Karnataka solar rooftop PV regulation

Electricity markets have always witnessed a tussle between the utilities and the regulators, Karnataka state is no different. The electricity regulator has always been among the first in the country in implementing progressive policies in the Renewable Energy (RE) sector. However, the progress of all the plans has been disheartening and in most cases it is due to lack of co-operation from the utility in the state. A case in point is the solar rooftop projects, in spite of having the highest Feed-in Tariff (FiT) of ₹ 9.56/kWh in the country in 2013, there was a lack of adoption for well over a year. The reason, Distribution Companies (DISCOMs) came up with an implementation plan nearly a year after the order.

Karnataka Electricity Regulatory Commission (KERC) has recently drafted a regulation to address the concerns of domestic residents living in apartment complexes with shared roofs and electrical connections. The proposed regulation intends to offer existing solar rooftop owners in shared roofs an option to increase their capacity and also new residents who wish to install a bigger system by aggregating the contract demand of multiple households in the building.

The proposed regulation aims to fill all the gaps existing in the current system which hinders adoption of solar rooftop system in residential complexes. The proposed tariff at Average Pooled Power Purchase cost (APPC) which is currently at ₹ 3.97/kWh for BESCOM will raise eyebrows considering the FiT is at ₹ 7.08/kWh for domestic consumers.

Will the regulations have a positive impact?

• The regulation is likely to have a positive impact because it removes the regulatory hurdle currently preventing residential complexes in implementing the system.
• Residential complexes tend to install solar as a way to reduce their energy bills and hence the type of metering or tariffs wouldn’t matter much.
• The regulation would however impact early adopters who will have to surrender their individual Power Purchase Agreements (PPA) if the complex as a whole is going for a bigger system in the common roof.

Overall, the regulation is definitely a good step but I believe there are technical challenges like metering involved in the implementation phase which only the DISCOMs can solve. I had a conversation with a regulator in KERC prior to the drafting of this regulation discussing issues related to solar rooftop in the state. He clearly admitted that at their level they can only bring in the best-fit regulation considering all stakeholders in mind but the final implementation is out of their purview. The comments to this draft regulation are open till 5^th July post that there could be a revised regulation coming up.

Check the proposed regulation:Here

Karnataka Solar Rooftop story

The recent announcement of the  solar rooftop tariff revision in the state of Karnataka has not gone very well with the general public even as they were expecting the tariffs to be reduced eventually. Tariff revision seemed to be an obvious move considering the ever decreasing cost of the solar power system and the recent solar bid results dint quite justify the prevalent tariff of INR 9.56 which is more than double the lowest tariff in the country with knowledge of the fact that the scale and projects are totally different.

The new tariff

Cty: KERC

The tariffs are differentiated and low compared to the previous order of 2013.

Cty: KERC (2013)

But the biggest announcement of the order came in the form of gross metering for domestic, hospital and institutional consumers.

Why is gross metering good for residential consumers?

The initial reaction to the tariff revision was surprisingly negative, with the so called industry experts calling KERC’s new tariff as a deterrent to the expansion of solar rooftops in the state but the gross metering policy will only aid the development of rooftop projects in the state. Gross metering will pay for every single unit of solar generated on domestic rooftops at the agreed price unlike the previous net metering scheme where consumers were paid for the excess sold over a billing period.

In short, consumers will be paid more for every solar unit they generate compared to every single unit they consume from the utility. The current tariff for domestic consumers in Bengaluru is between 3-6.90 INR. A quick calculation shows the slight benefit an average consumer stands to gain with the new policy.  The energy consumption numbers are conservative and the savings with gross metering will be higher than these on average.

And for the utilities

The utilities will be disappointed considering that they will be losing the extra revenue in terms of the energy the consumers will not be consuming. Since the consumption will go down for consumers they will also consume in the lower slabs of electrical tariffs and will be paying lower tariff.

BESCOM tariff 2016-17 Cty :KERC

In addition to losing out on energy revenue, utilities will also be paying up for the solar generation in totality. That will definitely be an added burden and for the utilities who have been complaining for a long time on losing out on consumers through the Open Access regulation.

Why is this a bad precedence?

Solar rooftops should definitely be incentivised but not at the cost of utilities. We have enough evidence of how such tariff regulations have failed in the long run in many places and is not sustainable. Germany, UK and even a few states in the US went this way in promoting solar with high Feed In Tariffs and then had to reduce or remove FiTs which then dint go well with the consumers.

The commission could have rather kept the new tariffs on par with the existing utility tariffs with similar slabs which wouldn’t have been harsh on the utilities. The tariff structures need a rethink, instead of  tilting the favours towards consumers the regulators can balance the situation by favouring the utilities in terms of tariffs but seeking a commitment in terms of service delivery or penalising on default of service.

More info on order

Why Karnataka needs pumped storage systems?

Courtesy:Wikipedia

A recent report titled ‘Wind and solar energy for meeting Karnataka’s future electricity demand’,  by the National Institute of Advanced Studies (NIAS) and Power System Operation Corporation Ltd. (POSOCO) analyses trends in consumption in Karntaka to predict the expected demand for power in the State in 2017 and 2022, as well as also accounts for the increase in generation from other sources. The most striking point the report drives is the need for ‘Pumped Storage Technology’ if Karnataka achieves its target of 5GW of wind +solar power by 2017.

What is pumped storage?

In a typical hydroelectric power plant the water from a dam or reservoir at a high level is let to run down through pipes and generator thereby converting gravitational potential energy into Kinetic energy.

Courtesy:BBC UK

On the contrary pumped storage involves the reverse process where the water from a lower level reservoir is raised to the higher reservoir using alternate energy (wind or solar) when they are in excess. The water then is let to run down the generator when there is a drop in wind and solar generation but a spike in power demand thereby maintaining the power supply-demand equation.

Why Karnataka needs pumped storage systems?

Karnataka today has a deficit of 3GW and has ambitious targets to raise the penetration of solar and wind power generation from the current state of 16% to nearly 27% of total power generation by 2017. If that goes as per plan we would have nearly 3.1GW of Wind and 1.3GW of solar power by 2017. This number is phenomenal considering we would have overturned the projected 10% deficit in 2017 by generating nearly 2% of excess energy.

The report goes on to predict that if all goes as per plan Karnataka would have solar, wind penetration of 31% by 2022 which could mean we would nearly export one fifth of our power production. However increasing wind and solar in the grid means we are raising our stakes on unpredictable energy but can be successful if we utilize the vast hydro potential of Karnataka.

In a recent report nearly 2000 tmcft of water was being considered to be wasted in Karnataka by rivers. A notable point was the failure of the Mekedatu pumped water storage project to take off.

(In the end there will be a few skeptics who point to the declining pumped storage systems in the developed nations; that debate is for another day.)