ISLAMABAD: The government is likely to fix the buyback rate of net metering at average energy cost aimed at increasing the payback period to five years instead of three years.
These thoughts were shared in an online seminar titled, “Net Metered Distributed Generation; Challenges Solutions and Way Forward”, organised by The Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH, often simply shortened to GIZ, the main German development agency.
The event brought together relevant stakeholders of the power sector; i.e., the Power Division, the National Electricity Power Regulatory Authority (NEPRA), the Central Power Purchasing Agency (CPPA), the Power Distribution Utilities (Discos), the Power Information Technology Company (PITC) along with the Pakistan Solar Associations (PSA) and Solar EPC companies’ experts and academia to have an in-depth discussion on the topic and recommend the best win-win situation for the Government of Pakistan, the solar industry and the consumers.
Net-metering: turning up the heat on Pakistani people instead of IPPs
The participants were informed that under the current NM regime, the excess units are carried forward for a period of three months.
At the end of the three-month cycle, the excess units are converted into monetary value and adjusted from the peak unit consumptions. It was argued that due to the carry forward facility of excess units, NM consumers intend to install more than the required solar capacity, enabling them to net off their energy consumptions for up to three months.
The Discos as well as some experts proposed that this facility should be limited to a monthly basis as it will encourage self-consumption and battery energy storage system rather than over installation of high capacity solar PV system.
One of the participants from Discos proposed that there should be a central cell established for Discos which shall oversee the activities related to NM. The cell shall gauge the integration of rooftop solar PV, hosting capacity analysis and other technical issues for whole Discos. It shall provide its recommendations to steer the NM connections at high and low-concentrated areas.
With 2,000 MW of net-metered installed capacity by April 2024 and over 130,000 net-metered systems generating 3TWh of energy annually, the technical session set the stage for discussing the significant integration of distributed generation- issues such as high consumer voltage, distribution transformer power ratings breach, power quality, and increased reverse power flow due to unauthorised addition of roof-top solar PV capacity were highlighted as major technical challenges.
The need for a reduction in consumer-sanctioned load limits for the installation of net metering solar PV system was also discussed. The current regulations allow net metering for 3-phase consumers, with PV connection limits set at 1.5 times the sanctioned load of the consumer and distribution transformer limits at 80o/o.
The distribution company officials highlighted that due to increased net-metered solar PV connections, reverse power was being observed on distribution transformers. Experts argued that such a reverse power flow can occur only during the shoulder months of (March, April, October and November) due to the fact that during peak summer months the energy generated is self-consumed while during winter months the energy generation from solar PV systems is less due to fog and low irradiation levels in most of the parts of the countries (mostly load centres like Punjab, KP). Some solutions proposed were to install transformer monitoring system and lo enable warning alarms in case of high reverse power flow to reduce the transfer burn-out ratio.
It was argued by experts along with DISCO officials that allowance of NM capacity by 1.5 times sanctioned load limit creates disparity as this allows few consumers to install solar PV before the transformer capacity limit is exhausted. Therefore, it is preferred that similar to countries of Bangladesh, Saudi Arabia, and India, the NM capacity limit should be reduced to one time the sanctioned load limit.
The Discos mentioned that some consumers install excessive solar PV panels on their already NM connection, thereby, increasing the energy feedback by unauthorised means to gain benefit. Such unauthorised installation of solar panels is causing power quality issues and over-voltage problems during period of low loads. Experts mentioned that Discos are free to take actions as per the NEPRA guidelines.
Furthermore, experts recommended that Discos should install smart meters at all NM connected consumers and through effective data analytics ensure that unauthorised installations are penalised and are discouraged. The use of smart meters will allow Discos to have visibility over their network.
Experts also argued that since many of the Discos have conducted GIS mapping of their network, they should now utilise the mapping to conduct hosting capacity analysis of their network. Such an analysis will enable the Discos to have firsthand information of their network and its capacity to integrate solar PV. Such information shall be made public to consumers on a regular basis (annually or biannually).
This session examined the financial implications and challenges of net metering, proposing potential solutions. The financial session highlighted the decreased energy demand in Pakistan, increased tariffs, and government concerns about the benefits of net metering regulations favouring solar PV net metering consumers at the expense of non-net metering consumers.
Issues such as high buyback rates, cost of firm capacity, and quick ramping requirements were also discussed. Key discussion points included the grid usage by solar PV installations as a backup source, the financial burden on non-solarised consumers, appropriate buyback rates for excess energy units, and the potential for fixed charges on prosumers.
Currently, the buyback rates for excess exported units are the national average power purchase price. The DISCOS argued that this should be reduced to an average energy purchase price. Experts proposed that as per current affairs, the payback period is below two years for solar PV net metered system.
Therefore, any reduced buyback rate which increases the payback period to 4-5 years will be suitable and a win-win situation for both sides. The representatives of the solar association also agreed to this proposal of experts, however, they disagreed to reduction of buyback rates to 9 or Rs11 as rumoured in the media.
The change in the tariff regime was also discussed. It was agreed unanimously that under the current regime, there is a distortion as net metered consumers place burden on the non-net metered consumers in a way that the energy tariff is increased for remaining non-net metered consumers. Therefore, a suitable tariff mechanism should be adopted. In order to remove this distortion. Some DISCO officials stated that fixed charges shall be imposed across the board and not only on NM consumers.
It was also agreed by the participants that behind the meter solar at industrial scale which is non metered is also a point of concern. Captive solar is contributing towards a shrinking in energy demand.
To manage the integration of distributed generation more effectively, it was agreed to decrease the sanctioned load limit for net metering capacity. This measure is intended to avoid overloading the grid and ensure a more stable distribution network. Additionally, Discos are required to implement enhanced network monitoring measures, including the use of smart meters and transformer monitoring, to track and manage the impact of net metering systems on the grid more effectively.
A consensus was reached that Discos should determine and communicate their hosting capacity for net metering systems to stakeholders, which involves assessing how much distributed generation the grid can handle without compromising stability.
Furthermore, the permissible PV capacity connected to a distribution transformer may be reduced from 80 per cent to 50 per cent to prevent transformer overloads and associated technical issues, however, not without any practical technical justification.
To support these measures, Discos shall provide practical examples of over-voltage and power quality issues observed under the current net metering limits, helping to understand the real-world impact and formulate appropriate technical solutions.
It was proposed that a central cell should be established to oversee the overall progress of net metering and its effects on the grid, facilitating better coordination and monitoring. To encourage self-consumption of generated solar power, the unit net off-cycle can be reduced from three months to one month, incentivising consumers to use more of their generated power rather than exporting it to the grid.
It was recommended that the payback period for net metering and other rooftop solar installations can potentially be increased from the current two years to five years to make investments in solar energy more attractive by providing a longer timeframe for returns This can be done through a reduction in the buyback rates for excessive units exported to grid as done globally.
Copyright Business Recorder, 2024