Net Metering – Mechanism of Billing

Net metering is being pushed by the Government of India as a means to promote installation of rooftop solar power plants in India. So, what exactly is net metering?

Net metering is a system in which a rooftop solar power plant is connected to the grid through a net meter. This solar power plant is permitted to feed energy into the grid when the consumption at the premises where it is installed is less than the power being generated. Let, for example, there be a factory which consumes 500 KW of power for eight hours in a day. If this plant has installed an 80 KWp solar power plant which generates electricity for five hours in a day; it will consume all the power generated by the solar plant and draw some more energy from the grid. However, on a Sunday or any other holiday, when the plant is shut down, it will still generate 80 KW of power for five hours but not consume it. In net metering, this factory is permitted to feed this energy into the grid through a net meter.

A net meter is a two-way meter which measure the amount of energy being drawn by the factory as well as the amount of energy it is feeding into the grid. The billing is done on the net energy consumed by the factory.

Billed Energy = Energy consumed (units) - Energy fed into the grid (units)

This way, the factory is saving not only by consuming the power generated by the solar plant but also by feeding energy into the grid.

So how is the billing actually done?

Every DISCOM has a billing period and a settlement period. The settlement period is the financial year while the billing period would be usually one month or in some cases even two months. The adjustment in the net metering is done as follows:-

Billing Period. During the billing period, the DISCOM calculates the net energy consumed by the consumer based on the formula mentioned above. The bill is then generated for the number of units consumed. If the number of units generated and fed into the grid is more than the energy consumed, then the excess units are carried forward to the next billing period and so on.

Settlement Period. At the end of the financial years, the DISCOM determines the net units consumed by the consumer and bills him for that as per the tariff. However, in case the number of units fed into the grid is more than the energy consumed by the consumer, then the DISCOM pays the consumer for the excess energy fed into the grid. The rate for buying this energy is determined by the state Electricity Regulatory Commission based on the Annual Average Purchase Price for the DISCOM.

Who all can install a net metering system? Are there any limitations on the system size that can be installed? I shall cover all these issues in my next post.

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