Policy bar with net metering on solar energy leads to closure of rooftop cos, says Suncraft Energy MD

The slowdown in renewable energy (RE) sector had started before the pandemic itself. Covid has magnified it beyond proportion. The only ray of hope comes from the strong pipeline. On the other hand, the changes in Net Metering policy are expected to leave a negative impact on the industry. A long-term solution for the country's solar sector lies in deregulation of the distribution and transmission infrastructure and allowing the PP model to operate the grid and making the distribution companies extremely competitive, feels Rabin Roy, Managing Director, Suncraft Energy. Speaking to Bizz Buzz exclusively, Roy shares his thoughts on sunny side can be up for Indian solar sector

There has been a significant slowdown in RE capacity addition in India, thanks to the pandemic. However, there is a strong project pipeline and many projects are under the tendering process. So, do you foresee any upturn in RE capacity addition in 2022?

The significant slowdown in RE capacity, truly, is a surprisingly unfortunate reality. The slowdown in RE had started before the pandemic itself. Pandemic has magnified it in a much bigger way. In utility level or open access level there is of course a strong pipeline of RE, which would be implemented if the tendering processes are carried out in quick time. I am sure, there will be an effort from all concerned quarters to implement those projects and if it happens, we would definitely see some positive movement.

At the rooftop level, however, one can't overlook that change in Net Metering policy to allow the Solar Plant with Net Metering, whichever is lower between 500 kWp or the connected load of the premise, where the solar plant will be put. This will definitely impact the industry in negative ways. Apart from that, I must say that Covid pandemic is far from over in India and thus a significant upturn in RE by 2022 would be a little too optimistic.

Despite power tariff hikes, solar power tariffs are expected to be below Rs 3 per unit, which is cost competitive. What is your take on this? Do you think that this will come in handy to the country's solar sector?

The solar energy tariff saw an extremely competitive scenario. The kind of tariff Indian solar industry has been offering, made the sector quite attractive from a consumer and investor point of view. However, this is a price war, where many are burning their money.

In the current scenario, the landing price of cells and other equipment of the solar industry have been rising and thus I see this tariff will have a correction in near future. Even after a correction the tariff industry offer would be one of cheapest among all energy sources.

What are the key challenges before the Indian solar sector? And how to overcome them?

Indian solar sector in the last ten years achieved a significant maturity. However, as an independent energy source, it has serious policy dependency. In utility level and open access level, Indian solar sector is highly regulated and since grid belongs to distribution companies, the sector sees policy paralysis or delay in policy execution. The dependency on grid and net metering made rooftop solar energy completely in the pray of regulators.

To overcome these issues, we need to take few drastic actions.

A) We need to deregulate the distribution and transmission infrastructure and allow the PP model to operate the grid. In this arrangement, there will be many power generators, many grid operators so that consumers can have the option to buy the cheapest power available to them.

B) We need to make distribution companies extremely competitive so that it can find ways and means to increase its appeal to consumers.

Peak power demand reached an all-time high of over 200GW on July 7, 2021. It surpassed the previous all-time high of 197.06GW. Thermal power satisfied 67 per cent of the load when demand was at its peak. In comparison, renewable energy sources accounted for 16 per cent of the supply. Hydropower met 14 per cent of the demand, and the remaining was met through gas and nuclear units. Do you think this power mix or percentage wise break up is ok, or would you like to see it differently?

The power mix will always be dominated by thermal power till India adds significant nuclear power. However RE, especially solar energy would be vital in meeting the energy mix. Energy mix and power mix are not the same. Inclusion of solar energy will be shifting the mix more towards RE. Even though India is poised with huge hydro energy potentials, hydro projects are difficult to execute from different perspectives. Thus an increase from Hydro will be extremely difficult in either power or energy mix.

In the next 5 to 10 years, we are likely to see the emergence of new technologies in energy generation. These will definitely be from RE sources. Thus a greater percentage towards RE from both power and energy mix is on the cards.

How is the country's rooftop solar sector progressing? If you are not satisfied with the progress, what according to you, is going wrong and how to address the issue?

Rooftop solar is observing a significant policy aberration. Rooftop can sustain only when Net Metering arrangements are allowed. Recent policy change from central govt to have a cap to 500 kWp or connected load, whichever is lower, has brought a significant uncertainty in rooftop investment opportunities. Many state regulators are capping solar energy to 10 kWp or 5 kWp with Net Metering arrangement and allowing gross metering for more than 10 kWp or 5 kWp systems.

This is impacting the industry deeply. Many small scale solar rooftop companies are now on the verge of closing due to this policy change. Regulators must allow the use of solar energy captivity and must allow net metering of at least 1000 kWp to save this sector. This sector has created significant employment and thus all the states need to take a reasonable stand. This sector doesn't need any subsidy as the solar roof energy is extremely cost effective and it offers consumers an access to economical options.

What is the current state of affairs with regard to smaller or mid-sized solar companies like Suncraft? What needs to be done to see them flourish and prosper?

As I said earlier, due to the cap on Net Metering arrangement rooftop solar companies are going through a very tough time. Suncraft Energy started from Kolkata and West Bengal has been one its primary states to operate on. WBERC has capped the Net Metering arrangement for solar energy upto 5 kWp after 30th June, 2021. Naturally this has created a tremor in companies like Suncraft Energy. There are about 30-odd solar companies operating in the state and I am sure they are finding it equally difficult to go on.

This sector offers a better value to consumers. So, I guess, if the regulators can see from the consumers' perspective, then it is possible to find a solution where all the sectors can co-exist. Rooftop Solar Energy would not be able to contribute more than two per cent to the grid in the next 5 years even if all the states allow net metering arrangements for 1,000 kWp as it was before. Suncraft Energy requests all regulators and policy makers to bring the perspective consumer options in selecting energy sources and also to see how the infrastructure call grid can be just a medium of distributing energy allowing any generating company to sell energy through it.