In the previous article, I explained the basics of on-grid solar PV systems. In this article, I will explain the concept of net metering, which is very important to understand. I will also talk about the two main types of on-grid systems.
Net metering, which I touched upon in the last article, is a very important concept and deserves a lot of explanation.
Net metering looks easy to implement, which it is in many ways. However, it can’t be done unless the distribution company allows you to do so. Why? Because net metering requires the distribution company to do a lot of things:
They have to install the meters. They can do it either as shown in the diagram, or they can choose to install only one “two-way meter” which measures the amounts of exported and imported energy in addition to measuring the net energy; that is a perfectly acceptable solution.
They have to come up with a policy which determines what the consumer can and cannot do. The questions that a net metering policy needs to address are:
• Will the distribution company pay for the generation at a certain rate (called “gross” metering) or offset it against the consumption? Theoretically, the distribution company can opt for the former, although they opt for the latter in most cases, which means that they are paying the consumer at the rate at which they are charging him. In India, the higher a consumer consumes, the higher is his rate per unit. So this actually works out quite well for him.
• How much maximum energy can a consumer generate? Typically, it is specified as a percentage of the energy that he consumes. If it is 100%, it means that the consumer can export only as much as he imports from the grid. Of course, the consumer cannot exactly know how much he is going to consume. So the policy also needs to decide what happens in the event that the generation is more or less than the specified percentage. There is no issue if the generation is less than the allowed maximum; the issue is if it is more.
• If there is excess generation, the policy needs to decide what will be done
Will the excess be settled in that month itself, or will it be allowed to be rolled over to the next month?
Will rolling over be allowed till the end of a calendar year (or financial year as the case maybe) or will it allowed over multiple financial years?
If it is the former, what rate will the distribution company pay for the excess energy, if at all? The policy can say that they will buy the excess electricity at a fixed rate, which in most cases is APPC (Average Pooled Purchase Cost). But it might also say that the excess generation won’t be paid at all.
• How much maximum energy can the consumers in a particular area generate collectively? Typically, it is specified as a percentage of the capacity of the distribution transformer that serves those consumers. The idea is that it shouldn’t exceed some percentage; too much renewable energy, since it is “infirmed” or variable, can cause problems to the grid and destabilize it if the variability is not dealt with properly.
They have to do the actual accounting as per the policy after consumers do the installations.
As you can see, there are a lot of things to consider when coming up with a net metering policy, and various countries/states/cities have come up with different net metering policies; each has its own flavour.
Why is net metering important? Because it encourages residential consumers to go solar. You might ask, how so? Well, the answer lies in the typical consumption pattern of residential consumers and the typical solar PV generation pattern as can be seen in the figure 21.1.
Figure 21.1: Residential consumption vs solar PV generation pattern
As can be seen in the figure, the consumption starts increasing from 6 a.m. and peaks at around 8 a.m. The daytime consumption is typically lesser than this peak. In the evening, the consumption starts increasing again at around 6 p.m., reaches the peak, stays there for a couple of hours, and then starts reducing after 10 p.m. The solar PV generation, on the other hand, starts from 8 a.m. or so, peaks at around noon, and then starts reducing, going all the way down to zero after sunset.
So as you can see, the solar PV generation pattern does not match the residential consumption pattern. So if residential consumers were to go solar, they would have to necessarily go for systems with batteries. This has two problems: 1) batteries cost a lot and increase the system cost by as much as 50% or even more in some cases, and 2) batteries have to be replaced every 3 to 5 years, which means that they add a recurring cost component as well!
However, if the distribution company allows net metering, consumers can go for on-grid systems like the one shown in figure 20.1. Since on-grid systems don’t have batteries and are fairly simple, it reduces the upfront system cost and also eliminates the recurring cost component. As evidence suggests, this has spurred investment in residential solar PV all over the world. India is a bit slow to catch up, but it will pick up in the years to come; there’s no doubt in my mind about that.
So if many consumers go for solar PV systems but don’t consume what is being generated when it is generated, what happens to the energy? Well, that is where load balancing comes in as explained in the article on the electrical grid. When consumers go for solar PV installations and become “prosumers” (normal consumers who also produce electricity), the SLDCs (State Load Dispatch Centres) have to do load balancing keeping this generation in mind. When solar PV penetration isn’t much, i.e. it is less than 15%, this isn’t much of an issue. However, at higher levels of penetration, i.e. more than 30%, it becomes a challenge, which it already has in some developed countries like Germany and the USA.
The extra accounting that distribution companies have to do when there is net metering is the easier part; the load balancing mentioned above is the harder part, without a shred of doubt.
Types of on-grid systems
There are two types of on-grid systems: rooftop and ground-mounted.
Rooftop Systems: On-grid systems that are installed on the rooftop are called rooftop systems. Typically, most on-grid systems are rooftop systems, at least in developed countries where net metering is allowed. The US, as of the 4th quarter of 2014, had a total installed capacity of 18.3 GWs, a good chunk of it in rooftop installations, which range from small residential installations (1 to 10 kW) to large commercial rooftop installations (100 kW all the way up to even a few MWs). Germany has a total installed capacity of 35 GWs, a good chunk of it in rooftop installations as well. However, the German solar PV success story was scripted not by net metering but by “gross” metering (getting paid for the total generation). Consumers were incentivized to go for rooftop solar PV installations with a high feed-in-tariff (or FiT in short), which was higher than their retail rate. In other words, the distribution company paid them handsomely for every unit generated using solar PV and fed into the grid. I will talk more about the solar sector in various countries later in the series.
Ground-mounted systems: On-grid systems that are installed on the ground are called ground-mounted systems. Typically they are in the MW-scale and called “utility-scale” solar PV power plants and look exactly like the system in Figure 20.1. The only difference with respect to residential or commercial rooftop systems is that the local consumption – to power the lights in the premises and/or guest house, or the air-conditioning unit to cool the inverters if at all – is a tiny fraction of the generation.
In the developed countries, the solar PV revolution started with residential rooftop installations and is now moving on to utility-scale power plants. In India, on the other hand, most of the solar PV installations in India today are utility-scale power plants; rooftop installations account for a small percentage of the total installations. This is a peculiar phenomenon and I will talk a lot more about it later in the series when I talk about the Indian solar sector.
I hope you liked this article. In the next article, I will talk about off-grid systems.
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