Net metering with solar panels


In the article appearing in the Island of 18.04.13, under the caption "Solar Power and Net-metering", the writer suggests that the policy makers need to take a closer look at the net-metering scheme as it has distorted the financial benefits to individual consumers, while being a heavy burden to the economy of the country. While I am unable to comprehend the writer’s argument that led him to this conclusion, let me give another aspect of the issue.

Under the new tariff structure, a consumer is required to pay the relevant tariff, corresponding to the particular unit range for the entire monthly consumption, rather than calculate it on a slab by slab basis. Under this situation, the net metering system offers an opportunity for both the mid- and high-consuming householders to benefit by getting an appropriate size solar panel installed in his premises, enabling him to reduce the number of units billed from a higher slab to a lower slab, while keeping the consumption the same. For example, a householder consuming 300 units a month could bring down his billed consumption to 120 units by installing a 1.5 kW panel generating about 180 units monthly. It will bring down the billing from a slab charged at Rs. 26 a unit to a lower slab charged at Rs. 15 per unit. He can then save Rs. 8,400 a month or Rs. 108,000 annually. The cost of such a system, which is about Rs. 700,000 can be recovered in less than 7 years.

In second case, if a householder currently consuming about 200 units a month could get a smaller panel say a 1 kW installed, it will reduce his consumption by about 110 units a month which will enable him to come to the 61-90 unit slab, charging only Rs. 8.50 a unit. He can then have a saving of Rs. 5,874 a month or about Rs. 70,500 annually. A cost of such a panel is about Rs. 450,000 and this could be recovered within about 4 - 6 years. In both cases, for the rest of the life time of the panels which is expected to be more than 25 years, the householder will get a bonus every month. When the electricity tariff goes up in the future, which will invariably happen, his bonus will correspondingly get enhanced.

Considering the cost of individual PV panels sold in the market and those of the net-metering inverter systems, there is a wide price difference and the vendors seem to be fleecing the customers. I wonder whether any local R&D institute involved in electronics such as the NERD Centre, Ja-Ela or the ACCMT, Katubedda made any effort to develop locally inverter circuitry necessary for connecting the solar panels to the grid. It would have been then possible to set up an industry here to manufacture inverter systems which could be offered to consumers at a more affordable price. The potential high demand for these systems would justify setting up a local industry even now.

There is a positive role that the policy makers could play to make the net-metering system popular. As done in many other countries, consumers investing on solar panels need to be granted certain concessions such as rebates and tax deductions on the capital, reduced import duty and low-interest loans. Every kilowatt installed will add up to megawatts and could off-set the megawatts required to be installed by the government at enormous costs. Assuming one watt of installed capacity costs US$ 1.5 as in the case of Puttalam coal plant, installing a 1000 W panel will relieve the government from installing a similar capacity thermal plant and thus save US$ 1,500 or about Rs. 180,000. Hence, a consumer investing Rs. 450,000 on a 1 kW solar system deserves a rebate of Rs. 180,000 or 2/5 of the capital. Anyone doubting the benefits of solar systems should do an internet search to see for himself the extent to which these are used in other countries.

Dr Janaka Ratnasiri


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