Govt to relax net metering policy to boost rooftop solar

Infographic: TBS

Summary:

• Net metering now allows 100% excess solar power transmission to the grid
• Policy expansion includes single-phase and prepaid meter users for participation
• Industries can reduce costs by transmitting surplus power on non-operational days
• Solar capacity integration limit raised to 80% of transformer capacity
• Factories could generate 5,000 MW using available rooftop space

The government has decided to ease net metering facilities for all in an effort to promote rooftop solar installations, as it aims to generate 40% of its total electricity from renewable sources by 2041, according to energy ministry officials.

Recognising the potential of solar power, the government has initiated an amendment to the net metering policy to encourage more users to adopt the system, reducing dependency on fossil fuel-based power generation.

Earlier, rooftop solar users could only transmit up to 70% of their generated electricity to the grid through net metering. The new amendment removes this limit, allowing users to send 100% of their excess solar power to the national grid.

This change benefits users who generate more power than they consume, as they will no longer need to invest in expensive energy storage systems to handle surplus electricity.

Ministry officials stated that a committee has already finalised a draft for legal vetting. Before that, top ministry officials agreed to introduce four major amendments.

Experts said the move would also help attract new investments in the solar sector, as businesses and households can now install larger solar systems without worrying about storage costs. The amendment will also help investors achieve a quicker return on capital, ministry sources said.

Previously, only those with three-phase electricity connections or 33 kV electricity connections were eligible for net metering. Now, the facility will be open to all, including those with 220-volt or single-phase electricity connections, significantly expanding participation.

However, the draft policy also proposes a 10% system maintenance charge, which utility distributors will collect during final payment settlements.

Currently, prepaid meter users are not eligible for net metering, but the amendment will allow them to participate as well.

Additionally, the new policy increases the threshold for solar power integration into the grid relative to transformer capacity, raising it to 80% from 70%.

A senior ministry official, speaking on the condition of anonymity, said that for individual households, eligibility will depend on the capacity of the local transformer. Net metering facilities will be granted on a first-come, first-served basis.

Speaking to The Business Standard, Shams Mahmud, Managing Director, Shasha Denims Ltd, said the removal of the threshold limit for net metering would benefit all solar power users by allowing them to share their excess power with the national grid, thereby reducing their energy costs.

He explained that on holidays when the operations of the firm are closed, it would be able to transmit its full solar energy production to the national grid without wastage.

How the net metering system works

Under the net metering system, a rooftop solar owner connects his or her solar panels to the national grid through a two-way electricity meter. 

When the building consumes less power than it generates, the excess electricity is sent to the national grid. The meter records both the electricity supplied to the grid and the electricity drawn from it.

At the end of the billing cycle, users pay only for their "net" consumption—the difference between what they used from the grid and what they supplied.

If more electricity is fed into the grid than consumed, users receive credits, which can be adjusted against future bills.

A new move to cut industries' power bills

Several firms and factories have installed rooftop solar systems under the net metering model since 2018, as it has become a popular choice for industries to minimise energy costs and reduce carbon emissions.

According to the Sustainable and Renewable Energy Development Authority, as of 2024, Bangladesh's total solar energy output stands at 1,084.55 MW.

This includes 258 non-net-metered rooftop solar systems with a capacity of 88.451 MW and 2,476 net-metered rooftop solar systems generating 111.732 MW.

The Infrastructure Development Company Limited, a government-owned non-bank financial institution specialising in financing renewables, estimates that using the rooftops of ready-made garment (RMG) factories, textile industries, and other businesses could generate around 5,000 megawatts (MW) of electricity by installing solar panels.

Bangladesh has more than 7,000 RMG factories with vast rooftops well-suited for solar photovoltaic (PV) systems. Estimates suggest that textile factories alone have approximately 420 lakh square feet of rooftop space capable of generating 400 MW of electricity.

Besides these, rooftops of other industries – including poultry, pharmaceuticals, paper, packaging, and cold storage facilities – could also be used to generate 5,000 MW of electricity.

Two popular methods for rooftop solar power

To encourage rooftop solar adoption, two financing models are widely used – Capital Expenditure (CapEx) and Operational Expenditure (OpEx).

In the CapEx model, users purchase and install solar panels at their own expense. The entire system, including design and implementation, is managed by a solar installation company, while users bear the total project cost upfront.

In contrast, the OpEx model allows consumers to avoid upfront costs. A third-party company installs, maintains, and operates the solar panels, while users pay for electricity at a rate lower than the conventional grid rate. This rate is fixed through a power purchase agreement for a set number of years.

Speaking with The Business Standard, David Hasnat, president of the Bangladesh Independent Power Producers' Association, said the policy amendment would encourage more people to adopt solar energy installations.

Factories have already started installing solar panels on their rooftops, as solar electricity costs less than grid electricity.

Following the policy amendment, individual households are expected to make significant investments. He added that in many countries, multiple households jointly transmit power to the national grid, and similar initiatives could be introduced in Bangladesh.

He stated that in industries, the OpEx model is commonly followed. If the policy allows, households could also adopt this model.

Referring to his factories and other rooftop solar plants, he noted that they currently produce about 1.5 MW, which is expected to increase to 2 MW soon.

"These were also installed under the OpEx model by a third-party company. We are paying them only 85% of the electricity price compared to our regular electricity bills."