India: TANGEDCO proposes severe net metering cut

Indian state utility the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has announced plans to drastically slash its net metering rates in an attempt to boost rooftop solar uptake in Tamil Nadu.

Faced with a central government-set rooftop solar target for the state of 3.5 GW, and in the wake of record-low solar tariffs that have made existing net metering rates appear rather generous, TANGEDCO has proposed reducing the net metering by more than half.

Currently, domestic solar customers in Tamil Nadu are eligible for a net metering rate of INR 6.63/kWh ($0.103/kWh) for ‘Low Tension” (LT) consumers, with High Tension (HT) domestic customers receiving INR 6.91/kWh. For commercial LT customers that rate is INR 7.01/kWh, and for HT it is INR 7.23/kWh.

The new proposal by TANGEDCO would be to reduce the benchmark rate to either INR 2.55 ($0.039)/kWh, or even lower, down to INR 2.20 ($0.034)/kWh.

These figures were arrived at by the utility planning to reset the tariff on the basis of calculating a figure based on a 50% of the lowest solar tender approved in the past financial year OR 50% of the solar preferential tariff issued by the Tamil Nadu Electricity Regulatory Commission (TNERC), whichever was lowest.

Given that the TNERC benchmark was INR 5.10 ($0.079)/kWh, one proposed net metering tariff is half of that figure, while the lower rate is based on a figure half of INR 4.40 ($0.068)/kWh, which was the lowest quoted tariff at auction in Tamil Nadu last year.

Either way, both figures represent quite a reduction on current levels, and come as TANGEDCO tries to boost interest in the rooftop sector following disappointing levels of interest in its utility-scale auctions. However, only 91 MW of rooftop capacity has so far been approved, and thus far it is not entirely clear how cutting net metering will steer investment and interest towards the under-subscribed rooftop segment.

“TANGEDCO views rooftop solar as being integral to meet its renewable purchase obligation as well as cutting operational costs,” said an official from the utility. “Rooftop solar will lead to distributed generation and ensure savings when it comes to developing the transmission network.”