Desperate Need for CO2 Mitigation
India ranks fourth in terms of fossil fuel based CO2 emissions (2.7 billion tonnes). WWF’s Living Planet Report-2022 highlights a devastating 69% drop in 48 years in monitored wildlife populations. India is a signatory to the international environmental treaty of UNFCCC and the goal is to keep global warming within 1.50C by the end of the century. But GDP, life expectancy and energy consumption are directly linked through a positive linear correlation. A transition to renewable energy sources will take decades. The effects of climate change are threatening life on earth. The Conundrum of Fossil Fuel Exploitation, Climate Change & Energy Security – What Can We Do?
Tariff as an Enabler for CO2 Mitigation
Tariffs can play a major role as an enabler to direct large populations to adopt measures that reduce CO2 emissions particularly in developing countries. All other measures, such as enacting laws, are seen to have had very little effect. Earlier we have seen the role that Apparent Energy (kVAh) Tariffs played in eliminating low PF loads resulting the savings of more than ₹20,000 crores/annum in loss savings through improvement in PF.
Taking inspiration from the success of kVAh tariffs, here we design a tariff for DERs, particularly for solar PV, that can help us reduce CO2 emissions in India.
Problem Definition
In India, EVs are mostly charged after dusk when the power plants are burning precious and scarce fossil fuels – coal or gas. Net metering permits an EV owner to conveniently offset his/her night EV consumption from her daytime solar RoofTop generation.
Role of EVs in the Smart Grid Vision
An Electric Vehicle (EV) is a load different from other electrical loads. A fan or a TV operates and consumes energy the same instant that it is drawn from the utility. However, an EV is different as it contains a rechargeable battery – a storage element. The battery allows the user to drive the vehicle or to export the stored energy back to the grid at a later time. The battery also gives a choice to the user to select its charging period.
This is the age of Internet of Things (IoT). Smart Metering and Smart Grids are part of the IoT revolution. As per the original Smart Grid Vision, the batteries installed in the EVs are expected to help the Electric Utilities in flattening its load curve by offering the stored energy during peak load intervals. In reality, what is happening is the reverse. EVs are posing a threat, with their dangerously high extra burden, when placed on charge in the evening. Since an electric car consumption is equivalent to approx. 15 refrigerators, even an energy surplus state such as Gujarat may face load shedding once again between 7:00 PM to 9:00 PM due to excessively high charging load posed by the EVs.
‘Desirable’ Consumer
Net Metering has a fundamental flaw – it is unable to differentiate between prosumers who export different quantities of solar energy as long as their net difference between the units imported and exported, or ‘netting’, remains the same. Amongst them, we label the one, at one extreme, who exports his entire solar generation during the day while importing an equal amount of units at night to charge his EV, to be ‘totally undesirable’. On the other extreme end, we consider a consumer to be ‘desirable’, if he consumes his entire solar generation, himself – the way it was originally intended (when NM was introduced). The netting is zero in both the above cases, and NM is unable to identify the two (‘desirable’ and ‘undesirable’ consumers).
Damage by ‘Undesirable’ Consumer
An ‘undesirable EV consumer’ creates two major problems for the electric utility. On one side, expensive fossil fuel (coal/ oil) based generation is used to charge EVs. Hence, EVs are responsible for pollution & CO2 emissions (in contrary to claims made by GEDA) – may not be at his doorstep, but at the coal based power generation plants. Regardless of the place where the pollution occurs, the environment does get affected.
The second problem the ‘undesirable EV consumer’ creates to the electric utility is for the latter to find another consumer who is willing to receive the solar generation exported by the EV consumer. Since electrical energy is perishable and needs to be consumed the very same instant it gets generated, the utility has a mammoth job particularly with the rising number of solar rooftops and 950% increase in EVs reported recently. Wouldn’t it be better if the “undesirable EV consumer” prefers to use his solar consumption to charge his own EV?
Duck Curve
Utility companies use models to predict demand and operate as efficiently as possible while supplying more power during times of higher demand. But the introduction of solar power has brought about problems in these demand curve models.
As more solar power is introduced into our grids, electric utilities are grappling with a new problem due to generation versus consumption pattern mismatch. Take a look at the solar (orange) and the load (blue) characteristics of a solar roof-top prosumer in Figure 4. Solar production peaks around midday. Hence energy demand from traditional sources of energy (coal, nuclear) is typically low. As the sun sets, solar energy production wanes, just as demand for energy typically peaks. Utility companies need to ramp up production to compensate for this gap, often overstressing an existing grid that is not yet set up for these peaks (since solar generation is recent). Moreover, the traditional sources of energy (coal, nuclear) are only economically feasible when they are continuously kept running. They cannot be turned off mid-day because the power is supplied by solar.
Due to overproduction, solar power is already being wasted in some places where the technology is widely used, like California. The problem is most intense during summer or spring when part of the solar panels has to be turned off to avoid overloading or even damaging the power grid. This discrepancy results in a net demand curve that takes the shape of a duck, and the duck curve gets more pronounced each year as more solar capacity is added and net demand dips lower and lower at midday Take a look at California’s Demand curves between the years 2019 and 2022 in Figure 5.
In India, with increasing solar, a similar phenomena is happening. In this situation, when the prosumer charges his electric car, typically after 18:00 hrs, the load curve is seen to further rise after 18:00 hrs, making the ‘duck curve’ even more pronounced (problem worsening).
Flattening the Duck
The increasing share of renewables in the power mix brings with it new challenges, including balancing electricity supply and demand, changes in transmission flow patterns, and a decrease in system stability. As more countries have started to rely on solar power, numerous potential solutions for the duck curve are being explored.
Overproduction of solar power during the day can be stored in Long Duration Energy Storage (LDES). LDES can be achieved in vastly different ways, including mechanical, thermal, electrochemical, or chemical storage.
Pumped hydro storage (PHS): is a proven mature technology which is cost-effective and suitable for many developing countries if they have a reasonably integrated grid. Excess solar energy is used to pump water uphill to a higher reservoir and later, when power is needed, release the water downhill through turbines to the lower reservoir(see Figure 6). In India, significant investments that strengthen and integrate the grid have been made in the last decade and some additional interventions are necessary to overcome the geographical limitations of PHS solutions.
Batteries: Considerable improvement in battery technology has helped their deployment in homes, power stations and electric vehicles for storage upto a few hours.
However, the cheapest and most effective way to flatten the duck curve is through use of ‘demand side management’ (DSM) techniques. One of the best DSM techniques is “Application of Appropriate Tariff Policies and Mechanisms”.
Post-net Metering Successor Tariffs
In the USA, utility companies have always contended that solar prosumers get their bills reduced by too much under net metering. This shifts costs for keeping up the grid infrastructure to the rest of the customers, particularly the low income non-solar customers. The report funded by the Institute for Electric Innovation (IEI), too, claimed net metering to be offering excessively large subsidies.
On a nationwide basis, energy officials have debated replacement programs for net metering for several years. The key challenge faced while constructing pricing and rebate schemes in a post-net metering environment is how to compensate rooftop solar customers fairly while not imposing costs on non-solar customers. Experts have said that a good “successor tariff,” as the post-net metering policies have been called, is one that supports the growth of distributed energy resources in a way where both customers and the grid benefit. As of 2018, few “replicable models’’ have emerged. The IEI report concluded that changes are needed in California, ranging from Time of Use (TOU), Net Billing to a separate BASA (“Buy All – Sell All”) arrangement.
Time of Use (TOU)
This option reflects the status quo – Net Metering with TOU rates that more specifically reflect grid conditions, including (a) peak-to-off-peak rate differentials, (b) locational rate specificity, and (c) shifts in TOU periods on daily or seasonal basis.
Net Billing
The second alternative structure is ‘Net Billing’ that awards credit to exports at a specified price which is different from the consumption charge for imports. Such a billing construct preserves the Net Metering structure and essence, namely, self-supply, that is, compensating the customer for the self-supplied portion of her production at the consumption charge. Credits awarded to exports are at a price other than the grid consumption charge, which may count against subsequent charges or be monetized.
No change is required in the metering system. The meter reader is expected to take both the import and export readings from the standard bi-directional meter (see Figure 3) for application of their corresponding rates while billing.
Net billing pays the retail rate for customer-consumed PV generation and a below retail rate for exported generation.
Buy All – Sell All (BASA)
The third alternative core structure is ‘Buy All, Sell All’ (BASA), which relies on a dual-meter system to meter all production and all consumption separately. The meter connections under BASA are similar to those under PPA mechanism. All production receives compensation at a price other than the consumption charge. Unlike Net Metering, there is no direct connection for self-supply under a BASA framework. Hence, self-supply does not offset the customer’s charges for consumption.
Under BASA, the utility both charges and compensates at a below-retail rate.
Such a formulation of core structures creates an important distinction between a compensation structure and the underlying rate design. In practice the two are intertwined, but the focus of this evaluation is how the overlaying compensation structure may be adapted.
Successor Implementations
In the US alone, sixteen states swapped successor tariffs for retail rate net metering programs in 2018. For example, compensation in Nevada will go down over time though the compensation today is at the retail rate. In Arizona, the new solar rate is ten percent below the retail rate.
Since the Indian electric utilities have installed a Solar / FiT Meter and a Standard Bidirectional Meter on each prosumer’s installation, it is easy to migrate to any of the above post-net metering successor tariff structures.
Suggestions
In the interest of fairness, our suggestion is that State Regulatory Commissions (GERC) and electric utilities should make a very simple shift from Net Metering to Net Billing as a successor tariff. Net Billing preserves consumer’s right to self-supply, the main advantage of Net Metering in a democratic country. Moreover, utilities can make this shift without making changes at consumer premises. Under this new successor Tariff, a ‘desirable’ consumer, who consumes his entire solar generation himself, say to charge his EV, would stand to benefit with lower bills and this is help alter the habit of ‘undesirable’ consumers who were charging their EVs after dusk.
Going forward, building solar capacity alone will not suffice. Instead of building mega solar plants (like old fashioned centralized power plants), small solar plants have to be planted at locations advantageous to the grid. Energy needs to be produced simultaneously with demand, or stored until there is demand. Solar alone will not suffice; it needs to be locationally targeted and co-located with storage. Net billing structure with locationally differentiated prices paid for exports will help achieve this.
Conclusions
Decarbonizing the power generation sector through renewable energy that is flexible, schedulable and dispatchable is an essential pivot on the path to limit global warming to 1.5 degrees C. Flattening the duck curve is one of the greatest challenges facing renewable energy.
India has committed to rapid decarbonization of its power sector. Most of its states are pursuing that objective through a wide range of policy solutions, one of which is net metering, an incentive encouraging customer adoption of renewable distributed generation, especially solar. As of June 2021, in Gujarat alone, net metering has supported the adoption of solar by more than 2 lakh homes totaling nearly 1.27 GW of installed capacity. These adoptions have contributed to reductions in greenhouse gas emissions from the power sector and local job creation.
Looking forward, Gujarat’s path to decarbonization assumes increased reliance on renewable energy, including estimates of up to 10 GW behind solar roof-tops by 2030. Achieving these targets would require accelerated customer adoption of solar. But as analyses of Gujarat’s electric system have demonstrated, continued growth in generation during day-time solar peak periods creates two challenges: (a) excess generation at the system-level and (b) grid constraints at the distribution-level. At their core, these challenges are the manifestations of misaligned power supply and demand.
Meanwhile, policy-makers are pushing for differentiation of incentives for solar by location, ensuring grid costs are fairly recovered, and enable customer choice. A clear need for balancing these objectives with the State’s decarbonization imperative exists. Net metering is, therefore, reexamined to understand how to build on its success, for further decarbonization, and also account for location value, fairly recover grid costs, and enable customer choice. Evaluating alternative policies and applying consistent criteria reflective of State Electricity Regulatory Commission’s (SERC’s) principles, this analysis has identified Net Billing as a clear successor to Net Metering.
We recommend Gujarat policy-makers to move expeditiously to transition the state’s solar compensation framework toward a net billing structure with locationally differentiated prices paid for exports. This transition may be eased in several ways and informed by data and insight gained through evaluation of current net metering policies. This will help sustain growth in customer adoption and achieve forecasted levels of solar.
Net metering had allowed non-simultaneous netting of vehicle load undermining a principal benefit of vehicle electrification. In the next few years, electric vehicle adoption is forecasted to surge, and a huge class of customers may come to expect low or zero cost service from the grid. Timely adoption of a Net Billing structure would pave the way for grid friendly transportation electrification. Net Billing would encourage electric vehicle customers to charge while the sun shines, or store their solar-generated energy to charge their vehicles at other times.
References
1. Kamat V. N. Implementing Net Billing for CO2 Mitigation – Part 1, Electrical India, published by Chary Publications, 311, Raikar Chambers, Govandi (E), Mumbai, 400 088, Vol. 63, No. 1, January 2023, Page No. 34-39.
2. Sustaining Solar Beyond Net Metering, A Report by Gridworks, PO Box 5013 Berkeley, CA 94705, USA. https://gridworks.org/wp-content/uploads/2018/01/Gridworks_ SustainingSolar_Online.pdf
Vithal Kamat has a Doctorate in Artificial Intelligence from the University of New Brunswick, Canada as a Commonwealth Scholar in 1996. He completed Masters in Control and Instrumentation from IIT Bombay. His current role – reviving a sick industry as a Managing Director of Baroda Electric Meters Ltd. Current interest lies in exploring ways to replace the Human centric Judiciary with an AI Judiciary, to replace the 24-hour clock with Ghati clock, and to replace ICE vehicles with solar vehicles.
