Solar Blog

by Solar experts

solar energy plant installation

The savings from installing rooftop solar will accrue to the consumers by reducing their electricity bill. For the units generated from the solar solution, the consumer does not have to pay the bill to the distribution company (Discom). However the consumer does not get the waiver from paying all the charges.

The Discom electricity bill consists of the Demand Charges, Energy Charges, Fuel Surcharge, Electricity Duty, Various Taxes, Surcharge on Regulatory Assets, and meter rents. Out of these, all charges except Electricity Duty and Various Taxes are specified the State Electricity Regulatory Commission. Electricity Duty is specified by the State Government while the taxes are specified by the Municipalities and the State Government based on the end usage of taxes.

The Demand charges or the Capacity Charges are specified as the fixed charges to be paid by a consumer in a month. These charges may vary depending on the consumer's connected load (in KW terms) or may be a constant for a month. These charges will be borne by the consumer irrespective of the solar generation from the rooftop solution.

The Energy Charges are specified as the per unit (or kWh) rate and are calculated as the multiplication of energy units consumed and the per unit rate. Also for certain consumers, the energy charges are specifically provided in kVAh terms instead of kWh terms. For converting the consumption in kVAh to kWh, just multiply the kVAh units by the power factor (can take a value of 0.9 normally). The generation from the solar solution (as read from the meter installed with the roof top solar solution) will be reduced from the units consumed as per the consumer's electricity meter. As such the energy charges will reduce to the extent that the units generated from the solar solution.

The Fuel Surcharge is generally specified by the State regulator on a quarterly basis. The consumers can expect to witness a variation in these charges during a year itself. These charges are sometimes specified as the percentage of the demand charges and the energy charges. In few other states, these charges are specified as the per unit rate which needs to be multiplied by the energy units consumed to get the total Fuel Surcharge. The Fuel Surcharge will also reduce to the extent of generation from solar.

Electricity duty (ED) and Various Taxes (like municipal tax, water tax etc) are specified on per unit (kWh) of consumption basis by the State Government. Generally the state government specifies differential rates of ED for the units consumed and the units generated from a captive power plant. Most states have not specified an electricity duty to be charged against the rooftop solar generation. As such the consumer will save on the ED also when generating from roof top solar.

The Municipalities and the State Government have not provided any directive on the collection of various taxes against the generation from solar, therefore the savings from these taxes can be assumed when generating from the roof top solar.

Surcharge on Regulatory Assets are specified by the Regulator as a means to recover the past losses incurred by the Discom. This surcharge is typically specified as a percentage on the Demand Charges and the Energy Charges. The solar generation will help to save this regulatory surcharge also.

The table below summarises the savings applicable against various charges.

SN Type of Tariff or Charge as per Customer Bill Applicable for the Savings from the Roof top Solar Generation
1 Demand Charges Not Applicable
2 Energy Charges Applicable
3 Fuel Surcharge Applicable
4 Electricity Duty Applicable
5 Various Taxes Applicable
6 Surcharge on Regulatory Assets Applicable
7 Meter Rents and other Miscellaneous Items Not Applicable

 

Pradeep Prakash Singhal

Pradeep Prakash is a solar enthusiast/ solar professional by heart. He has been involved in setting up distributed solar at more than 100 sites across India