The Power Division is pushing for a reduction of the buyback rate of Rs 23 per unit to Rs 11, so as to discourage the switchover to solar power by domestic consumers. The question of whether this will be a wise decision or not is likely to remain unanswered, as consumers are driven to opt for battery storage along with generation capability. The Power Division claims that, because it makes capacity payments to IPPs, it has to raise tariffs to prevent non-solar consumers from being burdened. The problem is that the solar power installed is the first generation capacity installed by consumers. Where power utilities previously installed huge generation plants and sold it on their grids, now consumers are shouldering the entirety of the cost of generation.
This means that the utilities have missed a golden opportunity to monopolize solar generation, and integrate it into its existing commercial model. The problem for utilities has been that while generation only made sense on a large scale with sales to consumers, solar generation capacity can be installed with an investment which is heavy for domestic consumers, but within reach. Utilities may miss the bus again, because consumers may go off-grid when they install storage capacity. At present, solar consumers also remain in the grid, not just because they can sell their excess production, but for grid coverage during nights or overcast days. Storage is technically feasible, but batteries are expensive and maintenance is not easy. Utilities should dread the time when these issues are sufficiently resolved to allow consumers to install them, and go entirely off the grid. More dangerous, if banks line up the financing, and a combined generation-storage solution is made available.
The utilities need to get away from the siren song of the oil generation lobby, and into the provision of storage as well as generation capacity. The utilities need to look at small hydel projects suited for run-of-canal use, for example. This addiction to huge projects (with the attendant opportunities for kick backs) must be overcome. The buyback tariff was set to encourage the adoption of solar power. It should be remembered that there is presently a lack of financing for an installation, but it is still cheaper than a new car. If buyback tariffs go beyond making the monthly bill more the possible instalment, consumers will vote with their pockets. And then where will the utilities be?
