Net metering: Can it alleviate power supply, costs woes?

Special Report:

MANILA, Philippines — In September 2020, Florencio Fernando, a returning overseas Filipino worker from the Middle East, decided to invest his hard-earned money on a solar photovoltaic system for his home in Valenzuela City.

With a 3.2-kilowatt solar system on his roof, Fernando and his family could cool down for the whole day using two air-conditioning units – along with other home appliances – without worrying about the monthly electricity bill.

From the usual P5,000 to P6,000 monthly electricity bill, Fernando’s family was able to cut it down by up to P2,000.

“The investment was worth it. Imagine, I am saving P3,000 to P4,000 a month. The life span of the panels is 25 years,” Fernando said.

Fernando is among the many Filipinos who have installed solar rooftops during the pandemic.

The residential segment saw an increase in solar adoption during the pandemic, when all household members were forced to stay at home to slow the spread of the virus, causing an abnormal spike in electricity consumption.

“Definitely, the demand for solar rooftops, especially the residential segment, increased over the pandemic. A lot of the customers (installed solar rooftops) since they are mostly working from home while students are doing online schooling. So this helped in their energy consumption in terms of savings,” Spectrum COO Patrick Henry Panlilio said.

Spectrum is the solar solutions provider of distribution utility giant Manila Electric Co. (Meralco).

Spectrum’s statement was supported by data from the Energy Regulatory Commission (ERC), which showed that 2,341 end-users availed themselves of the net metering program in the past two years – 590 in 2020 and 1,715 in 2021. Their solar capacity is equivalent to a total of 14.55 megawatts peak.

Implemented in 2013, the net-metering program enables an ordinary electricity consumer to become a “prosumer” by installing a maximum of 100 kilowatts of solar facility. As a prosumer, the ordinary electricity consumer generates electricity for its own consumption, and sells any excess generation to the distribution grid.

“Net metering is a system of empowering our consumers because they are able to provide and produce, instead of just consuming electricity,” ERC chairperson Agnes Devanadera said in a recent forum.

While there were only 590 new additional users under the program in 2020, they were able to install solar panels over their homes despite challenges during the pandemic.

“Because of people movement limitations and import concerns brought about by the pandemic, there is a reduction of customers entering into net metering arrangements,” Department of Energy-National Renewable Energy Board (NREB) Technical Services and Management Division chief Gaspar Escobar said.

Driving the increase in net metering end-users is the involvement of the housing and financial sector.

“The housing sector has become involved, no less than the financial institutions factoring the solar panels into the cost of the house. Cost of solar panels is now financed together with the household project and the repayment is spread over the years,” Devanadera said.

Another factor the ERC cited in the increase in the net metering clients is the amendment of net metering rules in 2019, which made it more accommodating to ordinary electricity consumers wanting to avail themselves of the program.

During the implementation of the 2013 net-metering rules, significant concerns on permitting and costs were raised by the stakeholders.

Data from the ERC showed there were only 200 end users that availed themselves of net metering in 2015, 536 in 2016, 663 in 2017 and 844 in 2018.

“We saw a slow growth in net metering. Then we amended the rules in 2019. In 2021, we saw the increase… from a very slow growth, it has kicked in,” Devanadera said.

The ERC then adopted changes to the Rules Enabling the Net-Metering Program for Renewable Energy through Resolution 06 in 2019.

The amended net-metering rules prescribe a maximum 20-day processing timeline for the distribution utilities (DUs) to complete the whole interconnection process from receipt of the letter of interest as long as all necessary permits and licenses are secured and completed.

The distribution impact study (DIS) fee and other related soft costs were also removed in order to encourage participation from end-users.

The ERC has considered the conduct of DIS as a regular activity of the DU to ensure the reliability and stability of the distribution system. Hence, the ERC deemed it unnecessary to impose additional charges for its conduct.

Soon after the new rules were implemented, the ERC recorded an additional 1,168 new end users under the net-metering program.

“What we really need to do now is increase our information and education campaign (IEC) and reach all those future participants, and those who have started to inquire about the net metering program,” Devanadera said.

As of end-2021, there were a total 5,716 end users qualified under the net metering program, which have a total of 46.73- MWp in capacity, data from the DOE showed.

Of the total, 81 percent are located in Luzon, 15 percent in the Visayas and the balance in Mindanao.

“We have so much IEC to be done so more people can participate and more DUs can participate in this kind of program. We have streamlined the application and the action, how the DUs must act and process,” Devanadera said.

To further grow the number of end users availing themselves of the net metering program, the DOE will issue a net metering guidebook to provide guidelines, standards, procedures for all net metering arrangements.

“The DOE is targeting to issue the net metering guidebook this year,” DOE supervising science research specialist Jaime Planas said.

The government is also expanding the program to off-grid areas, especially after the DOE issued a policy introducing net metering applications in far-flung areas in October 2020.

On the side of the ERC as the power regulator, the commission is targeting to rollout the net metering in off grid areas within the year, Devanadera said.

Solar rooftops are also seen alleviating power supply woes during summer—a time when solar panels can harvest energy for a longer time.

“Solar power is one of the best alternative sources of energy since it can really alleviate power supply concerns and relatively have a short-term timeline to build compared to other power plants,” Spectrum’s Panlilio said.

Solar rooftop systems can reduce the strain on the power grid by lowering demand, while supply in the power grid can also be boosted since the prosumers can sell back their excess capacity to the DUs through the net metering program.

The Luzon grid faces an electricity shortfall in the weeks leading up to and after the May elections as forecasts point to instances of yellow and red alerts, which may lead to power interruptions during the peak months.

This is due to higher demand forecasted this year and when several power plants go on unplanned outage.

A red alert status is issued when supplies are insufficient to meet consumer demand and the transmission grid’s regulating requirement. A yellow alert means there are not enough reserves to cover the largest running generating unit at the time but does not necessarily lead to power outages.

“To help alleviate that supply problem, companies and buildings have their own portion of their generation. It can lessen the dependency on the grid. The excess energy can be exported back to the grid through the net metering program. This can be used also for additional supply,” Panlilio said.