' consumers who were charging their EVs after dusk. 

Going forward, building solar capacity alone will not suffice. Instead of building mega solar plants (like old fashioned centralized power plants), small solar plants have to be planted at locations advantageous to the grid. Energy needs to be produced simultaneously with demand, or stored until there is demand. Solar alone will not suffice; it needs to be locationally targeted and co-located with storage. Net billing structure with locationally differentiated prices paid for exports will help achieve this. 

Conclusions

Decarbonizing the power generation sector through renewable energy that is flexible, schedulable and dispatchable is an essential pivot on the path to limit global warming to 1.5 degrees. Flattening the duck curve is one of the greatest challenges facing renewable energy.

India has committed to rapid decarbonization of its power sector. Most of its states are pursuing that objective through a wide range of policy solutions, one of which is net metering, an incentive encouraging customer adoption of renewable distributed generation, especially solar.  As of June 2021, in Gujarat alone, net metering has supported the adoption of solar by more than 2 lakh homes totaling nearly 1.27 GW of installed capacity.  These adoptions have contributed to reductions in greenhouse gas emissions from the power sector and local job creation. 

Looking forward, Gujarat’s path to decarbonization assumes increased reliance on renewable energy, including estimates of up to 10 GW behind solar roof-tops by 2030. Achieving these targets would require accelerated customer adoption of solar. But as analyses of Gujarat’s electric system have demonstrated, continued growth in generation during day-time solar peak periods creates two challenges: (a) excess generation at the system-level and (b) grid constraints at the distribution-level. At their core, these challenges are the manifestations of misaligned power supply and demand.

Meanwhile, policy-makers are pushing for differentiation of incentives for solar by location, ensuring grid costs are fairly recovered, and enable customer choice. A clear need for balancing these objectives with the State’s decarbonization imperative exists. Net metering is, therefore, reexamined to understand how to build on its success, for further decarbonization, and also account for location value, fairly recover grid costs, and enable customer choice. Evaluating alternative policies and applying consistent criteria reflective of State Electricity Regulatory Commission’s (SERC’s) principles, this analysis has identified Net Billing as a clear successor to Net Metering. 

We recommend Gujarat policy-makers to move expeditiously to transition the state’s solar compensation framework toward a net billing structure with locationally differentiated prices paid for exports. This transition may be eased in several ways and informed by data and insight gained through evaluation of current net metering policies. This will help sustain growth in customer adoption and achieve forecasted levels of solar.

Net metering had allowed non-simultaneous netting of vehicle load undermining a principal benefit of vehicle electrification. In the next few years, electric vehicle adoption is forecasted to surge, and a huge class of customers may come to expect low or zero cost service from the grid. Timely adoption of a Net Billing structure would pave the way for grid friendly transportation electrification. Net Billing would encourage electric vehicle customers to charge while the sun shines, or store their solar-generated energy to charge their vehicles at other times.

References

[1] Kamat V. N. Implementing Net Billing for CO2 Mitigation - Part 1, Electrical India, published by Chary Publications, 311, Raikar Chambers, Govandi (E), Mumbai, 400 088, Vol. xx, No. 1, January 2023, pp. xx-yy.

[2] Sustaining Solar Beyond Net Metering, A Report by Gridworks, PO Box 5013 Berkeley, CA 94705, USA.
https://gridworks.org/wp-content/uploads/2018/01/Gridworks_SustainingSolar_Online.pdf