Journal of Cleaner Production 218 (2019) 696e707

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Journal of Cleaner Production

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Impact of compensation mechanisms for PV generation on residential

consumers and shared net metering model for developing nations:
A case study of India
Jagruti Thakur a, b, Basab Chakraborty a, *
a
Rajendra Mishra School of Engineering Entrepreneurship, Indian Institute of Technology, Kharagpur, 721302, India
b
Department of Energy Technology, KTH Royal Institute of Technology, Stockholm, Sweden

a r t i c l e i n f o a b s t r a c t

Article history: The present work examines the impact on consumer electricity bills under five different cases based on
Received 30 July 2018 different compensation mechanisms to evaluate PV generation units for 120 residential consumers in
Received in revised form Kharagpur, West Bengal, for assessing the pertinence of energy policy to be introduced for encouraging
24 January 2019
rooftop PV in India. The consumers are categorized based on their lifestyles. It is found that lower the size
Accepted 25 January 2019
Available online 28 January 2019
of the panel, lower is the savings leading to a decrease in the attractiveness of a rooftop PV system for a
residential consumer. Also, the compensation mechanism and injection tariff play a crucial role in
making a rooftop PV system feasible for a residential consumer. It is observed that the achieved savings
Keywords:
Shared net metering models
of a consumer is a function of compensation mechanism and seasonal load pattern of a consumer. A
Net metering policy shared distributed net metering model is proposed as an alternative to the individual rooftop PV systems,
PV compensation mechanism to mitigate the issues related to shading, land and financial feasibility of a PV system for small residential
Residential consumer consumers. The results of the simulation analysis based on the model indicate a high positive net present
India value and an acceptable payback period, which makes the model feasible. The proposed model is found
to be more scalable and economically viable for a developing nation like India. Net metering policy, being
in its nascent stage in India, needs to be revisited to incorporate innovative tools and mechanisms to
deliver the goods to the large section of the population.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction In the context of installed capacity of solar photovoltaic, China is

The undeniable need for lowering the GHG emissions and
transition to cleaner electricity generation has led to an inevitable
requirement of new regulations and mechanisms to promote the
growth of Renewable Energy (RE). The integration of solar photo-
voltaic (PV) renewable energy sources with the smart grid has led
to an immediate requirement of various platforms to address the
technical as well as financial needs of the system. There is a rise in
the grid-connected centralised and decentralised power generation
in the recent years (IEA, 2015). This has led to the development of
policies directed towards self-consumption of electricity encour-
aging the concept of prosumers (IEA, 2015). Countries like Denmark
and Belgium have established a market for net metering, with other
countries like Dubai, Lebanon and few states in India joining the
league (IEA, 2015).
* Corresponding author.
E-mail address: basab@see.iitkgp.ernet.in (B. Chakraborty).
leading the world with 130.2 GW of total installed solar PV, fol-
lowed by Japan with 49 GW and Germany with 42.4 GW in 2017
(Fig. 1). Among the top 10 nations, India stands 6th with a total
installed solar PV of 17.65 GW in 2017, as shown in Fig. 1, confirming
a high global market potential of 5% globally (IRENA, 2019). There is
a 113% growth since April 2013 in India, in rooftop PV installation,
with 713 MW of installed capacity in 2017. The growth is
phenomenal, but it is mainly driven by industrial and commercial
sectors and not by net metering. Hence, further research in the net
metering policy and compensation mechanisms is critical for
achieving the set targets of the national solar mission.
The average solar radiation incident on land in India, is in the
range of 4-7 KWh/day (MNRE, 2016). Most parts of India experience
300 sunny days in a year (MNRE, 2016). Hence to harness the solar
potential of India, the government of India has launched Jawaharlal
Nehru National Solar Mission. Under this mission, the government
targets an increase of 100 GW solar power capacity by 2022, with a
break-up of 40 GW for solar rooftop and 60 GW for large and

https://doi.org/10.1016/j.jclepro.2019.01.286
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707 697

Abbreviations NPV Net Present Value

NPM Non-Profit Model
AMI Automated Metering Infrastructure NREL National Renewable Energy Laboratory
ANM Aggregate Net Metering O&M Operation and Maintenance
CFL Compact Fluorescent Lamp PPA Power Purchase Agreement
CNM Community Net Metering PV Photovoltaic
CUF Capacity Utilisation Factor REC Renewable Energy Certificate
DG Distributed Generation RES Renewable Energy Sources
FIT Feed in Tariff ROI Return on Investment
GHG Green House Gases RPS Renewable Portfolio Standards
GTD Generation Transmission and Distribution SAM System Advisor Model
GW Gigawatt SPE Special Purpose Entity
IBR Inclining Block Rate TPO Third Party Ownership
JNNSM Jawaharlal Nehru National Solar Mission USM Utility Sponsored Model
LCOE Levelized Cost of Electricity VNM Virtual Net Metering
LLC Limited Liability Company VOS Value of Bill Savings
MNRE Ministry of New and Renewable Energy WBSEDCL West Bengal State Electricity Distribution Company
MSA Multi-Site Aggregation Limited
MW Megawatt

metering, shared net metering models and PV compensation

mechanisms would give crucial insights to policymakers as these
140 elements have real-world influence on solar markets and PV
Thousands

deployment. Generally, a bidirectional meter or two different me-

120
ters are used for accounting the number of units which is consumed
Installed capacity in MW

or sent back to the grid by the consumer. Micro-grids have been

100
existing for quite a long time in India, but the mechanism to handle
80 grid-connected renewable sources of energy in which a consumer
becomes a prosumer is still absent in most of the states.
60 As a step towards the restructuring of Indian electricity grid,
different locations are selected for the smart grid pilot projects
40 considering the wide diversity in the GTD of electricity, diverse
demography and socio-economic conditions of the people in the
20
different states (Thakur and Chakraborty, 2015a). To achieve the set
0 solar target in national solar mission by 2022, net metering policies
would play a pivotal role in promoting deployment of solar PV in
India. Solar energy has an inherent potential to offer clean and
environment-friendly energy which is also economically feasible.
The electricity use per capita of India is quite low as compared to
Fig. 1. Top 10 countries with the total installed solar PV in 2017 (IRENA, 2019). other nations in the world, as seen in Fig. 2.
On the contrary, it is found that there is a tremendous increase
in installed capacity of solar energy based systems in India (IRENA,
medium scale grid-connected solar power (MNRE, 2015). A target 2019) (Fig. 3). Hence, the advancement in installed capacity of solar
of developing 55 solar cities (MNRE, 2016) under this mission is energy based systems indicates a requirement of a policy frame-
also envisaged. work to encourage the continual growth of RE.
The policies are being revised from time to time to make them
sustainable and feasible for consumers as well as utilities. As per
14000
the reports of MNRE, in India, 32 states and union territories have
Elelctricity consumption/ Population

implemented a policy to support grid-connected PV (MNRE, 2017). 12000

Some of the states have net metering regulations but few have only
10000
guidelines. There are few limitations set by some utilities and states
(kWh/capita)

in the net metering policy. Calcutta Electric Supply Corporation 8000

(CESC) in Kolkata (CESC, 2014), has implemented a net metering 6000
mechanism, but it is limited to a specific category of consumers,
with a minimum limit on the size (5 kW) of the panel. In the states 4000
like Uttarakhand (UREDA, 2013) and Andhra Pradesh (Government 2000
of Andhra Pradesh, 2015) the net metering policies have some
constraint on the usage of battery, limits on the size of the panels, 0
enumeration of Renewable Energy Certificates etc. In Odisha (OERC,
2014), the net metering tariff order applies to only government-
owned and public sector-owned buildings. Hence, while the pol-
icy is being devised and designed, detailed research on net Fig. 2. Electricity use per capita in 2015 (IEA, 2017).
698
20 000
Cumulative Installed Capacity (in MW)
Solar PV CSP
18 000
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0 residential and commercial consumers (Holdermann et al., 2014).
Year
Fig. 3. Installed solar in India (IRENA, 2019).
A comparison between annual average electricity consumption
of households per capita in 2014 and average electricity con-
sumption per electrified household is shown in Fig. 4 (WEC, 2016).
The annual average electricity consumption of households per
capita is 178 kWh/household in 2014, which is very low as
compared to other developed nations globally. This fact is signifi-
cant from the viewpoint of framing the net metering policy for
India.
1.1. Literature review
From an analysis of data of net meters, collected from the smart
grid pilot project in India (Thakur and Chakraborty, 2015), it was
observed that conventional net metering would not be feasible for
all types of consumers in India, where annual per capita con-
sumption of energy is low. It was concluded by Satchwell et al.
(2015), that to reduce financial impacts of PV installed by the cus-
tomers on utility shareholders and utility ratepayers, incremental
changes to regulatory and comprehensive business models could
be of great importance. An analysis of three different PV models viz.
customer-owned (collective buying), community shared and third-
party business was carried out for Netherland (Huijben and
Verbong, 2013). It was observed that lots of variations were made
in the models to accommodate various requirements and make net
metering feasible. Apart from consumers, company and third-party,
the role of the local body and state government was critical to the
success of these models. It was found that subsidies discouraged
consumers who were not eligible for the grant, to invest in RES in a
Fig. 4. Electricity consumption for electrical appliances and lighting per electrified
household (WEC, 2016).
J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
research of the Dutch market (Huijben and Verbong, 2013). Tala-
vera et al. found that annual loan interest, normalised initial in-
vestment subsidy, normalised annual PV electricity yield, PV
electricity unitary price and normalised initial investment have a
profound impact on financial performance of solar PV (Talavera
et al., 2007). Rocha et al. studied four cities in Brazil, and found
that the exemption of tax on circulation of goods and services along
with net metering was critical to make PV microgeneration feasible
for investors (Rocha et al., 2017). From an analysis of 63 distribution
networks in Brazil, it was observed that small-scale grid-connected
PV in residential and commercial sectors were not viable for any
For the analysis, discounted cash flow method was used where
lower PV system costs and discount rate led to the viability of PV.
Darghouth et al. conducted an analysis of 215 residential con-
sumers in California, to study the impact of alternative PV
compensation mechanisms on value of bill savings (Darghouth
et al., 2011). It was found that net metering was more beneficial
than full Market Price Referent (MPR) based feed-in tariff and
different alternative tariff mechanisms which include hourly and
monthly netting of units compensated at MPR rate. From a com-
parison of feed-in tariffs (FIT), net metering and net purchase and
sale, it was observed that social welfare was more in FIT as
compared to net metering and net purchase and sale if the reduc-
tion in electricity consumption is small and vice versa (Yamamoto,
2012). States like California, Oregon, New York and Austin in USA
have transitioned to various alternative ways like compensating PV
generation based on avoided costs rather than full net metering
(Orrell et al., 2018). A study of 30 consumers, highlighted that, the
net metering policy was found to be incapable of generating suf-
ficient profits for rendering the project feasible, owing to the lower
solar panel size and high capital cost (Thakur and Chakraborty,
2016).
The objective of the paper is to explore the impact of different
PV compensation mechanisms on bill savings of a residential
consumer. A methodology to evaluate the performance of con-
ventional net metering for different categories of the consumer
with detailed profiling of generation and critical changes in
compensation mechanisms which impacts the value of savings
earned in a DG (Distributed Generation) system is presented in the
paper. The paper evaluates the sensitivity of the potential savings
achieved in rooftop PV, to self-consumption rates and different
compensation mechanisms. A shared net metering model is pro-
posed, after analysing the feasibility of traditional net metering
concept. The aim is to study the implications and feasibility of a
shared net metering model for encouraging community based
solar deployment.
The research is novel in its approach, as it evaluates the benefits
of DG in lieu of various compensation mechanisms and has policy
implications while deigning net metering policy for different cat-
egories of consumers for policymakers. Also, the evaluation of
shared net metering model offers an alternative for the existing net
metering regulation for encouraging solar deployment. The
research is befitting to the present scenario wherein different
models for renewables deployment are being explored in devel-
oping nations for the transition towards a cleaner economy. The
mitigation of risks associated with conventional net metering
would greatly boost the penetration of RE sources and contribute
towards sustainable and cleaner society.
A conceptual schematic of methodology of the paper is shown in
Fig. 5. The paper is organized as follows: after the introduction,
methodology and data are discussed in section 2. In section 3, the
results of different cases and a shared model is proposed for India
and based on the model; results and analysis are discussed. Finally,
the conclusions are discussed in section 4.
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707 699

Collection and analysis of
the data of residential
consumers
Calculation of rooftop PV
sizes for all the Calculation of monthly
consumers, to be bills for the consumers in
evaulated as net metered all the cases in SAM
consumers

Shared net metering

Evaluation and discussion
Analysis of VOS and model concept and
of VOS for all the cases for
discussion of results dividng consumers in
the groups
groups

Fig. 5. Schematic representation of methodological flow of the study.

1.2. Net metering and space constraints, and shading issues. The consumers with
such issues cannot avail the benefits of net metering. In the pre-
Net metering is a policy initiative in which a consumer receives sent net metering policy, provisions for a single customer with
credits for sending excess energy back to the grid after self- multiple meters and different tariff rates are absent. These
consumption (Fig. 6). Under such an arrangement, a unit of en- drawbacks of net metering are required to be addressed through
ergy generated by the consumer will be valued at the same price as more flexible net metering policies to accommodate different
the unit of energy being consumed by the consumer (Coughlin categories of consumers. As seen in Fig. 6, in traditional net
et al., 2012). This mechanism can be used for peak load manage- metering, every individual needs to have an individual solar
ment, balancing energy demand and meeting renewable portfolio arrangement or any alternative renewable source of energy which
standards, leading a nation towards clean and green energy further requires a separate installation of every single meter. The
production. concept of shared renewables, wherein multiple customers can be
There are certain issues with plain net metering like high incentivized for adopting renewable energy generation, would
capital costs, the necessity of a physical connection between solar improve the adoption of technology and will make the market of
PV and the meter of the consumer, the consumers with location renewable energy grow many folds. Some of the shared renewable
models are discussed in Thakur et al. (Thakur and Chakraborty,
2015b). The PV compensation mechanisms are regulatory in-
struments that play is vital while encouraging PV deployment.
Hence, the study of these mechanisms including other shared
NM renewables model is critical for evaluating realised benefits for a
NM consumer. In Table 1 comparison of different existing shared net
metering models on various parameters is discussed. In Commu-
nity Net Metering (CNM), a community can set up a single
generating site, instead of multiple individual generating facilities
under the paradigm of net metering. Aggregate Net Metering
(ANM) arrangement allows a consumer with multiple meters on a
contiguous property to offset electricity demand through a single
NM grid-connected solar PV system. Virtual Net Metering (VNM) al-
Utility grid lows a building owner with a generating facility, sometimes called
host, to allow its beneficiaries to have a share in the units gener-
ated. The beneficiaries can be located on multiple sites and avail
benefits of green energy units from a site which is not connected.
Multi-Site Aggregation (MSA) is a model wherein, a single con-
sumer with multiple meters on multiple sites can generate elec-
tricity on one site and use it to offset consumption on another site.
For the Special Purpose Entity (SPE) model, some individuals form
NM
an LLC (Limited Liability Company) and install a generating facility
at a host institution to achieve benefits of tax credits and sub-
sidies. A group of individuals come together to set up a generating
NM facility for some social welfare purpose, for an organization like a
school, church etc. in the Non-Profit model (NPM). Utility Spon-
sored Model (USM) encourages a consumer to participate in the
solar project through an upfront or on-going payment. The con-
Units imported from the grid sumer receives energy credits on bill depending on the proportion
Units exported to the grid of investment made and the capacity of the plant. The consumer
can buy monthly or yearly blocks of solar power which are then
NM Net meter used to offset monthly bill. Other features of these models are
Fig. 6. Net metering. discussed in Table 1.
700 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707

Table 1
Comparison of various shared net metering models.

CNM ANM VNM SPE USM MSA NPM

Owned By Community Owner of the Owner of the SPE members Utility/TPO Owner of the Nonprofit
property property/Utility Property organization
Financed By Members of Community Owner of the Owner of the Members, Utility, grants, Owner of the Memberships,
property property/Utility incentives, grants, ratepayers Property Donors, grants,
investments subscription contributions
Hosted By Community Owner of the Utility Third Party Utility/TPO Owner of the Nonprofit
property Property organization
Subscriber Profile Member of the Owner of the Electric ratepayers Community Electric Owner of the Donors, members
community property of the utility investors Ratepayers of Property
the utility
Subscriber Motive Offset personal use of Offset personal Offset personal ROI, offset personal offset personal Offset personal Return on
electricity of members electric use electric use electric use electric use electric use Investment,
philanthropy
Long term Strategy Add more generation Retain the Offer solar options Sell system to host, Offer solar Retain the system Retain for electricity
of Sponsor with more members, system for to disadvantageous retain for electricity options, Add for personal use production for life of
offer solar options personal use consumers production generation for the system
RPS
Attractiveness for Low Moderate High High High Moderate High
consumers based
on investment
Operation and High Very high Low High Low Very High High
Maintenance of
the plant
Advantage of REC Yes Yes No No Depends on Yes No
utility
Tax Benefits on Yes Yes No No Yes No
investment
Financial risk Moderate High Low Low Low High Low
Cost of Land Yes Yes No Yes No Yes Yes
Disbursement of Bill Complex and Vary- Simple Simple Simple Simple Simple Simple
credits depending on the policy
of the state
Location constraint Limited Limited Unlimited Limited Unlimited Limited Limited
Affected by seasonal Yes Yes No Yes No Yes Yes
changes
System Losses To be taken care of by To be taken care No No No To be taken care by To be taken care by
the community by owner owner members
Power outages High Very high Low Low Low Very High Very high
sensitivity
Service restoration Critical Highly critical Low Moderate Low Highly critical Highly critical
Suitability Disadvantageous Universities, All Schools and All Individuals with Schools,
individuals colleges, commercial different contiguous Dharamshalas etc.
government enterprises property sites
buildings

2. Data and methodology
In this section the data and methodology for studying the eco-
nomic implication of different mechanisms to address the PV
generation for a consumer is discussed. The analysis is divided into
two sub sections. A detailed analysis of the data collected for 120
residential consumers including load profile analysis is performed
(Section 2.1). The methodology alongwith the tools and description
of PV compensation mechanisms considered for the analysis is
discussed in Section 2.2.
2.1. Data
The data of consumers is collected from Kharagpur, West Bengal,
from three different sectors of consumer categorized with respect
to their lifestyle. A semi-structured interview based on the ques-
tionnaire was conducted for 125 respondents. From that, 120
samples were selected, 40 in each category for analysis. The three
categories in which the consumers are divided are referred to as A,
B and C with high, medium and low lifestyle respectively. It is
observed that the lifestyle of a consumer impacts the energy con-
sumption (Sanquist et al., 2012; Sukarno et al., 2017). Category A
and Category B consumers are the domestic urban consumers of
WBSEDCL and consumers in category C constitute domestic rural
consumers. Category A consumers reside in a township, category B
in suburbs and consumers of category C are housed in a rural set-
tlement in a village. The data for category A consumers was
collected from two small townships, category B from a suburban
area and category C from a village named Golghoria in Kharagpur.
The total number of members residing in a family was in the
range of 2e25 for category A, 2e16 for category B and 2e11 for
category C. Apart from this, it was found that for category A, 59% of
total members in the family stayed at home throughout the day,
whereas in category B it was 50% of total members and in category
C it was 60%. It was observed from the data that the level of edu-
cation for the highest educated person in the family ranged from
illiteracy to post-graduation for all the three categories A, B and C.
There were uninformed power outages for all the three categories
of consumers. There was no regular or planned power shedding.
The power outages, on an average for all the consumers, were for a
duration less than 30 min in case of category A, 30 min to 1 h for
category B and 1e2 h for category C.
The frequency of power outages in a month was 1e3 times for
some consumers in category A and more than five times for
remaining consumers in the same category. Category B residents
experienced the power outage for 3e5 times a month while for
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
category C it was more than five times. It is also found that there
were voltage fluctuations for all the consumers, but the frequency
of fluctuation was very low. The electricity utility for all the con-
sumers was the West Bengal State Electricity Distribution Company
Limited (WBSEDCL).
For category A, it was found that except two consumers who did
not attend school, rest of the consumers availed education between
high school and post-graduation, with most of them being un-
dergraduates. Based on this, the respondents in category A were
asked a few more questions regarding climate change, solar panel
technology and their readiness for adapting the same. It was found
that most of them were not aware of climate change and its impact.
From the total respondents of category A, it was found that 22% of
consumers were not aware of solar technology. Except one, all of
them showed their readiness for the installation of the solar panel
in their locality. The most important factor preventing installation
of the solar panel was affordability, followed by lack of trust and
awareness about technology and finding a suitable and trustworthy
contractor. Also, it was found that 15% of consumers did not see any
disadvantage in installing the solar panel, whereas 30% felt that it
was not reliable and 30% of consumers were concerned about the
efficiency. The remaining consumers felt that the technology is not
fully established.
The lighting options used by the residential consumers in all
three categories of consumers are described as a percentage of a
total number of lighting appliances used in Fig. 7. It is observed that
CFL Compact Fluorescent Lamp (CFL) is used more by consumers
belonging to category A and category B. The reason for this can be
attributed to the level of education of consumers. It is observed that
50% of lighting still comes from incandescent lighting, which con-
sumes more power than a CFL, for category C consumers. It was also
observed from the list of appliances used by the consumers, that
most of the households in category C have a fan and a few incan-
descent bulbs for the lighting. Hence, even after having less number
of electrical appliances, the consumer in category C had higher
monthly bills. For cooling purposes, consumers in category A use air
conditioner, coolers and fans, whereas in category B, consumers
Winter
Monsoon
Fig. 8. Electricity consumption of all the consumers based on seasons.
701
Fig. 7. Lighting appliances in use for different categories of the consumer: A, B and C.
have only fans. In the case of category C, 22% of consumers do not
use any cooling appliances and remaining of them have only fans.
The other electrical appliances used were, washing machine, iron,
mixer grinder, refrigerator, TV and submersible water pump by
40%, 63%, 68%, 83%, 100% and 50% of consumers of category A
respectively, along with one consumer using kitchen chimney. Also
in category B, other electrical appliances used by the consumers
were washing machine-13%, iron-45%, mixer grinder-60%, refrig-
erator-65%, and TV-67.5%. For category C consumers, the refriger-
ator was used by 28% of consumers, iron by 13%, submersible pump
by 30% and mixer grinder by only 3% of the consumers.
The seasonal consumption of all the consumers for all the three
categories is shown in Fig. 8. It is observed that the consumption in
winter is lower than the other two seasons. It is also observed that
during the monsoon, the maximum amount of electricity is used in
all the categories (except for a few consumers in category A, having
the highest load requirement during summer) due to high hu-
midity in this region. The average temperature during summer and
monsoon is 29.25
C and 31.2
C, whereas the humidity is 69.25%
and 78% respectively (Timeanddate, 2017). The average tempera-
ture for summer and monsoon are almost similar with higher hu-
midity in monsoon. High humidity levels in both the seasons lead
to high consumption of energy in both the seasons as there exists a
linear relationship between electricity consumption and humidity
along with the temperature (Sailor and Ricardo Munoz, 1997).
Summer
702 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
Fig. 9. Solar Power generated.
The power generated from a 100 kW rooftop solar PV plant
installed in Kharagpur is shown in Fig. 9.
The solar generation data presented in Fig. 9 is recorded at a 15
min timestamp for one year duration (Dec 2014eNov 2015). It is
observed from the figure that the power generated from the plant is
low in the months of JuneeSeptember, because of the monsoon.
The power output starts to increase in October with the highest
power generation in March. Based on the solar power generated
from the solar PV plant, the capacity utilisation factor was calcu-
lated to be 0.1488, and the performance ratio was found to be 0.814.
2.2. Methodology
The residential consumers considered for the study did not have
any PV systems installed. Hence, PV profile from the System
Advisor Model (SAM) of National Renewable Energy Laboratory
(NREL, 2016) was used. The model simulates the performance of
different renewable energy technologies like photovoltaic,
concentrating solar power, solar water heating, geothermal etc.
SAM performs simulations, parametric and sensitivity analysis,
Monte Carlo simulation as well as statistical analysis. A detailed
photovoltaic model was considered for the analysis. The details
regarding weather data, system specifications, utility rates and
financing options were incorporated into the model. The output of
the model included, LCOE, NPV, payback, revenue, the capacity
factor of the plant, and load and generation characteristics (Blair
et al., 2018). The PV to load ratio considered for the analysis is
0.9. A 100% PV to load ratio is not considered as it will violate the
net metering rules within the policy. The tariff rates are inclining
block rates for both domestic and rural residential consumers.
Under the net metering schemes discussed in Section 1, in India,
the consumers can offset their monthly volumetric charges but not
Table 2
Cases for the PV compensation mechanism.
Cases Monthly net unit calculation
Case 1 Monthly Net is the difference between total generation and consumption
Case 2 Monthly Net is the difference between total generation and consumption
Case 3 Monthly Net is the difference between cumulative hourly generation and
consumption
Case 4 Monthly Net is the difference between cumulative hourly generation and
consumption
Case 5 All the PV units generated are sold at a sell rate, and the load is purchased at a buy rate The monthly electricity bill is the sum purchases
fixed and minimum monthly charges. Any excess units remaining
at the end of the month is carried forward to next month and any
excess credit units remaining at the end of the year are forfeited by
the utility. While evaluating the results, solar panel size is consid-
ered as one of the important element.
The cases are differentiated based on the manner the electricity
bill is calculated and the PV generated units are compensated. The
PV compensation mechanisms are primarily divided into three
main categories, 1) Net energy metering 2) All buy all sell and 3) Net
billing mechanism (Zinaman et al., 2017). Based on the above cat-
egories, five different cases, are designed with variations in their
method of compensating the PV units. The inclining block rate tariff
is used for analysis as it is the existing retail rate for post-paid
residential consumers in Kharagpur. The rate structure consists of
a fixed monthly charge, energy charge and minimum monthly
charge.
Five different cases are used to calculate monthly bills as dis-
cussed in Table 2. Case 1 is a simple mechanism where the monthly
electricity bill is calculated based on net units which is the differ-
ence of units consumed and units generated by the system. Based
on the tiered rates, the electricity bill is calculated for net units of
the month. At the end of the year, any excess remaining units are
credited to the December electricity bill at the year-end sell rate of
Rs.6.64/kWh. The monthly bill is calculated based on net units, the
same as in case 1 but excess units are rolled over to the next month
in terms of bill credits. In case 3 and case 4 the net load is calculated
as a difference between hourly consumption and hourly PV gen-
eration. The excess PV generation is credited to the current month's
bill in case 3 whereas it is applied to the next month in case 4. In
case 5, the compensation mechanism is all buy and all sell at a rate.
All of the electricity is bought at existing retail rate and all of the
electricity generated by a PV system is sold at a rate based on the
policy of the utility. In this analysis, tiered rates are considered for
buying and selling electricity. The size of the solar panel is calcu-
lated using the formula (1),
Size of the system ¼ Annual electricity demandðinkWhÞ=CUF*8760
(1)
wherein, CUF is capacity utilisation factor, which is metric used to
measure the performance of a PV power plant.
Based on the calculated size of the system, the size of the solar
panel size to be installed on the rooftop was considered to be 90% of
the total capacity requirement, in consideration with the net
metering policy.
Based on the size of the solar panel required to meet the elec-
tricity requirements of a household, the analysis for five different
cases was carried out in SAM for all the categories of consumers.
Monthly Excess units
Rolled over to next month in terms of kWh.
Excess generation at the end of the year added to December's bill based on
sell rate
Rolled over to next month in terms of credit
Any credit remaining at the end of the year credited to the December
electricity bill.
Excess units credited to current month bill
Rolled over to next month in terms of credit
Any credit remaining at the end of the year credited to the December
electricity bill.
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707 703

Table 3
Factors considered for analysis in SAM (CERC, 2016).

Factors Values Factors Values

Total load supported 90% Total Losses 23.4%

O & M Costs in INR 700 per kW Fixed monthly charges in INR 15
O&M Costs escalation Rate 5.72% annually Monthly minimum charges in INR 28
Inverter efficiency 96%
Module efficiency 15% Analysis period 25 years
DC to AC ratio 1.1 System Cost (including inverter) in INR Rs. 53/Watt
Tilt 33
Inflation 5.45%
Loan 70% of total capital Loan interest 12.76%
Loan term 12

Table 4
Tariff rate a) Category A and B b) Category C (Govt. of West Bengal, 2016)

a b

Units Rate(in INR) Units Rate(in INR)

First 102 5.3 First 102 5.26
Next 78 5.97 Next 78 5.86
Next 120 6.97 Next 120 6.73
Next 300 7.31 Next 300 7.23
Next 300 7.58 Next 300 7.32
Above 900 8.99 Above 900 8.99

The factors considered for the analysis are given in Table 3.

The fixed monthly and minimum charges in the electricity bill
are considered from the electricity tariff of WBSEDCL. The tariff
rates used for category A, B and C is given in Table 4.
Value of bill savings (VOS) is calculated for the consumers based Fig. 10. Annual net savings of consumers in category A, B and C for all the cases.
on the following formula for all the consumers

Bill without PV  Bill with PV

Value of bill savings ¼ (2) The panel size for 42.5% of the consumers is below 1 kW in category
PV generation units
A. For the consumers with panel size below 1 kW, 65% of the con-
sumers achieve maximum savings in case 5. For the other 29% of
where the value of bill savings is in Rs./kWh. The inputs for SAM
the consumers who, despite having panel size of less than 1 kW
include the load of a consumer, size of solar PV, PV generation
achieve maximum savings in case 1. The varying load profile and
profile, retail rate specifications, system design parameters which
range of consumption in a season plays a critical role in realizing
include losses and degradation rate, system cost and other financial
maximum savings among all the five cases for a consumer. For the
parameters as described in Table 3 and Table 4. The output of the
same panel size, the change in seasonal load pattern leads to
model comprises of details regarding energy production, load
different cases for the achieved maximum savings by a consumer.
detail, energy losses and detailed financial analysis of the system.
For the consumers with panel size greater than 1 kW, maximum
The results are discussed in section 3.
savings are achieved in case 5 for 68% of the consumers (Fig. 11).
The increase in solar panel size leads to better savings in a
3. Results and discussion
compensation mechanism where monthly net units are utilized for
billing (case1 and case 2). The average payback period for all the
In this section, the savings achieved by a consumer with a PV
cases is more than 7.5 years and the average discounted payback
system in five different cases is analysed in section 3.1. The feasi-
period is 11.4 years; with the least being in case 1 and maximum in
bility of a PV system for a consumer is studied using SAM (NREL,
case 5. The NPV is positive for all the consumers in all the cases with
2016). A shared net metering model is developed for the individ-
average being more in case 1 as compared to all other cases.
ual consumers, and the economic feasibility of the shared net
metering models is analysed in section 3.2.

3.1. VOS of consumers for different cases

The net savings of a consumer refers to the bill savings achieved

by a consumer with the PV system. Net savings is the difference
between annual bill without a PV system and a bill with the system.
Fig. 10 represents the net annual savings versus the size of the
solar panel for residential consumers. It is observed that the
increasing size of the solar panel leads to increased savings. The net
savings are closely related to seasonal consumptions. The con-
sumption of a consumer varies based on season and the PV gen-
eration is also dependent on seasonal variation. Hence, net savings Fig. 11. Discounted payback period and NPV of consumers of category A for different
are related to seasonal variation along with the size of the panels. cases.
704 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707

metered units leads to better savings for consumers with larger solar
panel size because their consumption is high and net units lead to
smaller blocks of units in Inclining Block Rate (IBR) which ultimately
reduces their bills. For the smaller consumer, case 5 (all buy and all
sell) compensation mechanism proves to be more beneficial. The
consumer with lower panel size has lesser loads. Thus the electricity
bill generated is small. Thus, it is better to buy all the electricity at a
retail rate and sell all the PV generation units at a different rate,
thereby leading to better savings. The net savings achieved are
critical for determining the financial feasibility of a PV system for a
residential consumer. Also, the discounted payback period, which is
Fig. 12. Discounted payback period and NPV of consumers of category B for different considered to evaluate the project more accurately (as compared to
cases. the payback period) is very high for all the cases. While encouraging
rooftop PV systems among the residential consumers, a combination
of decreased system cost, improved injection tariff, and accessibility
In category B, 57.5% of consumers have their panel size below
to economic capital is a must. Another option is innovative policy
1 kW. For the consumers with panel size less than 1 kW, case 5
mechanisms and models which would encourage consumers to opt
proves to most beneficial in terms of net savings for 82.6% of con-
for rooftop PV systems. Shared net metering model offers an option
sumers. For the consumers with panel size more than 1 kW, 81.25%
for rooftop PV systems for individuals, wherein based on the
consumers achieve maximum savings in case 1 whereas rest of
designed mechanism, the consumers can form a group to avail the
them achieve maximum savings in case 4. The modest net savings
benefits of PV systems. Shared renewables offer various financial
achieved in a year are not enough for achieving attractive dis-
mechanisms with innovative investment options in addition to
counted payback period and net present value for the consumers.
extending benefits to consumers with relatively lower monthly
In all the cases the average payback period is more than 7.8 years,
consumption, land and shading problem.
and the discounted payback period turns out further worse with an
The payback period needs to be necessarily less than seven
average of 12.6 years in all the cases with the minimum in case 5
years, to attract investments in solar technology because the con-
(Fig. 12). Apart from this, 2.5% consumers realize negative NPV in
sumers would compare the investments made in solar with a fixed
case 1, 2 and 3.
deposit, where the later leads to a better return on an investment
In category C, 87.5% of consumers have their panel size less than
made within comparable duration (SBI, 2018). The consumers with
1 kW and the maximum savings achieved for these consumers is in
lower electricity usage will not be able to realize the benefits of
case 5 (Fig. 13) except for two consumers whose maximum savings
green energy. In rural India, the monthly per capita consumption of
are achieved in case 1. For the remaining five consumers, three of
electricity is between 2.4 and 42 kWh whereas for urban India, it is
them achieve maximum annual net savings in case 1 and the other
in the range of 8.2e52 kWh (Kochhar, 2015). Hence given the
two in case 4. The smaller panel size makes it more infeasible
disparity and wide range in per capita consumption in rural and
financially to install rooftop PV system. The average payback period
urban consumers, the same renewable energy policy may not prove
is 8.6years while considering all the cases and the average dis-
to be inclusive enough for all the consumers.
counted payback period is 13.7 years. Also, the discounted payback
Further, the value of bill savings is calculated for all the con-
period is not achievable for 12.5% of consumers in case 1 and 2, 15%
sumers in all the cases as shown in Fig. 14. Value of bill savings
in case 3 and 5% in case 4. The average discounted payback period
indicates the amount that a consumer will save per units after
in case 5 wherein maximum savings are achieved for most of the
installation of a PV system. Higher the vale of VOS, more beneficial
consumers, is 12.3 years. The NPV is negative for 20% of consumers
it is for consumers to opt for PV system and vice versa. The value of
in case 1e3 and for 10% of consumers in case 4 as observed in
bill savings for category A consumers is better as compared to
Fig. 12. In case 5, NPV is positive for all the consumers.
Also from Figs. 11e13, it is observed that the range of NPV is
more in category A as compared to category B and C, which is due to
larger size of solar panels, increasing net savings and hence better
financial feasibility.
The above analysis indicates that the smaller the size of the panel,
the compensation mechanism opted in case 5 proves to be most
beneficial. As the size of the panel increases, case 1 and case 2 prove
to be more beneficial. The compensation mechanism with net

Fig. 13. Discounted payback period and NPV of consumers of category C for different Fig. 14. Value of bill savings for all the consumers in category A, B and C for all the
cases. cases.
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
consumers in category B on an average, owing to bigger panels and
more requirement of energy. The value of bill savings decreases
with the decrease in the size of the solar panels. The range is very
small in case 5, and it decreases considerable in category C. This is
due to the fact that, all the electricity is bought at a particular rate
and all the electricity is sold at a price (in this case, tiered rates),
hence due to the rate structure and low requirement of energy, the
value of bill savings turns out to be almost similar for most of the
consumers.
The simulation results show that a modification in net metering
policy for adoption of a new model is necessary in case of a
developing nation like India. From this analysis, it can be inferred
that the existing net metering mechanism may not be able to assist
the government in meeting the rooftop solar PV goals. The net
metering policy will not be able to cater to the large part of the
population. Hence a novel mechanism which would be inclusive
enough to cater all the sections of society along with techno-
economic feasibility for the utility, as well as the consumers, is a
prerequisite for the success of JNNSM in India. Based on the study of
various shared net meter models, a model of shared renewables is
proposed. A feasibility analysis for PV adoption is carried out based
on the proposed model for the residential consumers considered in
the study.
3.2. Shared distributed net metering model
Based on the discussion of various net metering models in
section 1.2, a new model for India is proposed here.
Fig. 15. The proposed Model: Shared Distributed Net Metering Model.
705
This model is a variation of community net metering model,
modified to suit the needs of the Indian market. In this model,
consumers will come together to form a single generating facility.
The generating facility is shared between the members of the group
and the benefits of net metering are distributed based on con-
sumption among them. The model aims at achieving an energy
system which lowers carbon footprint but through a citizen
initiative and participation. The model would enable integration of
present passive consumer as an active participant in the sustainable
green energy independence. The disadvantageous consumers
having issues of land, rooftops and shading will also be able to
participate in net metering through this model. The initiative will
be taken by the consumers and utility would act as a facilitator for
the operation of the plant as shown in Fig. 15. The members would
be responsible for cleaning and maintenance of the plant, whereas
the utility would be responsible for grid integration which includes
providing the smart meters and management of disbursement of
units of green electricity among the beneficiaries. The utility has to
meet the renewable portfolio standards as per the guidelines of
state electricity regulatory commissions. Hence, this model will
also facilitate utility to meet RPS along with increasing their con-
sumer base. The model encourages on-site generation and con-
sumption of electricity, wherever it is possible to harness
renewable energy sources. In this model, the consumers who are
willing to participate in the net metering will approach the utility.
The utility will combine consumers in a locality to set up a gener-
ating facility, with a cap on the number of consumers for a single
generating facility and also a minimum cap on the size of the panels
706 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
required, if the consumption is low, as in category C in the analysis.
The model will serve multiple meters through a single system. A
smart grid would augment the net metering policy and play a big
role in making net metering successful in India. Hence, as the smart
meters will be installed in India, the use of meters for customer
integration in the electric supply through renewable energy inte-
gration and demand side management will modernise the overall
grid. With the onset of smart grid pilot projects in India (Thakur and
Chakraborty, 2015a), the AMI will be available. The smart meter will
record the import and export of units of electricity, and hence
would be a necessary element for this model. The consumers will
use the electricity generated from the solar panels and excess en-
ergy will be sent back to the grid. The utility will manage the dis-
tribution of benefits among the consumers based on their
electricity consumption. This model would impart all the benefits
of community net metering, aggregate net metering and virtual net
metering. The excess units generated can also be allocated to some
other consumer, who is not connected to the facility, as in virtual
net metering, so as to avail the benefits of net metering. The plant
will suffice 90% of the requirement of a consumer. Any excess units
remaining at the end of the month will be sold to the utility based
on the agreed rate.
The size of the panels is calculated as per formula 1, and the
analysis for the feasibility of this model is performed. It is assumed
that to qualify as a group for this model, the minimum size of the
solar panel required will be 5 kW as discussed in the introduction of
shared net metering model. As per the model, the consumers were
combined in ten groups; four groups (G1, G2, G3 and G4) for
category A, four groups for category B (G5, G6, G7 and G8) and 2 for
category C (G9 and G10). Based on the annual consumption of
electricity, the groups were designed to include an optimal mix of
consumers with low and high energy requirement, to maximize the
size of the solar panels. The groups G1-G8 had 10 members in each
group and G9-G10 had 20 members in each group, which satisfied
the requirement of a minimum size of the panel of 5 kW. The
consumption of the consumers of each group was combined and
the size of the solar panel was calculated. The net savings is
calculated, based on the individual savings of each consumer as a
difference between electricity bills with and without the system.
In the shared distributed net metering model, the compensation
mechanism of case 5 is considered. It is observed that, while
considering consumers with panel size less than 1 kW, in all the
three categories, 80.8% of consumers achieve maximum savings in
case 5, hence this case is chosen for the shared net metering model.
The objective of the shared net metering model is to provide an
inclusive model which would let small consumers harness the
benefits of shared renewables. The economic feasibility of shared
distributed net metering model is carried out for two different
cases. In case 1, the compensation mechanism in case 5 is consid-
ered, wherein all the electricity will be bought and sold at tiered
rates. Case 5a represents a slight variation of case 5, which com-
pensates all the PV generation at a single flat rate. The single flat
rate considered for the analysis is Rs.6.64/unit, which is the flat
tariff rate at which a residential consumer buys electricity in case of
prepaid connection with WBSEDCL.
The results indicate that the payback period is below 7.5 years
for all the groups with high positive NPV in case 5. The model
proves to be beneficial in terms of accommodating small con-
sumers, mitigating the disadvantages of individual net metering
while addressing the feasibility issues. In case 5a, the results are
further improved with a payback period of 6.2 (Fig. 16) years for all
the groups and high NPV value. The case 5a leads to higher returns
due to a single flat rate. This model makes the solar PV net metering
financially feasible for the residential consumers. This model is
more scalable and even an economy of scale is realizable. This
Fig. 16. NPV and Payback period for case 5 and 5a for groups designed for shared
distributed net metering model.
model will make it possible for the residential consumers to avail
economies of scale, reduced risks along with the savings in elec-
tricity bills. These results indicate that the proposed model is more
suitable than individual PV systems in net metering policy. From
the results, it is observed that the NPV for this model never went
negative, as the demand was high and the plant required was of
considerable size, which ultimately made the project financially
feasible.
In an analysis of net metered consumers from a smart grid pilot
project site in India (Thakur and Chakraborty, 2015a), it was
observed that net metering was not financially feasible for a resi-
dential consumer who was having lower consumption of elec-
tricity. On the other hand, the commercial consumer had a payback
period of 8 years with a positive NPV. In the case of another resi-
dential consumer with high consumption of electricity, the payback
period was found to be ten years. Through this analysis, it was
found that there is a dire need to design a net metering policy
which would be able to cater to residential consumers as well. The
proposed model aims to mitigate the feasibility issues alongwith
other barriers of individual net metering for encouraging commu-
nity based energy systems.
4. Conclusion
The environmental benefits of net metering are high, but long
payback period dissuades the investors. It is observed in the anal-
ysis of the results that conventional net metering may not be able to
cater to all the categories of consumers, for instance, consumers
with lower consumption or the consumers with shading and land
issues. Apart from this, the type of compensation mechanism
suitable for a particular consumer also differs. The study of five
different PV compensation mechanism demonstrated that 80.8% of
consumers achieve maximum savings in case 5 among all the
consumers with panel size less than 1 kW, whereas 67% of con-
sumers achieve maximum savings in case 1 for all the consumers
with panel size more than 1 kW. Hence, it was observed that sav-
ings of a consumer depend on the size of the panel and type of PV
compensation mechanism as well. Hence for any nation, it is
important that net metering policy needs to be inclusive and be
able to address the feasibility for different categories of consumers.
Shared renewables or shared net metering offer an alternative in
the net metering policy design which can mitigate the disadvan-
tages of the conventional net metering mechanism. The shared net
metering models encourage community involvement leading to
sustainable energy access, which is one of the sustainable devel-
opment goals (SDG) of United Nation. The results indicate that the
proposed model is more scalable and efficient as compared to the
conventional net metering set up for all the consumers. The NPV for
all the groups was found to be less than 7.5 years in case 5 and less
than 6.5 years in case 5a. Consumers will be more attracted towards
this type of arrangement as the risks are lower and benefits of
economies of scale as well as the optimal location can be achieved.
This type of model would aid in the development of a sustainable
 J. Thakur, B. Chakraborty / Journal of Cleaner Production 218 (2019) 696e707
society through green power generation. The model can also be
extended to other sources of distributed generation if detailed
mechanisms are integrated into the proposed model. The role of
utility and reliability of the grid would prove to be critical for the
successful implementation of this type of model. The evaluation of
net metering concept with different types of PV compensation
mechanisms and evaluation of a shared net metering model adds to
the existing literature of promotion of renewables in the grid.
Distributed generation deployment can be accelerated through
regulations and strategically conceptualised compensation mech-
anisms. The PV compensation mechanism holds repercussions on
the value proposition of the investment made in DG and hence is
critical. In India 77% of the population falls under low-income
group, 3% in middle-income, 1% in upper middle income, 0.5%
population in high-income group and rest of the population is poor
(Kochhar, 2015). The present study represents the majority of the
population in India. The study presents substantial policy impli-
cations for the developing countries in the world which are
considering the net metering policy for distributed PV deployment
in order to meet their renewables goals. In future, it would be
interesting to study the implication of smart grid implementation,
AMI time-variant rates and demand response mechanisms on net
metering policy structure. Also, net metering policy based on solar
insolation, due to variation in solar radiation needs to be studied.
The impact of the carbon tax and carbon pricing on electricity
would also impact this sector of grid-connected renewable energy
sources and energy policy.
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