Net Metering of Electricity has Arrived!

All electricity customers in Sri Lanka now have the opportunity to produce electricity using renewable sources of energy. A customer can "sell" that electricity to the grid at any time of the day. Following the approval of the concept by the Government last August, Lanka Electricity Company (LECO) has been the first to announce the new procedure, last week. The other electricity supplier, Ceylon Electricity Board (CEB) too is expected to announce the scheme shortly.

What is "net" metering?

Imagine your electricity meter is replaced with a two-way meter. The meter will have two registers: the "import" register and the "export" register. You can produce electricity (using a renewable source of energy), and first use that electricity for your own requirements, and send the surplus back to the grid. Such "exported" electricity units will be registered in the "export" register of your meter. During certain times of the day, your own electricity production may not be adequate for your requirements. Then your consumption will be recorded in the "import" register. When the electricity meter is read once a month, you will pay only for the difference between the "import" and the "export". If in any month you have exported more than what you imported, your bill will only carry the monthly fixed charge (no charge for the units of electricity), and the excess exported units will be credited to your next month’s bill.

No financial transactions

As the term implies, in "net" metering, there is no "payment" by your electricity supplier for what you produce. LECO or CEB only agrees to let you "bank" your surplus electricity with them, and let you take it back whenever you want, at any time in the future. The transaction is "in kind", not in Rupees and cents. You get effectively paid for at the same rate you pay for your electricity, because you avoid purchasing from your electricity supplier. A household customer using 250 units of electricity per month, is now paying for electricity at the rate of Rs 25 per unit plus a fuel surcharge of 30% for his consumption from the 181st unit to the 250th unit of electricity. So the "value" of electricity he can produce is Rs 32.50 per unit, for 70 units per month. A commercial customer presently pays at Rs 20 per unit, and whatever he can produce, will effectively be "paid" for at the same rate.

How to produce electricity from

renewable energy

The "net" metering facility is available to all electricity customers (presently in LECO areas only, later, hopefully in CEB areas too). The customer is free to use whatever renewable energy source he likes, based on the availability and his affordability. A sea-side building can have wind turbines fixed on its roof, or a city building can fix solar electricity panels on its roof. A tea factory can use hydroelectricity to take advantage of "net" metering. The electricity producing facility can be an existing power plant (eg: an old minihydro in a tea factory or existing solar panels on roof top in a building), or a newly built one. There are a few constraints and conditions:

(1) You must use only a renewable source of energy to produce electricity. Therefore, power plants run on petrol, diesel, kerosene and gas are not allowed, and they would be too expensive any way. Those who have such oil-burning power plants, are free to use them for their own consumption, but cannot apply for "net" metering to "sell" the surplus to the grid.

(2) It is your responsibility to workout the economics of your electricity production. You may be very enthusiastic on solar power, but if a unit of electricity produced from solar is more expensive than the price at which you can purchase from LECO (or CEB), then you are not making a wise decision. However, LECO or CEB will not refuse to connect your supply, even if you resolve to forget the high costs of certain forms of electricity generation.

(3) Your renewable energy-based generating facility should not be larger than your electricity requirement. If your hotel building has a supply contract with LECO for 100 kVA, then the maximum renewable energy generator you can fix is 100 kVA. You have to be mindful not to over-size your renewable energy facility, because LECO will not pay you for any excess units of electricity exported, even in the long-term. You can only set-off such excess exports against your own future consumption. Keeping with good utility practices adopted worldwide, LECO/CEB are expected to allow you to carry forward your "renewable energy credits" even when you vacate one building and move to another.

(4) LECO/CEB will require certain new protection equipment and a new meter to be fixed, for which there will be a one-time cost. After all, electricity distribution wires were designed to supply electricity to you, and not to let you send electricity on the same wires back to the supplier. However, this thinking has changed over time, and LECO (and CEB) are now providing a facility for you to bank your surplus energy with them, and take them back later on. There is no charge by LECO (or CEB) for banking your surplus energy, but would not want to risk the safety of their workmen in case you send the electricity back when their maintenance staff is working on the line. The equipment you have to purchase and fix will not allow you to send power back on the line, when the supplier has switched-off the lines for maintenance.

Sri Lanka is among the first few developing countries to introduce "net" metering, and that too free of charge, except for the initial charge for a one-time charge for a new meter and protection equipment. Total flexibility is allowed to the customer to choose the type and size of his renewable energy facility, and the customer is free to switch on and off whenever he likes. LECO (and CEB) would always standby to provide your electricity supply, in case your renewable energy facility goes out of order or if you simply give-up using it. There will obviously be a loss of income to LECO and CEB, which they have obviously resolved to put up with, to support the cause of renewable energy development in Sri Lanka.

Use of renewable energy to produce electricity in Sri Lanka was so far limited to investors who develop a "project", usually costing one hundred million rupees or more. Now the opportunity is open to ALL electricity customers to participate in producing electricity using renewable energy in whatever small way they can afford.

In 2007, Sri Lanka produced 40% of her electricity requirements of the grid, using renewable energy, which too places the country high on the world ranking. With the new large coal power plants being built to meet the growing demand at a lower cost, this share of renewable energy may drop to 25% within a decade from now. Sri Lanka’s national energy policy released in 2008 has declared that by 2015, the country would endeavour to achieve a 10% contribution to grid electricity from small non-conventional renewable energy sources. By end 2007, the country has achieved 3.5%, and the net metering facility would certainly help to further improve this renewable energy contribution.

Possibly the first to benefit from this "net" metering facility are the tea factories that have small hydropower facilities, which are presently not connected to the grid. Another group of beneficiaries would be the 100,000 households who now have a solar electricity supply for which they have already invested because the grid supply has not reached them yet. When they get the grid supply, they can continue to use the solar electricity system under the "net" metering facility. Following LECO’s announcement this week, CEB is also expected to shortly announce the "net" metering concession to its customers, too.

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