Solar Developers’ Rift with Maharashtra’s Draft Order on Net Metering Intensifies

The draft order has become a bone of contention between solar developers and the state government


The tussle between the rooftop solar industry and the distribution companies (DISCOMs) has intensified in Maharashtra, with both sides adamant on not ceding their ground.

Now, the Maharashtra Solar Sangathan (MSS), Nagpur, has vehemently opposed the state’s proposal to roll back net metering for all segments except residential.

The body has alleged that the draft regulations by the Maharashtra Electricity Regulation Commission (MERC) are “an attempt by the DISCOM to kill the rooftop industry with the sole objective of minimizing their losses and continue with the luxury of inefficient management.”

Recently, the Maharashtra State Electricity Distribution Company Limited (MSEDCL) submitted its comments regarding the commission’s suggestion to roll back net metering for all segments except residential. The MERC had issued a draft in October 2019 seeking opinions on its proposal to go back to gross metering, as reported previously by Mercom. The state DISCOM pointed out that net metering in Maharashtra was allowed for all categories of consumers for renewable energy capacity less than 1 MW but up to the contract demand or sanctioned load of the consumer. To make their arguments stronger, the MSEDCL has given the examples of Gujarat, Rajasthan, and Uttar Pradesh.

Vipul Joisher, the convener of the Maharashtra Solar Sangathan, Nagpur, told Mercom that while showing the revenue loss, “the MSEDCL has not at all considered the benefits of the fulfillment of renewable energy purchase obligations (RPO) which is a minimum of ₹2.40 (~$0.034)/kWh.”

“They have also not considered the AT&D (aggregate technical and distribution loss) for supplying power from generating station to the end consumers, which is almost 30%. They’ve taken the cost of power at ₹2.80 (~$0.04)/ kWh instead of ₹3.60 (~$0.05)/kWh, which is the present average pooled purchase cost (APPC) of the MSEDCL,” he added.

Loss Calculation Due to Net Metering as Per MSEDCL Letter dated November 25, 2019

Joisher further argued that the MSEDCL in its comments showed a loss of ₹8.12 (~$0.11)/kWh in low transmission (LT) category and ₹10.76 ($0.13)/kWh in high transmission (HT) category which is “much higher than their average sale rate.”

“How can they expect consumers to pay for their inefficiencies. They are not saying anything about ₹50 billion (~$706.5 million) plus the losses if the same principle is applied to captive open access projects operational in Maharashtra,” Joshier rued.

Recently, the members of the solar body led by Joisher and Shyamal Chhetterji, the secretary of the organization, met the Minister of Power R.K. Singh and submitted a letter against the state’s draft order.

The letter states that the proposed draft has the potential to “kill all employment in one stroke.” Moreover, if other state commissions are allowed to follow suit, then the entire solar rooftop industry in the country will collapse, resulting in a direct employment loss for more than one million people, the letter emphasized.

According to the letter, over 5,000 system integrators are operating in Maharashtra, and the sector provides direct employment to approximately 100,000 skilled and semi-skilled people.

Further, the Maharashtra Solar Sangathan stated that through the draft regulations, the MERC has proposed to buy the power from the rooftop solar owner at approximately ₹3.64 (~$0.05)/kWh and sell the same power to them at a retail tariff ranging from ₹9-16 (~$0.13-0.23)/kWh.

“Due to this compulsory unconstitutional arrangement, the consumer is not only required to pay higher tariff but also has to pay electricity duty, tax on the sale, wheeling charges, cross subsidy surcharge, and an additional surcharge on the electricity produced and consumed,” added the letter.

“We believe that this is completely against the spirit of the Indian Electricity Act 2003 Section 9, which gives right to generate power for self-use to all citizens,” states the letter.

The members of the association also pointed out that the MERC in its draft has pointed that the changes have been proposed stating that the Forum of Regulators (FoR), the apex body of regulators of electricity in the country, had initiated the process and the new draft provided by FoR in the draft, “is the guiding force behind the proposed changes.”

“The FoR wants to promote rooftop solar whereas MERC wants to curb it openly. They are not on the same page in terms of whether the moderate growth needs to be improved or exponential growth needs to be curbed,” the association argues.  It further highlighted that the Commission had not taken the business models proposed by the Forum and only removed the earlier cap of 1 MW for net metering.

The Maharashtra Solar Sanghthan represents over 1,000 small and medium-size solar PV system integrators of Maharashtra.

Earlier, Chandrasekhar Bawankule, Maharashtra energy minister, requested the Maharashtra Electricity Regulatory Commission to discard the proposed draft regulations as it will undermine the progress of Maharashtra and discourage the use of solar energy.

According to Mercom India Research’s recently released Q3 2019 India Solar Market Update, the top 10 states accounted for 77.4% of total rooftop solar installations in India. Maharashtra accounted for over 9% of total rooftop solar installations.