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What is Solar Net Metering and How Does it Work?

18th January 2022  

We live in a time when people all over the world are becoming more environmentally conscious. Governments are encouraging and motivating businesses and citizens to use renewable energy sources. There are a few terms that have come into our language as more individuals decide to go green. Net metering is one of them.

What is Solar Net Metering?

Solar net metering is a utility billing mechanism that provides residential and commercial customers with credits for the power they are sending back to the grid. In other words, the excess electricity produced by solar panel systems is sent back to the grid. In this way, customers have to pay only for the net energy used.

How Net Metering Works?

You might wonder how solar net metering works, and you will get to know about it ahead. Your home does not use much electricity during the day, which is; when your solar panels are most efficient.

You are at work for most of the day, the kids are probably at school, and there's not much going on in the house, resulting in not much electricity in use. As a result, your solar panels will generate a lot of electricity at a time when you do not require it.

Without solar net metering, the additional solar energy produced through your panels is sent to the grid, and you would receive nothing in return.

With net metering, on the other hand, your utility company pays for the solar electricity you send to the grid. Utilities typically compensate you by implementing an energy credit to your electric bill for each kilowatt-hour (kWh) of solar power you send to the grid.

The net metering credits are then used to compensate for any energy you take from the grid when your solar panels are not generating electricity, such as after the sun has set. It allows you to receive the thorough economic value of all of the solar energy produced by your panels.

In other words, because your net metering credits will cancel out your future grid usage, you don't have to pay for all of the electricity you use from the grid, which is what makes net metering so worthwhile.

Have you read: Solar Panel Subsidy in Tamil Nadu (2022) - Process Of Net Metering

Checklist for Net Metering Approvals

Given below is the checklist to comply with for application of solar plant net metering:

  • Interconnection Agreement Between a Distributed Generator and a Distribution Company (Schedule-I)

  • Distribution Company Standard Distributed Generation Application Form (Schedule-II)

  • License application National Electric Power Regulatory Authority (NEPRA) (Schedule-III)

  • Request for an Exemption from Section 24 of the Act (Schedule-IV)

  • Fee Structure (Schedule-V)

  • Affidavit (written on non-judicial paper) (Schedule-VI)

  • License Generation Template (Schedule-VII)

  • A copy of the CNIC that has been attested

  • A copy of the most recent paid power bill (The applicant's name and the name on the power bill must be the same.

  • Technical data about components such as solar modules, inverters, and so on.

  • Schematic designs and system single-line diagram

  • Site plan indicating the placement of the external disconnect switch

  • Electrical Inspector's certificate if the DG facility is greater than 250 KW

  • Load Flow Analysis if the DG Facility is larger than 250 KW.

  • Electrical Installation Inspection

What are the benefits of net metering?

Net metering can save homeowners lots of money on their utility bills each year, so it's a good reason to go solar sooner rather than later.

Here are some practical benefits of installing solar net metering:

  • Utility bill savings:
  • The most significant advantage of net metering for solar homeowners is the reduction in utility bills. Net metering can save you large sums of money over the life of your solar panel system.

    If your solar system is properly sized, you could potentially eliminate all of your energy costs in a billing period. However, keep in mind that your electricity bill will almost certainly include some fixed charges that net metering will not avoid.

  • Shorter payback periods:
  • Payback periods will be relatively short in areas that offer full retail net metering than in regions that do not. Solar homeowners will save more money on their electricity bills, allowing them to recoup their investment costs more quickly.

    Net metering is not the only factor influencing your solar payback period. The size of your photovoltaic system, the amount of electricity you utilize, the expenses of your setup, and the solar incentives and rebates available in your area will all influence how long it takes to pay off your solar panels.

  • Lessens the pressure on the grid:
  • Residential solar panels benefit utilities and their customers by reducing the amount of strain on the electric grid distribution system. Because solar homeowners use their electricity rather than power from the grid, fewer people draw power directly from the grid.

    Furthermore, when a solar system transfers surplus energy to the grid, that energy is used by non-solar utility customers to meet their own energy needs. It relieves even more strain on utility power plants.

  • Unneeded expensive battery storage:
  • Net metering assures that your solar panels are used to their full potential. When your utility company offers net metering, you can use the grid as a "virtual battery” to hold the economic value of your excess solar power. Without net metering or energy storage, all additional energy would be sent to the grid and becomes worthless.

Why does it take considerable time to get net metering after application submission?

The delay in getting net metering after application submission is mostly because some junior engineers come across faults in the installation, etc. In states like Gujarat and Rajasthan, the net metering application takes comparatively less time, usually 10-15 days, due to a favorable policy.

What is the process of installing net metering in India?

In a broad sense, the process of net metering installations is the same in all the states in India. However, there can be minor differences in some states or Union Territories. Therefore, we recommend contacting the particular divisional office for more details.

The general process of installing net metering in India is as follows:

  • Step 1: Fill out the online/offline net metering application form and submit it to the divisional officer.

  • Step 2: After the junior engineer visits the site and completes the inspection, they will then permit you to install the solar system.

  • Step 3: After installing solar PV system, you will have to submit the following:

    1. Net metering fee

    2. Property documents

    3. Solar system certificates

    4. Installation certificates issued by the installer

  • Step 4: The junior engineer will again visit your site to survey the installation. If the installation process meets all the standards, they will issue and install a net meter at your site. In some states, you can even purchase a net meter from the market from a recognized company and install it after testing.
  • Some of the important terms and conditions are as follows:

    1. You should own the property.

    2. The installation capacity should not exceed the sanctioned load. If it is not so, you should apply for an increase in sanction load.

    3. You must own a solar panel, inverter, and earthing datasheet, and test report documents.

    4. Ensure the solar panel, inverter, earthing, and ACDB/DCDB are installed per the MNRE guidelines.

How much do net meter installations cost?

Net meter installations generally cost between Rs. 10,000-15,000 including installation and testing. However, some states may charge a bit more. Extra financial credit is one of the benefits of net metering.

If the quantity of energy produced by the owner's system exceeds the amount of energy consumed, the owner will earn additional credits and money.

You can also read: The Definitive Guide to Buy a Solar System on EMI

Why does the electricity bill increase when a net meter is installed?

The owner gets invoiced for the "net" energy used in net metering, which is the difference between the total energy produced by the system and the total energy used. The difference between excess power exported to the grid and total electricity utilized by the owner is calculated using net metering. As a result, surplus energy generates money while the grid meets energy shortages.

After you install a net meter, the exported units should be visible in your electricity bill. When the exported unit is not included in the bill, it is higher than it should be. After an initial complaint, the bill amount is reduced.

What is the Net Metering Policy in each state?

Each state may have distinct rules regarding the sort of net meter used to record electricity. In certain places, just one meter is required to measure the net amount of electricity utilized by the owner. On the other hand, some states need two meters to record the entire number of units used from the grid by the owner as well as the total quantity of power generated.

For example, states like Uttar Pradesh acquire only 1 meter, with less electricity generation through solar panels. Whereas states like Maharashtra and Delhi acquire 2 meters with more electricity generation through solar panels.

Some states in India have implemented the gross meter policy. The gross meter policy entails paying Rs. 2-3 per unit if you generate solar energy and export it to distribution companies. Therefore, under the gross metering policy, you should install as much as you need to obtain the maximum benefits.

As each state strives to meet their respective targets as India approaches the 100GW milestone, we at Waaree have attempted to compile and aggregate all information concerning solar policy in one spot. On our official website, you will not only discover state-by-state solar policies, including net metering, but you will also find these separated by customer type.

Waaree is a leading provider of EPC services, rooftop solar solutions, and solar water pumps in India. Contact us for scheduling an appointment today!

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