comparitive study of solar policies

Summer Internship Report

On

COMPARITIVE STUDY OF SOLAR POLICIES OF

INDIA AND ABROAD& MODEL SOLAR POLICY

FOR MAHARASHTRA

AND

FINANCIAL MODELING OF A SOLAR PV PLANT

UNDER THE GUIDANCE OF

Mrs. Manju Mam, Director(MS),

CAMPS, NPTI, Faridabad

&

Mr. Vijay L. Sonavane, Member (Technical)

MERC, Mumbai

Submitted By:

Anish Kumar Deb

NPTI, MBA Power Management

(Under Ministry of Power, Govt. of India)

Maharishi Dayanand University, Rohtak

August 2013

COMPARITIVE STUDY OF SOLAR POLICIES

DECLARATION

I, Anish Kumar Deb, Roll no. 14 / Semester 3rd

/ Class of 2012-14 of the MBA (Power

Management) of the National Power Training Institute, Faridabad hereby declare that the

Summer Training Report entitled:

COMPARITIVE STUDY OF SOLAR POLICIES OF

INDIA AND ABROAD& MODEL SOLAR POLICY

FOR MAHARASHTRA

AND

FINANCIAL MODELING OF A SOLAR PV PLANT

is an original work and the same has not been submitted to any other Institute for the award

of any other degree.

A Seminar presentation of the Training Report was made on ………………….. and the

suggestions as approved by the faculty were duly incorporated.

Presentation In charge Signature of Candidate

(Faculty)

Countersigned

Director/Principal of the Institute


ACKNOWLEDGEMENT

Learning experience is like no other, but to learn one seeks a teacher, a guide,

and I found all of these in MR. Vijay L. Sonavane (MEMBER MERC) who were

my project guide during my stay at MAHARASHTRA ELECTRICITY REGULATORY

COMMISION.

I would also like to thank MR. Anant Sant (DY DIRECTOR, TECHNICAL, MERC)

for the valuable teachings, Sir the inputs given by you will always be with me.

I also express gratitude towards MRS. Sarita Thakur (DY DIRECTOR,

ADINISTRATION AND FINANCE, MERC)for coordinating administrative

activities and other efforts.

I would like to thank MR. Amit Chilwe (REGULATORY OFFICER, MERC) who

helped me throughout my learning of each and every aspect. His guidance and

support made the learning easy and enjoyable.

I take this opportunity to express my sincere thanks to MRS. Megha Singhal

(REGULATORY OFFICER(FINANCE), MERC)who helped me and supported me

an guided me.

I would like to each and every person in MERC who helped me and

contributed in my project.

I also extend my thanks to all the faculty members and my batch

mates in CAMPS (NPTI), for their support throughout the course of

internship.

THANK YOU ALL.


EXCECUTIVE SUMMARY

It is a known fact that Sun is the ultimate source of energy and mankind has been

harnessing Sun’s energy ever since the dawn of civilization. In modern era electricity has

become fundamental need of every human-being and the demand of it is rising by the day.

The world has awakened towards the need of alternate sources of electricity; hence almost

all major countries are coming up with policies to attract investors and industrialists. A study

of federal policies, regulations and incentives given in countries namely GERMANY, ITALY,

CHINA, UNITED STATES, JAPAN, FRANCE, AUSTRALIA and UNITED KINGDOM was done

during the training period.

To unite the effort towards reducing environmental pollution, nations united and formed

Kyoto protocol in which inter-country methods were designed to fulfil the binding target

set.

This report contains the provisions and important statements in the Indian federal

legislative documents relating to solar/renewable energy.

Comparative study of rules, regulations, policies and tariff components related to solar

technologies has been done of the states of India namely GUJARAT, RAJASTHAN,

KARNATAKA, MADHYA PRADESH, ANDHRA PRADESH, TAMIL NADU and CHATTISGARH.

Pro’s and Con’s of state policies and regulations are mentioned from a developer’s point of

view after comparing them on the basis of parameters namely eligible producer, land

allotment, operative period, sale of power and tariff, wheeling, banking of electricity,

power, evacuation & grid interfacing and incentives & general.

The project proceeds with MERC initiative to develop solar power in Maharashtra. A model

solar policy is been prepared during the training period which may be helpful to encourage

more and more solar power generators across the state of Maharashtra.

Last but not the least a financial modelling of a Solar PV plant has been prepared for a

capacity of 1MW to determine various financial indicators i.e. IRR, NPV, DSCR and various

other parameters has been taken in to account for the project viability of a Solar PV plant.


Contents 1. GLOBAL SOLAR POWER SCENARIO ................................................................................................. 1

2. COUNTRY WISE SOLAR POWER INSTALLATIONS ACROSS THE WORLD .......................................... 1

3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER ..... 3

3.1 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE ........................................ 3

3.2 KYOTO PROTOCOL ........................................................................................................................ 3

4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP SOLAR POWER GENERATION .......... 4

4.1 GERMANY ...................................................................................................................................... 4

4.2 ITALY .............................................................................................................................................. 5

4.3 CHINA ............................................................................................................................................ 6

4.4 UNITED STATES ............................................................................................................................. 7

4.5 JAPAN ............................................................................................................................................ 8

4.6 FRANCE.......................................................................................................................................... 9

4.7 AUSTRALIA .................................................................................................................................. 10

4.8 UNITED KINGDOM ...................................................................................................................... 11

5. INDIA’S SOLAR POWER SCENARIO ................................................................................................ 12

6. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER ... 13

6.1 ELECTRICITY ACT 2003 ................................................................................................................ 13

6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP)................................................................................ 14

6.3 NATIONAL TARIFF POLICY 2006 (NTP) ........................................................................................ 14

6.4 NATIONAL ACTION PLAN ON CLIMATE CHANGE ........................................................................ 14

7. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION ....................................................................... 16

8. REC MECHANISM OVERVIEW:....................................................................................................... 20

9. OPERATIONAL FRAMEWORK OF REC MECHANISM ...................................................................... 21

10. STATE WISE RPO (SOLAR & NON SOLAR) .................................................................................. 22

11. STATEs SOLAR POLICIES ............................................................................................................ 24

11.1 GUJARAT SOLAR POLICY 2009 ................................................................................................... 24

11.2 RAJASTHAN SOLAR POLICY 2011 .............................................................................................. 26

11.3 KARNATAKA SOLAR POLICY ....................................................................................................... 31

11.4 MADHYA PRADESH SOLAR POLICY 2012 ................................................................................... 33

11.5 ANDHRA PRADESH SOLAR POLICY 2012 & FIRST AMENDMENT .............................................. 37


11.6 TAMIL NADU SOLAR POLICY 2012............................................................................................. 39

11.7 CHATTISGARH SOLAR POICY 2012-17 ....................................................................................... 42

12. CONCLUSION ............................................................................................................................. 44

13. MAHARASHTRA STATE SOLAR POWER SCENARIO .................................................................... 45

14. LEGAL EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER .......... 46

15. MERC INITIATIVE TO DEVELOP RENEWABLE ENERGY .............................................................. 46

15.1 Renewable Purchase Obligation ............................................................................................... 46

15.2 Renewable Tariff ....................................................................................................................... 47

16. MAHARASHTRA MODEL SOLAR POLICY .................................................................................... 48

17. FINANCIAL MODELLING (SOLAR PV PLANT) .............................................................................. 54

1. GLOBAL SOLAR POWER SCENARIO Solar energy has experienced an impressive technological shift. While early solar

technologies consisted of small-scale photovoltaic (PV) cells, recent technologies are

represented by solar concentrated power (CSP) and also by large-scale (PV) systems that

feed into electricity grids. The costs of solar energy technologies have dropped substantially

over the last 30 years.

The rapid expansion of the solar energy market can be attributed to a number of supportive

policy instruments, the increased volatility of fossil fuel prices and the environmental

externalities of fossil fuels, particularly greenhouse gas (GHG) emissions.

Germany is the world's top photovoltaic (PV) installer, with a solar PV capacity as of

December 2012 of more than 32.5 gigawatts (GW).The German new solar PV installations

increased by about 7.6 GW in 2012, and solar PV provided 18 TWh (Trillion kilowatt-hours)

of electricity in 2011, about 3% of total electricity. Some market analysts expect this could

reach 25% by 2050.

The overall capacity installation across the world has increased from 39.78 GW in 2010 to

102.024 GW in 2012.

It is visible that though energy usage from renewables is increasing but still the majority of

energy is supplied by fossil fuels and there is a long time before world becomes

independent from fossil-fuel usage. There is a need of continuous improvement and

implementation of renewable technologies.

2. COUNTRY WISE SOLAR POWER INSTALLATIONS ACROSS THE

WORLD

COUNTRY 2010(MW) 2011(MW) 2012(MW)

GERMANY 17320 24875 32509

ITALY 3502 12764 16987

CHINA 893 3093 8043

UNITED STATES 2519 4383 7665

JAPAN 3617 4914 6704

FRANCE 1025 2831 3843

AUSTRALIA 504 1298 2291

UNITED KINGDOM 72 1014 1831

INDIA 189 461 1686

REST OF WORLD 10137 14051 20465

TOTAL 39778 69684 102024


The 370 MW Ivanpah Solar Power Facility, located in California's Mojave Desert, is the

world’s largest solar thermal power plant (SINGLE TOWER TYPE) project currently under

construction.

The Solana Generating Station is a 280 MW solar power plant which is under construction

about 70 miles (110 km) southwest of Phoenix, Arizona.

0

5000

10000

15000

20000

25000

30000

35000

2010(MW)

2011(MW)

2012(MW)


3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY

INCLUDING SOLAR POWER

3.1 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE

In 1992, countries joined an international treaty, the United Nations Framework Convention

on Climate Change, to cooperatively consider what they could do to limit average global

temperature increases and the resulting climate change, and to cope with whatever impacts

were, by then, inevitable. By 1995, countries realized that emission reductions provisions in

the Convention were inadequate. They launched negotiations to strengthen the global

response to climate change, and, two years later, adopted the Kyoto Protocol. The Kyoto

Protocol legally binds developed countries to emission reduction targets. The Protocol’s first

commitment period started in 2008 and ends in 2012. Till date there are total 195 parties.

3.2 KYOTO PROTOCOL

The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into

force on 16 February 2005. The detailed rules for the implementation of the Protocol were

adopted at COP 7 in Marrakesh in 2001, and are called the “Marrakesh Accords.” In Kyoto

protocols three mechanisms namely emission trading, clean development mechanism

(CDM) and Joint implementation (JI) with targets for reduction in overall GHG emissions

were stated and accepted by the parties (nations).

India acceded to the Kyoto Protocol in August 2002 and one of the objectives of acceding

was to fulfill prerequisites for implementation of Clean Development Mechanism projects,

in accordance with national sustainable priorities, where-under, a developed country would

take up greenhouse gas reduction project activities in developing countries. MoEF is

pursuing capacity building projects with GTZ (Gesellschaft für Technische Zusammenarbeit),

UNDP (United Nations development programme) and ADB (Asian Development Bank). CDM

is explained in detail in the later part of this report.


4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP

SOLAR POWER GENERATION

4.1 GERMANY

In the electricity sector, as of July 2010, feed-in tariffs for solar PV have been lowered

substantially while the incentive for auto-consumption (captive) was increased.

Feed-in Tariffs in c€/kWh

Installations not attached to a building Installations attached to a building

Agricultural land

Sealed or Conversion

land

Certain other land

≤30 kW >30 kW and ≤100

kW

>100 kW and ≤1,000

kW

>1,000

Kw

0.0 22.07 21.11 28.74 27.33 25.68 21.56

In addition, the degression rates where increased for 2011 and a flexible “breathing” cap

was introduced in order to adapt the degression rates to PV market development.

Different additional benefits are granted for certain characteristics, such as innovative

technology, the fulfilment of sustainability criteria, auto-consumption or high efficiency.

New installations are supported at different rates to modernized or retrofitted installations.

Investment costs for commercial systems (incl. Planning and installation) can be depreciated

over a 20 year period and other costs can be considered as operations cost

• Commercial systems are VAT exempted (VAT is at 19% in Germany)

• In exceptional cases for some commercial systems which operate closely to

producing or manufacturing facilities 12.5-27.5 % of investment can be claimed as tax credit.

4170 6120

10566

17554

25039

32643

0

5000

10000

15000

20000

25000

30000

35000

2007 2008 2009 2010 2011 2012

SOLAR INSTALLED CAPACITY IN MW

INSTALLED CAPACITY


4.2 ITALY

Feed-in tariffs (15 years) for electricity produced by renewable energy plants with a

maximum power output of 1 MW (0.2 MW for wind energy), as an alternative to the green

certificates;

An incentive scheme (“Conto Energia”) for photovoltaic and solar thermodynamic plants

through the feed-in premium mechanism.This defines a premium for PV production

differentiated by size and level of architectural integration. The premium is constant for 20

years. The electricity produced can be used for own consumption, sale, or exchange with

the network (net metering up to 200 kW installed capacity). The initial premiums of 2007

have been reduced by 2% per year, and will be reduced by a further 2% for plants beginning

production in 2010.

An obligation has been introduced to install PV on new buildings: A minimum of 1 kW for

each residential unit has to be covered by RES and 5 kW in industrial buildings larger than

100 m2.

Electricity suppliers can fulfil their obligation using tradable Green Certificates, issued by

GSE, the body in charge of collecting resources from electricity suppliers and giving them to

the producers.The quota had an annual increase of 0.35%, from 2004 to 2006, and of 0.75%

from 2007 to 2012, though a change in the support system is expected in 2011.

Italy’s Conto Energia V solar incentive programme will expire on 6 July 2013 having reached

its cap of €6.7 billion and therefore cease any further investment into solar power.

87 432 1144

3470

12783

16361

0

5000

10000

15000

20000

2007 2008 2009 2010 2011 2012


INSTALLED CAPACITY


4.3 CHINA

Chinese government has employed most internationally recognized policies to stimulate the

development of renewable energies, e.g., mandatory renewable portfolio standards,

subsidies, special development funds, feed-in tariff, tax credits and etc.

“Renewable Energy Law of People’s Republic of China” was first launched in 2006, followed

by “Medium and long term development plan for renewable energy development” and then

“The eleventh five-year plan for renewable energy development” in 2008. According to

these programs andregulations, the proportion of renewable energy in China’s primary

energy consumption will be increased to 10% by 2010, and 15% by 2020.

The subsidy’s upper limit was set at 20 Yuan/Wp for the year of 2009, which can cover 30-

50% the production cost of the manufactures. This can be interpreted as a strong policy

driver for solar energy utilization, especially PV utilization.

“Golden Sun Project” aiming at accelerating the PV industries was launched in July, 2009.

The subsidies can go as high as 50% of the initial investments for the on-grid electricity and

its dispersion systems, 70% for the independent electricity generating system for the

remote areas.

If a national FIT policy for utility scale-solar plants is adopted, it is predicted that this new

type of solar policy will drive much faster growth in the Chinese solar market as compared

to China’s existing roof-top subsidy and “Golden Sun” program, which focuses on remote

off-grid installations. It is expected that the tariff will fall between US $0.16 and US $0.22

per kilowatt hour of electricity produced at large-scale photovoltaic arrays.

100 140 300 800

3300

8300

0

2000

4000

6000

8000

10000

2007 2008 2009 2010 2011 2012


INSTALLED CAPACITY


4.4 UNITED STATES

US proposed a mix of incentives that includes government-guaranteed loans, a mandatory

solar portfolio standard for electric utilities, and a solar price support program for a feed in

tariff (FIT).

In the first 5-year round of solar deployment, the FIT subsidy levels are $0.11/kWh for CSP ,

$0.11/kWh for PV–CAES, and $0.2/kWh for distributed PV. The FIT subsidy levels are

reduced in the second 5-year round of solar deployment to $0.07/kWh for CSP, $0.03/kWh

for PV–CAES, and$0.1/kWh for distributed PV. The FIT subsidies are paid over the entire 30-

year capital recovery period.

Section 204 of EP Act 2005 establishes a photovoltaic (PV) energy commercialization

program for the procurement and installation of PV systems in public and federal buildings.

It requires the installation of 20,000 solar-energy systems on federal buildings by 2010, as

contained in the federal Million Solar Roof Initiative (MSRI) of 1997. The commercialization

program has been appropriated $50 million annually for fiscal years 2006–2010, until funds

are expended. An evaluation program has been appropriated $10 million annually for fiscal

years 2006-2010, until funds are expended.

The Property Tax Exemption for Solar Systems is a product of the California Revenue and

Taxation Code, section 73. Active solar energy systems installed between January 1, 1999

and January 1, 2006 are not subject to property taxes when assessing property for property

tax purposes.

612 864 891

1212

1818

4342

0

1000

2000

3000

4000

5000

2007 2008 2009 2010 2011 2012

SOLAR INSTALLED CAPACITY IN GW

INSTALLED CAPACITY


4.5 JAPAN

In December 2008, the Ministry of Economy, Trade and Industry announced a goal of 70% of

new homes having solar power installed, and would be spending $145 million in the first

quarter of 2009 to encourage home solar power.

The government enacted a feed-in tariff on November, 2009 that requires utilities to

purchase excess solar power sent to the grid by homes and businesses and pay twice the

standard electricity rate for that power.

On June 18, 2012, a new feed-in tariff was approved, of 42 Yen/kWh, about 0.406 Euro/kWh

or USD 0.534/kWh. The tariff covers the first ten years of excess generation for systems less

than 10 kW, and generation for twenty years for systems over 10 kW. It became effective

July 1, 2012. In 2013, Japan is expected to install 5-9 GW of solar power.

In July, 2012, Japan's Ministry of Economy, Trade and Industry (METI) introduced a

restructured feed-in tariff in order to spike investments in large-scale renewable energy and

photovoltaic. Market segmentation and development in Japan are anticipated to change

significantly in the near future, with residential market share projected to fall sharply by

2013 and shift towards commercial, industrial, and small and large utility markets. These

sectors are expected to grow quickly through 2016, creating more room for foreign

manufacturers.

1919 2144 2627

3618

4914

7000

0

1000

2000

3000

4000

5000

6000

7000

8000

2007 2008 2009 2010 2011 2012

INSTALLED CAPACITY IN MW

INSTALLED CAPACITY


4.6 FRANCE

The support scheme for PV projects was largely modified in December 2010. A clear

distinction between projects under 100kWp and projects above 100kWp has been made.

The impact is particularly important for large installation above 100kWp.

The government justifies this change by the fact that France is well on track on the

development of its solar portfolio, and that the industry has reached a satisfying inertia. The

government therefore now aims at stabilizing the yearly installation rate at 500MW (against

expected yearly installation rates of 1000MW to 1500MW between 2011 and 2012).

Large installations, above 100kWp, are not eligible for the feed-in tariff anymore. For

smaller installations, the tariff has been reduced progressively from December 2009, and

three categories have been created: integrated PV, partially integrated PV and ground based

installations.

As of January 1, 2011, larger projects (above 100kWp), or ground based projects will benefit

from a reduced feed-in tariff (120€/MWh against a previously existing tariff of 328 €/MWh).

Full integration of PV panels requires the panels to take a vital role in the structure of the

building (e.g.watertightness). A partially integrated installation requires panels to be fixed

on an existing building. For these installations tariffs range from 460 €/MWh to

288.5€/MWh. The table below details the different feed-in-tariffs.

98.2 103.9 289.3

1197.3

2948.6

4027.6

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1 2 3 4 5 6

INSTALLED CAPACITY IN MW

INSTALLED CAPACITY


4.7 AUSTRALIA

An Expanded Renewable Energy Target was passed by the Australian Parliament on 20

August 2009, to ensure that renewable energy obtains a 20% share of electricity supply in

Australia by 2020. To ensure this the Federal Government has committed that the MRET will

increase from 9,500 gigawatt-hours to 45,000 gigawatt-hours by 2020.The scheme lasts

until 2030.

The Australian Government provided a rebate program that offered up to A$8,000 rebates

for installing solar panels on homes and community use buildings (other than schools),

through the Solar Homes and Communities Plan.The Solar Flagships program sets aside $1.6

billion for solar power.

Schools were eligible to apply for grants of up to A$50,000 to install 2 kW solar panels and

other measures through the National Solar Schools Program beginning 1 July 2008, which

replaced the Green Vouchers for Schools program. Applications for the program ended 21

November 2012. A total of 2,870 schools have installed solar panels. The output of each

array can be viewed, and compared with that of up to four other schools.

Feed in tariffs were introduced by a number of states to increase the amount of solar PV

power generated. They can be classified by a number of factors including the price paid,

whether it is on a net or gross export basis, the length of time payments are guaranteed, the

maximum size of installation allowed and the type of customer allowed to participate. Many

Australian state feed-in tariffs were net export tariffs, whereas conservation groups argued

for gross feed-in tariffs. In March 2009, the Australian Capital Territory (ACT) started a solar

gross feed-in tariff. For systems up to 10 kW the payment was 50.05 cents per kWh. For

systems from 10 kW to 30 kW the payment was 40.04 cents per kWh. The payment was

revised downward once before an overall capacity cap was reached and the scheme closed.

Payments are made quarterly based on energy generated and the payment rate is

guaranteed for 20 years.

100 170 330

504

1298

2291

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011 2012


INSTALLED CAPACITY


4.8 UNITED KINGDOM

The primary support mechanism for Renewable energy development in the UK is the

Renewables Obligation (RO), a quota system with tradable green certificates known as

Renewables Obligation Certificates (ROCs).

The RO is periodically revised. The RO was introduced in England, Wales and Scotland in

April 2002 and in April 2005 in Northern Ireland. The scheme was originally set to run until

March 2027. In 2010, the previous Government administration extended the scheme until

2037 However in December 2010 the new Coalition Government proposed in the Electricity

Market Reform (EMR).

From April 2010, plants under 50kW will no longer qualify for support under the RO, but are

instead eligible for support under the recently introduced FIT scheme. Maximum size limits

are in place for specific technologies.

Innovative funding programme has budget of 200 million pounds, of which 160 million have

been allocated to various schemes. Funding help is provided to innovators / Entrepreneurs

who develop and demonstrate low carbon technologies.They will be able to apply for 1

million pounds funding from government and can use that funding to leverage additional

funds from private sector investors. They will also be able to get support from experts on

how to bring their products to market. Of the 35 million, 20 million will initially support

energy efficiency technologies and 15 million will expand the call into power generation at

later stage.

18.1 22.5 26.5 71.5

1014

1655

0

200

400

600

800

1000

1200

1400

1600

1800

2007 2008 2009 2010 2011 2012


INSTALLED CAPACITY


5. INDIA’S SOLAR POWER SCENARIO

India is densely populated and has high solar insolation, an ideal combination for using solar

power in India. Considering, Global perspective,India is 5th largest contributor in wind

energy sector. In the solar energy sector, some large projects have been proposed, and a

35,000 km2area of the Thar Desert has been set aside for solar power projects, sufficient to

generate 700 GW to 2,100 GW.

With about 300 clear, sunny days in a year, India's theoretical solar power reception, on

only its land area, is about 5000 Petawatt-hours per year (PWh/yr) (i.e. 5000 trillion kWh/yr

or about 600 TW). The daily average solar energy incident over India varies from 4 to 7

kWh/m2 with about 1500–2000 sunshine hours per year (depending upon location), which

is far more than current total energy consumption. Assuming the efficiency of PV modules

were as low as 10%, this would still be a thousand times greater than the domestic

electricity demand projected for 2015.

According to a 2011 report by BRIDGE TO INDIA and GTM Research, India is facing a perfect

storm of factors that will drive solar photovoltaic (PV) adoption at a "furious pace over the

next five years and beyond".

The falling prices of PV panels, mostly from China but also from the U.S., has coincided with

the growing cost of grid power in India. Government support and ample solar resources

have also helped to increase solar adoption, but perhaps the biggest factor has been need.

India, "as a growing economy with a surging middle class, is now facing a severe electricity

deficit that often runs between 10 and 13% of daily need.

SNO STATE INSTALLED CAPACITY(MW) 1 ANDHRA PRADESH 21.8 2 CHATTISGARH 4.0 3 DELHI 2.5 4 GUJARAT 654.8 5 HARYANA 7.8 6 JHARKHAND 4.0 7 KARNATAKA 9.0 8 MADHYA PRADESH 2.0 9 MAHARASHTRA 20.0 10 ORISSA 13.0 11 PUNJAB 9.0 12 RAJASTHAN 510.25 13 TAMIL NADU 15.0 14 UTTAR PRADESH 12.0 15 UTTARAKHAND 5.0 16 WEST BENGAL 2.0 TOTAL 1686.44


6. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY

INCLUDING SOLAR POWER

6.1 ELECTRICITY ACT 2003

Electricity Act 2003 is considered the most transformational and dynamic act till date. The

main focus of act was on de-bundling of the electrical utilities, but it also included guidelines

for renewable energy.

SECTION 4

The National policy on stand-alone system shall include renewable sources.

SECTION 61 (h)

The section states that while specifying term and conditions of tariff determination

the commission shall consider the promotion of generation from renewable sources

of energy along with other factors.

SECTION 86 (1) (e)

The section states that state commission shall promote generation of electricity from

renewable sources of energy and also tells that it shall be done by providing suitable

measures for connectivity with the grid and sale of electricity to anyone. A

percentage of total consumption in distribution licensee’s area shall be satisfied from

renewable sources specified by the commission.

0

100

200

300

400

500

600

700


6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP)

Section 5.2

This section states the importance of hydro power by notifying hydroelectricity as a

clean and renewable source of energy. The section states that in upcoming time

maximum emphasis would be laid on the full development of the feasible hydro

potential in the country. It emphasises the importance of harnessing hydro potential

for economic development and also reinforces government’s commitment to cater

huge capital requirements by making policy that will help debt-financing of viable

projects. The section also talks about safeguarding environmental concerns &

concerns of the families affected due to the projects through proper implementation

of National Policy on Rehabilitation and Resettlement (R&R) and by suitable

mechanism for monitoring of implementation of Environmental Action Plan.

Section 5.12

The section states that there is urgent need to promote energy generation from

renewable sources of energy because of their environmental friendliness. Efforts

must be directed to reduce the capital cost of these projects. It also states that the

share of electricity from non-conventional sources through competitive bidding

would need to be increased as prescribed by State Electricity Regulatory

Commissions and the Commission may determine an appropriate differential in

prices to promote these technologies.

6.3 NATIONAL TARIFF POLICY 2006 (NTP)

Section 6.4

The section states that in present stage the conventional and non-conventional

technologies cannot compete at similar tariff and hence the power shall be procured

from non-conventional sources at preferential tariff determined by the appropriate

commission but it also states that in long term the non-conventional technologies

have to compete with other sources in terms of full cost. It also states that

appropriate commission will fix the minimum percentage of power to be procured

from non-conventional sources with reference to section 86 (1) of electricity act

2003.

6.4 NATIONAL ACTION PLAN ON CLIMATE CHANGE

On June 30, 2008, Honourable Prime Minister Manmohan Singh released India’s first

National Action Plan on Climate Change (NAPCC) outlining existing and future policies and

programs addressing climate mitigation and adaptation.

The plan identifies eight missions under “National Missions” running through 2017 and

directs ministries to submit detailed implementation plans to the Prime Minister’s Council

on Climate Change by December 2008.


Emphasizing the overriding priority of maintaining high economic growth rates to raise living

standards, the plan “identifies measures that promote our development objectives while

also yielding co-benefits for addressing climate change effectively.”

It says these national measures would be more successful with assistance from developed

countries, and pledges that India’s per capita greenhouse gas emissions “will at no point

exceed that of developed countries even as we pursue our development objectives.

NATIONAL MISSIONS

National Solar Mission

National Mission for Enhanced Energy Efficiency

National Mission on Sustainable Habitat

National Water Mission

National Mission for Sustaining the Himalayan Ecosystem

National Mission for a Green India

National Mission for Sustainable Agriculture

National Mission on Strategic Knowledge for Climate


7. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION Jawaharlal Nehru National Solar Mission is a major initiative of the Government of India

with active participation from States to promote ecologically sustainable growth while

addressing India's energy security challenge.

a. MISSION OBJECTIVE

The objective of the Jawaharlal Nehru National Solar Mission is to establish India as a global

leader in solar energy, by creating the policy conditions for its large scale diffusion across

the country as quickly as possible. The Mission adopted a 3-phase approach, spanning the

period of the 11th Plan and first year of the 12th Plan (up to 2012-13) as Phase 1, the

remaining 4 years of the 12th Plan (2013-17) as Phase 2 and the 13th Plan (2017-22) as

Phase 3.

At the end of each plan, and mid-term during the 12th and 13th Plans, there will be an

evaluation of progress, review of capacity and targets for subsequent phases, based on

emerging cost and technology trends, both domestic and global. The aim would be to

protect Government from subsidy exposure in case expected cost reduction does not

materialize or is more rapid than expected.

b. JNNSM CAPACITY ADDITION TARGET

SNO. SEGMENT TARGET FOR PHASE I (2010-2013)

CUMULATIVE TARGET FOR PHASE II (2013-2017)

CUMULATIVE TARGET FOR PHASE III (2017-2022)

1 Utility Grid Power including rooftop

1100MW 10000MW 20000MW

2 Off grid solar application 200MW 1000MW 2000MW 3 Solar collectors 7 million sqmt 15 million sqmt 20 million sqmt

c. PHASE I OF JNNSM

Phase I of National Solar Mission was divided into two Batches i.e. batch –I & II. In Batch I,

capacity addition of 150 MW of grid connected solar PV plants and 500 MW of grid

connected solar thermal plants was envisaged. Whereas in Batch II, the remaining targeted

capacity for Solar PV i.e. 350 MW was awarded.

Apart from these grid connected large scale plants, small rooftop plants of capacity less than

2MW each were also allotted under GBI scheme in Rooftop PV and small Solar Power

Generation Programme (RPSSGP).


BUNDLING OF SOLAR POWER

In order to facilitate grid connected solar power generation under the first phase, without

any direct funding by the Government, Government approved NTPC VidyutVyapar Nigam

(NVVN) as the nodal agency to purchase 1000 MW of solar power from the project

developers, bundle it with the unallocated power available from the NTPC coal-based

stations and sell this “bundled” power to the Distribution Utilities. Bundling concept was

introduced to keep the cost of bundled power approximately Rs 5/kWh. It was decided to

select projects of 500 MW capacity each based on solar thermal and solar photovoltaic (PV)

technologies.

JNNSM Batch I BIDDING RESULT SUMMARY

SOLAR PV SOLAR THERMAL

CERC Approved tariff for Solar PV (Normal Depreciation)

CERC Approved tariff for Solar Thermal (Normal Depreciation)

1791 Paise/kWh 1531 Paise/kWh

Maximum discount offered(paise)

Minimum discount offered(paise)

Maximum discount offered(paise)

Minimum discount offered(paise)

696 595 482 307

Total 30 SPV projects were selected after bidding process and subsequently 28 project

developers signed PPAs for 140 MW capacity with NVVN. Similarly seven solar thermal

projects were selected after bidding process and signed PPA with NVVN. Average tariff for

selected SPV projects was 1216 Paise/kWh which was 32% lower than the CERC approved

benchmark tariff of 1791 Paise/kWh. For solar thermal projects, average tariff for selected

projects was 1141 Paise/kWh which was 25% lower than the CERC approved benchmark

tariff of 1531 Paise/kWh for solar thermal plants.

In batch-I, a total of 704 MW capacity grid connected solar power projects have been

selected, which comprise of 500 MW capacity of solar thermal power projects and 204

MW of PV power projects.

JNNSM Batch II BIDDING RESULT SUMMARY

BATCH II SOLAR PV

CERC APPROVED TARIFF FOR SOLAR PV (NORMAL DEPRICIATION)

1539 Paise/kWh

Maximum discount offered(Paise/kWh) Minimum discount offered(Paise/kWh)

790 595

FINAL TARIFF AFTER DISCOUNT FOR SOLAR PV

749 944


Under Batch II of Phase I, the total aggregate capacity of grid connected Solar Projects was

350 MW for the deployment of Solar PV Power Projects.SPV projects worth 350 MW were

awarded with an average tariff of 877 paise/kWh which was 43% lower than the benchmark

tariff approved by CERC.

d. STATE WISE COMMISIONING STATUS OF PROJECTS UNDER

JNNSM

(i) BATCH-1, PHASE-1

SOLAR PV

S. NO

STATE SolarPV capacityto be commissioned as per PPA (MW)

SolarPV capacity actually commissioned (MW)

Balance capacityto be commissioned (MW)

1 Andhra Pradesh 10.5 9.75 0.75 2 Chhattisgarh 4 4 0 3 Haryana 8.8 7.8 1 4 Maharashtra 5 5 0 5 Odisha 8 7 1 6 Punjab 8.5 6 1.5 7 Rajasthan 12 11 1 8 Tamil Nadu 7 5 2 9 Uttarakhand 5 5 0 10 Uttar Pradesh 8 7 1 11 Jharkhand 16 16 0 12 Madhya Pradesh 5.25 5.25 0 TOTAL 98.05 88.80 9.25

GRID SOLAR PV UNDER MIGRATION SCHEME

S NO STATE SolarPV capacity allocated as per PPA (MW)

Solar PV capacity actually commissioned (MW)

Balance capacity to be commissioned (MW)

1 MAHARASHTRA 11 11 0 2 PUNJAB 2 2 0 3 RAJASTHAN 41 35 6 TOTAL 54 48 6


GRID SOLAR THERMAL PROJECTS UNDER MIGRATION SCHEME

S NO STATE Solar PV capacity allocated as per PPA (MW)



1 RAJASTHAN 30 2.5 27.5

(ii)BATCH-1, PHASE-2

S. NO STATE Solar PV capacity to be commissioned as per PPA (MW)



1 Rajasthan 295 285 10 2 Maharashtra 25 5 20 3 Andhra Pradesh 20 0 20 TOTAL 340 290 50

e. OFF GRID TARGETS

The mission targets 200 MW of off-grid solar PV installed capacity by 2013 and 2,000 MW by

2022. Given the lack of electrification and access to clean energy sources in Indian villages

coupled with T&D losses, decentralised distributed systems make very good sense.

Therefore, the targets set for off-grid capacity could be bolder. A capital subsidy of `150 per

Wp is available for rural microgrids as against `90 per Wp for other applications.

Even if all the 200 MW was allocated to rural microgrids, the total subsidy would amount to

only `30 billion (this outlay is expected from tax revenues). Even if the capacity is increased

substantially (set aside for utility-scale PV), the total subsidy would work out to be still

considerably less than the incentive offered for the utility scale.

MICRO GRID BASED ON SOLAR POWER

Number of villages 14290

Load per village with 150 households (kW) (minimum load to supply lifeline support)

35

Total capacity solar based micro grids(MW) 500

Current policy of Capital Subsidy(Rs/Wp) 150

If in addition a generation-based tariff offered(Rs/kWh) 4.25

Annual outlay for GBI(Rs billion) 3.54

NPV of GBI over twenty-five years(Rs billion) 32.1

TOTAL OUTLAY OF CAPEX+GBI(Rs billion) 107


8. REC MECHANISM OVERVIEW: According to EA, it is the mandate of SERCs to ensure that the electricity mix in their

respective states has a fixed percentage of renewable energy. This mechanism is known as

the Renewable Purchase Obligation or the RPO. But there is an inherent flaw in this

mechanism. As each state has its own potential, different states have different RE potentials

and thus supply mixes. Also as the RPO mechanism concentrates mainly on the intra-state

use, a state devoid of any potential didn’t have either incentive for using renewable energy

nor was there any mechanism for inter-state sale of RE. Without such a mechanism, the

entire effort can turn into a sham as RE would still be generated and used in isolated

pockets only. Also, as RE is a costlier form of power, states would not want to generate any

more than their respective RPOs and those states with a meagre RE potential also do not

use any RE in absence of any mechanism promoting its inter-state purchase.

To address all these challenges and to turn the environmental salubrity of renewable energy

into a marketable entity, the concept of Renewable Energy Certificates was developed.

Apart from facilitating inter-state RE transactions, RECs also have some other objectives as

well, which can be identified as:

a. Effective implementation of RPO obligations across all states

b. Creating competition among competing RE technologies

c. Protecting the local distribution licensee selling RE

d. Overcoming geographical impediments to use RE

e. Reduce the costs for RE transactions

In the Indian context, generation of 1 MW of RE allocates a REC to the generator, which can

be sold in an energy exchange to an “obligated entity” which cannot find a RE generator to

fulfil its RPO obligations, thereby overcoming the geographical constraints the transaction of

RE poses.

There are some important points of note here. REC mechanism is not an incentive scheme.

It is simply a market mechanism to enable various obligated entities to meet their RPO

norms as set by their respective SERCs. The mechanism co-exists with all the current

incentive schemes as, these schemes offer incentives for generation only. Also it is not

related to carbon credits. The two mechanisms operate parallel to each other for the

benefit of RE generators.


9. OPERATIONAL FRAMEWORK OF REC MECHANISM

As can be seen from the figure above, the easiest route of selling RE to the obligated entities

is through the grid, as established by the connection (1).The accounting of the RE produced

by the generators is carried out by the SLDCs (1) the information of which is forwarded to

the national registry (3). If the generator chooses to sell their RE electricity through the REC

route, he makes an application to the national registry (2), after which a RECs is issued to

the generators (4) as per the amount of power generated, which they can trade in the

power exchanges. If these obligated entities cannot achieve their RPOs, they buy RECs in the

exchange to make up for whatever is the deficit in their supply mix (5), which are

redeemable at the national registry itself (6). The compliance reporting is done to the

monitoring committee of each state (7), which submits a quarterly report to each state’s

SERC.


10. STATE WISE RPO (SOLAR & NON SOLAR) In order to give thrust for solar development, states also come up with Solar Policy to

attract the investor in this sector.

S. NO

STATE ORDER DATE

TYPE 2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

1 ANDHRA PRADESH

06 JULY 2010

NON SOLAR

4.75% 4.75% 4.75% 4.75% 4.75%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 2 ASSAM 21 JUNE

2010 NON SOLAR

1.35% 2.70% 4.05% 5.40% 6.75%

SOLAR 0.05% 0.10% 0.15% 0.20% 0.25% 3 BIHAR 16 NOV

2010 NON SOLAR

1.25% 2.0% 3.25% 3.50% 3.75%

SOLAR 0.25% 0.50% 0.75% 1.0% 1.25% 4 CHATTISGARH 9 NOV

2010 NON SOLAR

4.75% 5% 5.25% 5.50% 5.75%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 5 GUJARAT 17APRIL

2010 NON SOLAR

4.75% 5.50% 6% 6.5% 7%

SOLAR 0.25% 0.5% 1% 1% 1% 6 HARYANA NOV

2010 NON SOLAR

1.25% 1.25% 1.25% 1.50% 1.50%

SOLAR 0.25% 0.50% 0.75% 1.0% 1.25% 7 HIMACHAL

PRADESH 12 MARCH 2010

NON SOLAR

10% 11% 12% 13% 14%

SOLAR 0.10% 0.10% 0.10% 0.10% 0.10% 8 JHARKHAND 31

MARCH 2010

NON SOLAR

1.75% 2.0% 3.0% 4.0% 5.0%

SOLAR 0.25% 0.50% 1.0% 1.0% 1.0% 9 KARNATAKA 16

MARCH 2011

NON SOLAR

7% 7% 7% 7% 7%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 10 KERELA 23 NOV

2010 NON SOLAR

3.0% 3.30% 3.63% 3.99% 4.29%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 11 MADHYA

PRADESH 19 NOV 2010

NON SOLAR

0.80% 2.10% 3.40% 4.70% 6.0%

SOLAR 0.40% 0.60% 0.80% 1.05 1.20% 12 MAHARASHTRA 7 JUNE

2010 NON SOLAR

5.75% 6.75% 7.75% 8.5% 8.5%

SOLAR 0.25% 0.25% 0.25% 0.5% 0.5% 13 MEGHALAYA 21 DEC

2010 NON SOLAR

0.60% 0.80% 1.20% 1.40% 1.60%

SOLAR 0.20% 0.30% 0.40% 0.40% 0.40%


14 NAGALAND 20 OCT 2010

NON SOLAR

14.75% 15.75% 16.75% 16.75% 16.75%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 15 ORRISA 16 MAR

2010 NON SOLAR

4.50% 4.75% 5.0% 5.25% 5.50%

SOLAR 0.50% 0.75% 1.0% 1.25% 1.50% 16 RAJASTHAN 23 DEC

2010 NON SOLAR

7.75% 8.5% 6.35% 7.20% 8.5%

SOLAR 0.50% 0.75% 1.0% 1.25% 1.50% 17 TAMIL NADU 19 MAY

2011 NON SOLAR

10% 10% 10% 10% 10%

SOLAR 0.15% 0.25% 0.25% 0.50% 0.50% 18 TRIPURA 9 NOV

2009 NON SOLAR

0.90% 0.90% 1.90% 1.90% 1.90%

SOLAR 0.10% 0.10% 0.10% 0.10% 0.10% 19 UTTARAKHAND 6 JULY

2010 NON SOLAR

4.0% 4.50 5.0% 5.5% 6.0%

SOLAR 0.0% 0.03% 0.05% 0.07% 0.09% 20 UTTAR PRADESH 17 AUG

2010 NON SOLAR

3.75% 4.50% 5.00% 5.25% 5.50%

SOLAR 0.25% 0.50% 1.0% 1.5% 1.5% 21 WEST BENGAL 10 AUG

2010 NON SOLAR

2.0% 3.0% 4.0% 5.0% 6.0%

22 JERC FOR GOA 5 MAY 2010

NON SOLAR

0.75% 1.70% 2.60% 2.60% 2.60%

SOLAR 0.25% 0.30% 0.40% 0.45% 0.50% 24 JERC FOR

MANIPUR 5 MAY 2010

NON SOLAR

1.7% 2.75% 4.75% 4.75% 4.75%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% 25 JERC FOR

MIZORAM 5 MAY 2010

NON SOLAR

4.75% 5.75% 6.75% 6.75% 6.75%

SOLAR 0.25% 0.25% 0.25% 0.25% 0.25%


11. STATEs SOLAR POLICIES

11.1 GUJARAT SOLAR POLICY 2009

A state specific policy dedicated to solar was first envisioned by Gujarat in 2009. The

outlines were given under the policy titled “Solar Power Policy -2009”. The policy was the

first solar specific policy introduced in the country predating the National Solar Mission.

The Gujarat Solar Policy is operative till 31st March 2014.Any Solar Power Generator (SPG)

commissioned during the operative period shall become eligible for incentives declared

under this policy for a period of 25 years.

SALIENT FEATURES

CAPACITY

Only new plants and machinery will be eligible under this Policy. No fossil fuel

shall be allowed for Solar Thermal Project.

The minimum capacity of for Solar PV and Solar Thermal projects will be 5

MW each. A total of 500MW SPG shall be allowed for installation during the

operative period of this policy.

CROSS-SUBSIDY CHARGE

Cross subsidy surcharges shall not be applicable for Open Access obtained for

third party sale within the state.

WHEELING CHARGES

As per determined by GERC.

ELECTRICTY DUTY

Exempted from payment of electricity duty for sale through all modes(self-

consumption/sale to third party/sale to licensee)

Exemption from demand cut to the extent of 50% of installed capacity

PPA

PPA duration will be 25 years

BANK GUARANTEE

Developer to furnish a BG @Rs 50Lakhs/MW at the time of PPA signing with

Distribution Licensee.BG to be refunded if the developer commissions the

project in time as per PPA.

METERING OF ELECTRICITY


Electricity generated would be metered jointly on a monthly basis by

GEDA/GETCO. Metering to done at sending sub-station of 66 kV or above,

located at the site.

REACTIVE POWER CHARGES

As per GERC order.

TRANSMISSION INFRASTRUCTURE

Transmission line from SPG switch yard to GETCO sub-station shall be laid by

GETCO.SPG to inject power at 66kV.

SHARING OF CDM BENEFIT

SPG will pass 50% of CDM benefit to DISCOM with whom PPA is signed.

FORECASTING & SCHEDULING

SPG based generation shall not be covered under scheduling procedure for

Intra-state ABT.

NODAL AGENCIES FOR FACILITATION AND IMPLEMENTATION OF SOLAR POLICY-2009

Gujarat Energy Development Agency (GEDA)

Gujarat Power Corporation Limited (GPCL)

PROs CONs

The policy is very detailed and

comprehensive and even describes

the financial and technical

requirements of SPG.

The tariff allotted is very lucrative.

Long Incentive period of 25 years

attract investors.

Wheeling charges of 2% are

comparatively lower than other

states.

The incentive programme is very good and a large no. of benefits are provided

There is capacity cap of minimum 5

MW for SPG.

Bank guarantee of 50 Lakhs/MW is

on the higher side.

The policy limits no. of players by

providing stringent qualifying criteria.

The policy doesn’t talk about land

allotment which is a major

requirement for solar projects.

Banking of power is not allowed.

The policy is not supportive to

budding entrepreneurs.


11.2 RAJASTHAN SOLAR POLICY 2011

The policy aims at developing Rajasthan as a global hub of solar power of 10,000-12,000

MW capacity in next 10-12 years to meet energy requirements of Rajasthan and India. To

achieve grid parity in next 7-8 years, the State will encourage the Solar Power Developers to

establish manufacturing plant of their technology in Rajasthan.

SALIENT FEATURES

The Policy will come into operation with effect from 19.4.2011 and will remain in force until

superseded or modified by another Policy.

To achieve the objectives of this Policy, the targets under the policy are mentioned below:

1. The State Government has sanctioned two Solar Power Projects of 5 MW capacity under

the GOI guidelines for Generation Based Incentive scheme for Grid Interactive Solar Power

Generation Projects issued by MNRE. The power evacuation transmission line from

generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be

laid by STU/Home Discom as per the prevailing orders of RERC.

2. The Rajasthan State has sanctioned 66 MW solar power projects in compliance of the

RERC’s orders. These sanctioned projects were migrated to National Solar Mission by the

State Government. The power produced from these solar power plants shall be procured by

NVVN as per mechanism provided under National Solar Mission Phase-1. The Discoms of

Rajasthan shall purchase this solar power from NVVN along with the equivalent amount of

MW capacity from the unallocated quota of NTPC stations allotted to NVVN by Ministry of

Power, GoI. The power evacuation transmission line from generating plant sub-station to

the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as

per the prevailing orders of RERC.

3. The Rajasthan State will develop 50 MW SPV and 50 MW Solar Thermal Power Plants

through selection of developer(s) by the tariff based competitive bidding process on

concept of bundling of Solar Power with equivalent amount of MW capacity of conventional

power. The successful bidder will set up Solar Power Plant in Rajasthan and supply

equivalent amount of MW capacity of conventional power from Conventional Power Plants

located anywhere in India. The power evacuation transmission line from generating plant

sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by

STU/Home Discom as per the prevailing orders of RERC.

4. The Rajasthan State will promote setting up of Solar Power Plants connected at 33 kV &

above level under the guidelines of National Solar Mission (NSM). The minimum/maximum

capacity allocation to each Solar Power Producer will be as per MNRE guidelines. The power

evacuation transmission line from the Generating plant sub-station to the RVPN/Discom

receiving Sub-station will be laid as per provisions of the orders of appropriate Commission.


5. The state government will support setting up of 100 MW solar photovoltaic power plants

and 100 MW solar thermal power plants under phase I of the Rajasthan Solar Energy Policy

2011 for direct sale of power to discoms in the state. Under phase II (2012-2017), the state

governmentplans to add another 400MW of solar power through tariff based competitive

bidding process. The power evacuation transmission line from generating plant sub-station

to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as

per the prevailing orders of RERC.

The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of

unlimited capacity for captive use or sale of power to 3rd party/States other than Rajasthan.

There will be no upper ceiling for power projects. The power evacuation transmission line

from the Generating plant sub-station to the RVPN/Discom receiving Sub-station will be laid

as per provisions of the orders of appropriate Commission.

7. The Rajasthan State will promote deployment of Roof-top and Other Small Solar Power

Plants connected to LT/11kV Grid as per guidelines of MNRE under Rooftop PV & Small Solar

Generation Programme (RPSSGP) of NSM. The minimum/maximum capacity for power

project sanctioned under this category will be as per the guidelines issued by MNRE. The

power evacuation transmission line from generating plant sub-station to the receiving

RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the

prevailing orders of RERC.

8. The State will promote setting up of small solar power plants connected at 11 kV grid of 1

MW capacity each for direct sale to State Discoms of Rajasthan. The total capacity under

this category will be 50 MW. The selection of the projects will be through tariff based

competitive bidding process. There will be no upper ceiling for power projects.

9. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of

unlimited capacity for sale through RE (Solar) Certificate mechanism. The power evacuation

transmission line from the Generating plant sub-station to the RVPN/Discom receiving Sub-

station will be laid as per provisions of the orders of appropriate Commission

10. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants

along with Solar PV manufacturing plants in Rajasthan. The target under this category will

be 200 MW up to 2013.

11. The Rajasthan State will also promote decentralized and off-grid solar applications,

including hybrid system such as solar water heaters, solar cooling systems, air drying, steam

cooking, power generation, sterling engine. The off-grid solar applications shall be promoted

for replacement of diesel based generators sets. The Rajasthan State will also consider

incentives for promotion of decentralized and off grid solar applications.

12. Rajasthan also intends to set up Pilot Demonstration Projects under National Solar

Mission’s R&D initiatives in Phase – 1 of Solar Mission. This will include:


a. 50-100 MW Solar thermal plant with 4-6 hours storage (which can meet both

morning and evening peak load and increased plant load factor up to 40%)

b. A 100 MW Parabolic trough technologies based solar thermal plant

c. A 100-150 MW Solar hybrid plant with coal, gas or bio-mass to address variability and

space-constraints.

d. 20-50 MW Solar plant with or without storage, based on central receiver technology

with molten salt/steam as working fluid and other emerging technologies.

e. Grid connected rooftops PV systems on selected Government buildings and

installations, with net metering

f. Solar based space cooling and refrigeration systems

The capacity allocation for pilot demonstration project will be finalized in consultation with

MNRE.

The maximum capacity to be commissioned under this Clause will be decided by the

Rajasthan Government after studying the subsidy pattern for these demonstration projects

under NSM

13. The Rajasthan State will develop Solar Parks (with RREC as nodal Agency) of more than

1000 MW capacity in identified areas of Jodhpur, Jaisalmer, Bikaner and Barmer districts in

various stages. RREC will allocate budget for development of infrastructure in Solar Parks to

SPV.The SPV will develop the initial infrastructure from the funds allocated by RREC, which

will be subsequently recouped from the Solar Power Producers whose project are located in

Solar Parks by levying development charges.

14. The Rajasthan State will promote Solar Water heating system by adopting the key

strategy of making necessary policy changes for mandatory use of solar water heating

system (SWHS) on Industrial, commercial, residential and other establishments.

DEVELOPMENTAL CHARGES

For Solar power projects established for sale of solar power to parties other

than Discoms of Rajasthan, the Solar Power Producer shall deposit non-

refundable development charge of Rs. 10 Lacs per MW to Rajasthan

Renewable Energy Corporation Ltd. within one month from the date of issue

of in-principle clearance for availing benefits, facilities and concessions under

the provisions of this policy. For solar power projects established for sale of

solar power to Discoms of Rajasthan State, no development charges will be

leviable from the Solar Power Producers.


CREATION OF RAJASTHAN RENEWABLE ENERGY INFRASTRUCTURE DEVELOPMENT

FUND

The resources mobilized by collection of development charges will be

credited to Rajasthan Renewable Energy Infrastructure Development Fund.

This fund will be utilized for creation of infrastructure such as transmission

network, roads etc. for accelerated development of renewable energy.

GRID CONNECTIVITY

For creation of proper facility for receiving power, the Solar Power Producer

shall pay Grid Connectivity charges as finalized by RERC from time to time to

Discoms of Rajasthan/RVPN as applicable.

The power evacuation transmission line from generating plant sub-station to

the receiving RVPN/Discoms of Rajasthan sub-station will be laid by

STU/Home Discom or as per the prevailing orders of RERC.

For grid connectivity/construction of line to be arranged by RVPN/ Discoms of

Rajasthan, the Solar Power Producer shall submit time-frame for construction

of their plant along with Bank Guarantee equivalent to the cost of bay and

transmission/ distribution line with an undertaking to use the system within

prescribed period. In case there is any delay in utilization of system, a penalty

@ 12% per annum for the period of delay on the amount of Bank Guarantee

will be levied by RVPN/ Discoms of Rajasthan. The Bank Guarantee shall be

returned to the Solar Power Producer after commissioning of the project on

depositing amount of penalty, if any on account of delay in the utilization of

the system.

ELECTRICITY DUTY

The energy consumed by the Power producers for own use will be exempted

from payment of the electricity duty.

METERING OF ELECTRICITY

Metering arrangement shall be made as per Central Electricity Authority

(Installation & Operation of Meters) Regulations, 2006, the grid code, the

metering code and other relevant regulations issued by RERC/CERC in this

regard.

REACTIVE POWER CHARGES

As per CERC order.

SHARING OF CDM BENEFIT

Solar Power Producer will pass CDM benefit to DISCOM with whom PPA is

signed as per appropriate commission’s order.


FORECASTING AND SCHEDULING

The Solar energy generated for sale will not be covered under scheduling

procedure for Intra-State ABT.

PROs CONs

Government to provide land at

concessional rates.

Bank Guarantee deposit is

comparatively low at Rs. 5 lakhs per

MW.

Surplus energy can be sold outside

state.

Banking is allowed.

The policy has been amended many

times in short period which provides a

sense of instability to the investor.

The policy doesn’t provide guidelines

for eligible producer.

A penalty of Rs. 5 lakhs per MW, if

producer commences work on

allotted land without project approval.

The operative period is not given in

the policy, hence new policy can be

anticipated anytime soon which adds

to uncertainty.

Wheeling charges are high.


11.3 KARNATAKA SOLAR POLICY

Under the Karnataka Renewable Energy Policy, it is envisaged that the State will have a

target for achieving 126 MW of solar power up to 2013-14. The Govt. of Karnataka had

released the Solar Policy for FY11-FY16 on 1st July 2011 envisaging to set up a capacity of

200 MW of solar power in the state for the RPO fulfilment of the ESCOMs. The policy came

into force from 1st July 2011 and shall remain in force up to 31st March 2016.

SALIENT FEATURES

PROPOSED CAPACITY

It is proposed to install 200 MW up to 2015-16, for the purpose of

procurement by the ESCOMS. This will be in addition to the allotment

received under JNNSM.

The minimum capacity shall be 3 MW and max. capacity will be 10 MW for

Solar PV projects and min. capacity shall be 5 MW for Solar Thermal projects

Power evacuation shall be through 11 KV and above voltage will only be

permissible.

WHEELING & OA CHARGES

In addition to envisaged 200MW capacity, captive power plants and plants

for sale to third party will also be set up. In case of captive power plants and

projects for sale of power to third party other than ESCOMs, wheeling and

open access charges have to be paid as determined by KERC/CERC.

REC SCHEME

Under the REC mechanism the project developers can sell their power at the

pooled cost of power purchase only to the ESCOMS. A capacity of 100 MW

can be installed under this scheme.

CDM PROCEEDS

Sharing of CDM proceeds will be as per bidding documents.

METERING

Metering arrangement shall be made as per Central Electricity Authority

(Installation & Operation of Meters) Regulations, 2006, the grid code, the

metering code and other relevant regulations issued by KERC/CERC in this

regard

The state will continue to implement JNNSM and all other schemes of the

MNRE.


PROs CONs

State government provides land if

available.

Banking of power is allowed.

Solar grid connected projects above 1 MW

are given additional incentives up-to Rs

12/kWh for solar PV &Rs. 10/kWh for solar

thermal in addition to tariff by KERC.

KREDL assists in availing CDM benefits.

Karnataka govt. to reserve 50 MW capacity

for solar plants to bundle it with thermal

projects outside state.

Land Owners to be equity partners of gross

energy generated.

Wheeling charges on the higher side.

For projects not under JNNSM the project

capacity shall be 3 MW to 10 MW for PV

and minimum for solar thermal be 5 MW.


11.4 MADHYA PRADESH SOLAR POLICY 2012

All Solar energy based power project Developers (Solar PV/Solar thermal) and

manufacturing units of equipment’s, ancillaries related to Solar Power projects shall be

eligible for benefits under the Policy. Only new plant and machinery shall be eligible for

installation under the Policy.

SALIENT FEATURES

There will be four categories of solar projects under the policy.

Category I:

Projects selected as per the competitive bidding process for selling power to MP

Discoms / MP Power Management Company. Maximum/minimum capacity will be

as per RfS document issued by GoMP from time to time. Only project capacities to

be installed in the state of Madhya Pradesh shall be eligible for incentives under this

Policy. The total capacity under this category will be as per the Renewable Purchase

Obligation (RPO) targets specified by M.P. Electricity Regulatory Commission

(MPERC) from time to time or as decided by the GoMP.

Category II:

Projects, of unlimited capacity (subject to single project capacity limitation described

below), to be set up for captive use or sale of power to 3rd party within or outside

the state or for sale of power to other states through open access –. Only project

capacities to be installed in the state of Madhya Pradesh shall be eligible for

incentives under this Policy.

Projects on Private Land: There is no maximum capacity cap on single project

installed on private land. For projects proposed to be set up on private land, any

developer willing to establish solar power project shall be eligible for incentive

subject to registration with the GoMP. Performance Guarantee to be provided will

be as per the guidelines specified in the qualification/selection document issued by

GoMP.

Category III:

Projects, of unlimited capacity, to be set up under Renewable Energy Certificate

(REC) mode. The minimum and maximum single project capacity for accreditation

under REC mechanism will be as per the Guidelines/Orders/Regulations issued by

CERC/MPERC from time to time.

Projects on government Land: For projects proposed to be set up on government

land, in addition to CERC REC mechanism criteria, there shall be a set of qualification

criteria

fixed by the GoMP. Every such applicant shall be evaluated against each of the

qualification criteria as specified in the invitation document. Upon eligibility, the


available land shall be offered on the basis of maximum free energy per Mega Watt

offered by the qualified bidders. Only such selected projects shall be eligible for

incentives under this Policy. The Developer shall submit Performance Bank

Guarantee at the rate of Rs. 5.0 Lac/MW or part thereof to New & Renewable Energy

Department (GoMP). Guarantee shall be valid for a period of twenty four (24)

months for Solar PV projects and for a period of forty (40) months for Solar thermal

projects respectively

Projects on Private Land: For projects proposed to be set up on private land, any

enterprise fulfilling the requirements/criterion as specified under CERC REC

mechanism may apply to the State Nodal Agency as per the procedures laid down by

CERC and/or MPERC. Such developers can apply for registration any time. In case the

project is set up on private land then developer is exempted from submitting any

performance guarantee

Category IV:

Projects under Jawaharlal Nehru National Solar Mission. The minimum and

maximum project capacity will be as per JNNSM guidelines.

PERFORMANCE GUARANTEE

Category I project: It will be as per the guidelines specified in the

qualification/selection document issued by GoMP.

Category II Projects and Category III: The Developer shall submit Performance

Bank Guarantee (for projects being setup on government land at the rate of

Rs. 5.0 Lac/MW or part thereof to New & Renewable Energy Department

(GoMP). The Bank Guarantee shall be valid for a period of twenty four (24)

months for Solar PV projects and for a period of forty (40) months for Solar

thermal projects respectively.

CONTRACT DEMAND REDUCTION

The Industrial Consumers opting to buy power from Solar Power Project

under category II and III shall be allowed corresponding pro-rata reduction in

Contract Demand on a permanent basis but subject to the decision of MPERC

in this regards.

METERING

Metering equipment, as may be stipulated by MPPTCL or by respective MP

Discom, shall be installed at the interconnection point which shall be line

isolator of outgoing feeder on HV side of the pooling substation. Developers

will install metering equipments at their own cost.


GRID EVACUATION & EVACUATION FACILITY

The developer shall be responsible for laying of power evacuation line from

generating station to the nearest substation or interconnection point. He

shall also be responsible for interconnection arrangement which includes

transformer panel, protections, metering etc., at the substation or

interconnection point.

WHEELING AND TRANSMISSION CHARGES

The Developer shall be responsible for payment of all wheeling and

transmission charges to the MPPTCL/respective Distribution Company in case

of sale of power to Third Party Consumers/ Distribution Licensee/ Power

Management Co. Ltd utilizing their network the payment shall be subject to

the regulations of MPERC.

ELECTRICITY DUTY

Policy provides 10-year (from COD) exemption in electricity duty (including

captive units).

BANKING

Banking (2% banking charges) of 100% of energy in every financial year shall

be permitted. The balance energy, if any, at the end of a Financial Year after

return of banked energy shall be purchased by the concerned State

Distribution Company/ State Power Trading Company in accordance with the

rules/ directions of MPERC.

VAT

Equipments purchased for installation of Solar power plants will be exempted

as per VAT rules and entry tax.

CDM BENEFITS

CDM benefits to the solar power project Developers/Investors shall be as per

the provisions specified by MPERC.


PROs CONs

The state government provides land if

available, and if not, provides half

exemption from stamp duty.

Subsidy on wheeling.

Banking allowed with 2% as banking

charge.

Carbon credit benefits to investor.

No open-access charges.

Reduction in contracted demand upto

50% installed capacity is allowed if any

consumer of MPSEB sets up captive plant

or purchases solar power.

Solar technology parks shall be

established.

Training programmes offered.

Developer to commission project in 15

months.

A huge amount of registration fee is to

be paid. (Rs. 50000 per MW max Rs.

500000)


11.5 ANDHRA PRADESH SOLAR POLICY 2012 & FIRST AMENDMENT

The policy shall come into operation with effect from the date of issuance (26/9/2012) and

shall remain applicable till 2017.

SALIENT FEATURES

INSTALLED CAPACITY

It intends to promote utility grid power projects for Captive Use/ Direct Sale

to third party/within the state and Utility Grid Power Projects for sale

through RE (Solar) Certificate Mechanism. Also, it intends to promote the Off-

Grid Solar applications to meet the power needs on Stand-alone basis.

WHEELING & TRANSMISSION CHARGES

Producer will bear the wheeling and transmission losses as per actual.

BANKING

Banking of 100% of energy shall be permitted for one year from the date of

banking. The settlement of banked energy will be done on monthly basis.

However, banked units cannot be consumed/redeemed from February to

June and also during TOD hours as amended from time to time. Developer

will be required to pay 2% of the banked energy towards banking charges.

OA CHARGES

Intra-state Open Access clearance for the whole tenure of the project or 25

years whichever is earlier will be granted within 15 working days of

application to both the generator and consumer irrespective of voltage level.

ADDITIONAL INCENTIVES

To promote investments in AP, the following incentives would be applicable

till June 2014. These incentives will be in force for a period of seven years

from the date of implementation.

No wheeling and transmission charges will be applicable for sale of electricity

within the state from the Solar Power Projects, to the desired location/s for

captive use/third party sale through the grid. However, producer has to bear

(As per APERC regulation) the wheeling and transmission losses as per actual

in case of captive/open access sale outside the state.

No Cross Subsidy charges for third party sale within the state and for captive

use.

Exemption from electricity duty for captive consumption and third party sale

within the state.


Refund of VAT ,paid in AP only, by Commercial Dept for all the good used for

Solar developers

Refund of Stamp duty and registration charges paid for land purchase.

EVACUATION INFRASTRUCTURE

The evacuation line from interconnection point to the grid substation shall be

laid by the APTRANSCO or DISCOM at the cost of the developer.

REACTIVE ENERGY CHARGES

Reactive charges applicable to the project developer as per APERC regulation.


11.6 TAMIL NADU SOLAR POLICY 2012

Tamil Nadu solar policy aims to achieve 3GW installed capacity by 2015 and thereby achieve

grid parity.

SALIENT FEATURES

RPO MECHANISM

3% solar RPO requirement till December 2013 & 6% solar RPO requirement

from 2014

RPO to be applicable to:

o Special Economic Zones (SEZs)

o Industries guaranteed with 24/7 power supply

o IT Parks, Telecom Towers

o All Colleges & Residential Schools

o Buildings with a built up area of 20,000 sq.m. or more

o This mechanism will require generation of 1000 MW by 2015.

The following categories are exempted from SPO

o Domestic consumers

o Huts

o Cottage & Tiny Industries

o Power looms

o LT Industrial consumers

o Agricultural consumers

The SPO will be administered by TANGEDCO.

PROMOTION OF SOLAR ROOF-TOP SYSTEMS

Domestic rooftop GBI:

All domestic consumers will be encouraged to put up roof-top solar installations. A

generation based incentive (GBI) of Rs 2/unit for first two years, Re 1/ unit for

next two years and Re 0.5/unit for subsequent 2 years will be provided for all

solar or solar-wind hybrid rooftops being installed before 31March,2014. A

capacity addition of 50 MW is targeted under this scheme.

Consumers desirous of availing GBIs shall necessarily install separate meters to

measure rooftop generation.

Promoting rooftops in Government:


o Existing government buildings will be provided with solar rooftops in

phased manner.

o All new government/local body buildings will necessarily be installed with

solar roof-tops.

o All street lights and water supply installations in local bodies will be

energized through solar power in a phased manner.

Promoting Solar Water Heating:

o Government of Tamil Nadu, through various orders, has made the use of

solar water heating systems mandatory for all new

houses/buildings/marriage halls/hotels/ industries having hot water boiler

(steam boiler) using fossil fuel etc.

DEVELOPMENT OF SOLAR PARKS

Utility scale solar parks may comprise 250 MW in sizes of 1 to 5 MW, 600

MW in sizes of 5 to 10 MW and 650 MW of sizes above 10 MW. Solar Power

projects will be developed through competitive/reverse bidding. Solar Parks

with a capacity of about 50 MW each will be targeted in 24 districts.

COMPETITIVE BIDDING

State will select developers through competitive bidding. Investments

through Joint Ventures by State Public Sector Undertakings will also be

encouraged at competitive tariffs.

GURANTEED SINGLE WINDOW CLEARANCE IN 30 DAYS

Various statutory clearances that are essential for the development and

commissioning of Solar Energy Projects will be handled by TEDA in co-

ordination with the concerned departments/agencies. Guaranteed single

window clearance will be provided through TEDA in 30 days so that the

plants can be commissioned in less than 12 months.

SOLAR MANUFACTURING FACILITIES

The government aims to promote indigenous manufacturing of solar panels

and other related equipment. Land will be identified for development of solar

manufacturing parks.

NET METERING

Net metering will be allowed (at multiple voltage levels) to promote rooftop

penetration.

Net metering facility will be extended to Solar power systems installed in

commercial establishments and individual homes connected to the electrical

grid to feed excess power back to the grid with “power credits” accruing to

the Photovoltaic energy producer.


WHEELING AND BANKING CHARGES

The wheeling and banking charges for wheeling of power generated from the

Solar Power Projects, to the desired locations for captive use/third party sale

within the State will be as per the orders of the Tamil Nadu Electricity

Regulatory Commission.

ELECTRICITY TAX

Exemption from electricity tax to the extent of 100% of electricity generated

from solar power used for self-consumption/sale to utility will be allowed for

5 years.


11.7 CHATTISGARH SOLAR POICY 2012-17

The Govt. of Chhattisgarh has released the solar energy policy on 20th November 2012. This

policy will be operative till 31st March 2017. Solar power plants approved, installed and

commissioned during this period would be eligible for the benefits of this policy.

SALIENT FEATURES

The state govt. aims to achieve a target solar power generation capacity between

500MW to 1,000MW by March 2017. This would be achieved through three routes:

Grid Connected Solar Power Projects for Captive Use, Direct Sale to a licensee or any

other person (Third Party) or a state other than Chhattisgarh.

Grid connected solar power projects for sale through Renewable Energy (Solar)

Certificate Mechanism. The power generated from these projects can be purchased

by State DISCOMs at Pooled Cost of Power Purchase as determined by CSERC from

time to time. CSPDCL will take a final decision in this regard considering the supply

and demand position of power in the state.

For sale to DISCOMs to fulfill Renewable Purchase Obligation (RPO).

INCENTIVES UNDER INDUSTRIAL POLICY OF CHATTISGARH

The state has considered non-conventional sources of power generation as a

priority industry under the State Industrial Policy 2009-14 and therefore has

extended all the incentives including interest subsidy, fixed capital

investment subsidy, exemption from electricity and stamp duty,

exemption/concession in land premium, project report subsidy and technical

patent subsidy. The state govt. will extend these facilities till March 2017

even after the end of tenure of the Industrial Policy.

ELECTRICITY DUTY

State government shall exempt all soar power projects from paying Electricity

Duty on auxiliary consumption and captive consumption within the state.

Following incentives will be extended to those solar power developers who

commission their solar plant by March 2017. These incentives will be in force

for a period of 7 years from the date of implementation of the project.

VAT

Exemption of VAT by the Commercial Tax Department for all

equipments/materials required for solar power project.


OPEN ACESS SURCHARGE

Charges for Open Access and losses shall be applicable as approved by the

CSERC/central regulatory body for third party sale outside the state.

WHEELING AND TRANSMISSION CHARGES

Shall be applicable based on the CSERC regulations.

CROSS SUBSIDY

Cross subsidy surcharge shall not be applicable for Open Access obtained for

the Third Party Sale within the state subject to the industries maintaining

their demand within the contracted range. Further it is also not applicable on

captive users.

BANKING

Energy banking facility allowed at mutually agreed terms and wherever

necessary approval of appropriate electricity regulatory commission shall be

obtained.

GRID CONNECTIVITY

Grid connectivity and evacuation facility shall be provided by the CG Transco

or DISCOM at the cost of project developer. Further, if the developer wishes

to lay the evacuation line by themselves, the same can be done without

paying supervision charges to CGTRANSCO.

PROs CONs

Government of Chhattisgarh fulfils the

land requirement of project.

CSEB carries out the maintenance work

of lines and equipment of power

evacuation system.

Electrical duty exempted for five and

three Years for plant capacity below 10

MW and 10 MW or above respectively.

There is no restriction on generation

capacity.

The policy directives are without

operative period and hence there is

uncertainty as new policy can be drafted

anytime.

CSEB purchases power at comparatively

lower rate of Rs. 2.25 per unit.

Banking of power is not allowed.


12. CONCLUSION India has a vast solar potential and almost every region is endowed with more than 320 days

of sunlight in the year. States have come up with renewable energy policies but there is a

need to issue separate solar policy by each state to tap the solar potential with main focus

of bringing solar at par with conventional sources. The existing policies provide many

incentives but there is need to nurture entrepreneurship so that more projects can come

up. The policies should also address the delay in statutory clearances.

VERY GOOD GOOD

1. GUJARAT As per many analysts Gujarat has the best policy for Solar, the potential is very good and both tariff and tariff-period are very encouraging. Industrialization is widely supported and large incentives are being provided.

2.TAMIL NADU One good initiative taken in this policy is extending Net metering solar power systems installed in commercial establishments and individual homes connected to the electrical grid. It has also announced exemption from electricity tax, tax concessions, exemption from demand cut to those who produce solar power from their rooftop

2. KARNATAKA Govt. Provides land and KREDL helps in availing incentives and also the tariff given is attractive. The solar potential is also very good.

2.ANDHRA PRADESH Andhra Pradesh had removed all wheeling and transmission charges and allowed banking within the time frame of a year (except between February and June or within a single day).The policy also includes exemption from Cross Subsidy Surcharges (CSS) and Electricity Duty, and a refund on Value Added Taxes (VAT) on all components of the plant and on stamp duty and registration charges on the purchase of land. RECs can be availed under the policy over and above the other incentives.

3. MADHYA-PRADESH The solar potential is very good. The transportation facilities and connectivity are very good. The government provides training assistance also.

3. CHATTISGARH The main requirement of a solar project is land, and a lot of barren land is available and govt. provides assistance in land acquisition. Also its Discoms are relatively in good financial condition but there are problems of villager agitation and political interferences. Power Surplus state also.

4. RAJASTHAN The potential is the best in the country, large amount of barren land available. The incentive and tariff given is good.


13. MAHARASHTRA STATE SOLAR POWER SCENARIO MERC has set out RPO target of 9% including 0.5% solar RPO by FY 2015-16 to be met by

distribution utilities, captive and open access consumers. Considering the existing and

growth in demand MSEDCL would need to procure more than 540 MW of solar power by

FY2015-16 to meet the RPO.

MERC through its Suo Moto tariff order has notified generic levelised tariff of Rs. 8.98/unit

for projects which have signed the PPA after March 31, 2013 and are commissioned during

FY 2012-13.

MSPGCL is presently executing a 125 MW solar PV facility in Sakri, Dhule. The scope of work

of the project player includes design, engineering, manufacture, supply, erection, testing

and commissioning of 75 MW of Crystalline Solar PV technology and/or 50 MW of Thin film

solar PV technology including 10 years of operation & maintenance of the same on turnkey

basis. The project developer will get 85% of the contract value up to the successful issue of

“Final Acceptance Test" certificate and remaining 15% of contract value spread over next 10

years after successful completion of O&M period of the contract (with 2% paid every year).

ADB is considering funding of approximately USD 500 Million towards cost of developing

renewable power projects of MSPGCL over the 12th five year plan along with the

development of associated evacuation and system strengthening infrastructure of MSETCL.

MSPGCL is exploring different public private partnership models for implementing the solar

projects.

For the future solar projects, MSPGCL is evaluating the Performance Linked Revenue Sharing

Model. For all these projects MSPGCL has signed or will sign PPAs with MSEDCL for off-take

of Power at MERC determined tariff. In this model the project developer receives a portion

(50%) of his EPC cost after the work is awarded. The bid parameter could be the share in

revenue that the project developer is asking for. The developer will receive this share of the

revenue from this project over its operating life. This pay-out will be a natural incentive and

penalty mechanism linked to actual generation from the plant. In this model the project

developer will have greater commitment as recovery will happen over the life of the project.


14. LEGAL EVOLVEMENT TO PROMOTE RENEWABLE ENERGY

INCLUDING SOLAR POWER MERC notified two Regulations on 7 June, 2010. Based on RE Tariff Regulations, 2010, the

Commission determines RE Tariff for different RE technologies including solar technology, at

the beginning of each financial year.

MERC (Terms and Conditions for determination of RE tariff) Regulations,

2010 (“MERC RE Tariff Regulations, 2010”) &

MERC (Renewable Purchase Obligation, its Compliance and Implementation

of REC Framework) Regulations, 2010 (“MERC RPO – REC Regulations, 2010”)

Regulation 8.1 of the RE Tariff Regulations specifies as follows:-

“8.1 The Commission shall notify the generic preferential tariff on suo-motu basis pursuant

to issuance of revised norms by Central Electricity Regulatory Commission at the beginning

of each year of the Control Period for renewable energy technologies for which norms have

been specified under the Regulations. Provided that for the first year of Control Period, (i.e.

FY 2010-11), the generic tariff on suo-motu basis may be determined within a period not

exceeding three months from the date of notification of these Regulations.”

15. MERC INITIATIVE TO DEVELOP RENEWABLE ENERGY

15.1 Renewable Purchase Obligation

Section 86 (1) (e) of the EA 2003 and National Tariff Policy mandates the Regulatory

Commissions to fix RPO levels in the states. In accordance with the Acts and Policies, MERC

has issued Renewable Purchase Obligation, its compliance and REC framework

Implementation Regulations, 2010. The RPO have been made applicable to the following

obligated entities in the states:

Distribution Licensee(s)

Captive User(s) with installed capacity of 1 MW and above

Open Access Consumer(s) with contract demand of 1 MVA and above

In order to promote solar energy in the state, MERC has specified separate RPO for solar

energy. The RPO specified by MERC is as shown below:

YEAR FY 12 FY 13 FY 14 FY 15 FY 16

SOLAR 0.25% 0.25% 0.25% 0.50% 0.50% MINI HYDRO 0.1% 0.1% 0.1% 0.2% 0.2% OTHER TECHNOLOGY

5.65% 6.65% 7.65% 8.30% 8.30%

TOTAL 6% 7% 8% 9% 9%


YEAR FY 12 FY 13 FY 14 FY 15 FY 16

PROJECT ELECTRICITY DEMAND OF MAHARASHTRA(DRAFT 18TH EPS ACTUAL AS PER FY 12)(MUs)

141,382 151,024 161,430 172,681 184,890

SOLAR RPO 0.25% 0.25% 0.50% 0.50% 0.50% SOLAR CAPACITY REQUIRED AT 17% CUF(MW)

254 542 580 621

15.2 Renewable Tariff

MERC issues tariff every year for different renewable sources in accordance with Section 61

(h) of the EA 2003 and MERC Terms and Conditions for determination of RE Tariff

Regulations, 2010. As per the 2nd year and 3rdyear suo moto generic tariff order of MERC for

the first control period following are the tariff approved for upcoming solar projects in the

state getting commissioning in FY13.

Tariff for projects commissioned in FY13

Tariff if Accelerated Depreciation not

availed (Rs. /kWh)

Tariff if Accelerated Depreciation availed (Rs.

/kWh)

PPA signed after 31 March 2012

11.16 9.51

PPA signed on or before 31 March 2012

15.61 13.10


16. MAHARASHTRA MODEL SOLAR POLICY

a. PREAMBLE

Conventional energy sources like coal, oil, natural gas, etc. are limited in quantity, and if

these continue to be depleted at the present rate, it will exhaust in coming decades.

Solar energy offers a clean, climate friendly, abundant an inexhaustible energy resource to

mankind. Due to Government intervention and development of competitive market

amongst the solar manufacturers, the costs of solar energy have been falling rapidly every

year and are entering new areas of competitiveness. Solar thermal electricity (STE) and solar

photo voltaic electricity (SPV) are becoming competitive against conventional electricity

generation in tropical countries.

Maharashtra has reasonably high solar insolation (4-6 kWh/sq. m) with around 280-300

clear sunny days in a year.

Eastern Maharashtra is considered to be one of the most suitable regions for solar projects.

As on 31.03.2013 Maharashtra has a total installed capacity of 205340.26 MW out of which

50.15 MW is solar installed capacity.

Knowing the importance of promoting solar power, the government of India has launched

Jawaharlal Nehru National Solar Mission (JNNSM) under the National Action Plan for Climate

Change (NAPCC). The goal of the mission is to provide tariff subsidies to increase scale and

drive down costs to grid parity for achieving target of 22,000 mw by 2022 in a phased

manner.

b. TITLE AND ENFORCEMENT

The policy will be known as “MAHARASHTRA SOLAR ENERGY POLICY”. The government of

Maharashtra will undertake a review of this policy as and when required in view of any

technological breakthrough or any changes taking place in the policy at national level.

c. OBJECTIVES

To generate 1000 mw of solar energy by 2015.

To achieve grid parity by 2015.

To put in place an appropriate investment climate, that could leverage the Clean

Development Mechanism (CDM).

Promotion of R&D and facilitation of technology transfer.

Promotion of local manufacturing facilities.


d. OPERATIVE PERIOD Solar power generators (SPGs) installed and commissioned during the operative

period shall become eligible for the incentives declared under this policy, for a

period of twenty five years from date of commissioning or for life span of the SPGs,

whichever is earlier.

e. INSTALLED CAPACITY A maximum of 1000 MW SPG shall be allowed for installation during operative

period of the policy.

f. CAPACITY CAP The minimum project capacity of a SPG, in case of Solar Photovoltaic (SPV) and

Solar thermal (ST) shall be 3MW.

g. ELIGIBLE UNIT Any company or body corporate or association or body of individuals, whether

incorporated or not, or artificial juridical person will be eligible for setting up of

SPGs either for the purpose of captive use and/ or for selling of electricity in

accordance with the Electricity Act-2003, as amended from time to time.

The entity to set up solar power project, either for sale of power and/ or for captive

use of power within the state, shall submit a proposal, with requisite details, as

may be specified to the nodal agency, for qualifying for setting up of the project.

h. DEVELOPMENT OF SOLAR POWER IN MAHARASHTRA

YEAR SPV SOLAR THERMAL

ROOF TOP

TOTAL

2010-11 170 25 5 200 2011-12 170 25 5 200 2012-13 170 25 5 200 2013-14 170 25 5 200 2014-15 170 25 5 200 TOTAL 850 125 25 1000

(In MW)


With an average solar incidence of 4-6 kWh/m2/day, Maharashtra is amongst the

states with high solar insolation in India. Thus Maharashtra will promote setting up

of solar projects to the extent of 1000 MW over a period of 5 years as furnished

above.

i. PLANT AND MACHINERY Only new plant and machinery shall be eligible for instalment under this policy.

j. METERING OF ELECTRICITY The electricity generated from SPGs, shall be metered on a monthly basis jointly by

MEDA/MSETCL at a sending substation or located at site. Solar based generation

projects will have to provide ABT compliant meters at the interface points.

Interface metering shall confirm to the CENTRAL ELECTRICITY AUTHORITY

(Installation and Operation of meters) regulations, 2006.

k. GRID CONNECTION AND EVACUATION FACILITY The evacuation facility from solar substation/switch yard to MSETCL substation

shall be approved by MSETCL after carrying out the system study. The power by

SPG shall be injected at 66 kV.

The transmission line from switch yard to Solar Substation to the MSETCL

substation shall be laid by MSETCL. They should be integrated by installing RTUs by

solar project developer so that penetration can be monitored at the connectivity

substation by SLDC on real time basis.

l. OPEN ACCESS FOR THIRD PARTY SALE If open access is granted to any developer or beneficiary they shall have to pay the

applicable Open Access charges and losses as approved by MERC from time to

time. However the, Cross Subsidy Surcharge shall not be applicable for Open

Access obtained for third party sale within the state.

m. RENEWABLE PURCHASE OBLIGATION The quantum of power that can be injected in the grid from all renewable

resources i.e. purchase by distribution licensees plus captive consumers plus third

party sale should meet 9% by 2015-2016.

In which SPGs share 0.50% till 2015 accounting to 580 MW till 2015.


n. PENALTY FOR NON FULFILLING POWER PURCHASE

OBLIGATION If the Obligated Entity fails to comply with the RPO target as provided in these

Regulations during any year and fails to purchase the required quantum of RECs,

the State Commission may direct the Obligated Entity to deposit into a separate

fund, to be created and maintained by such Obligated Entity, such amount as the

Commission may determine on the basis of the shortfall in units of RPO, RPO

Regulatory Charges and the Forbearance Price decided by the Central Commission;

separately in respect of solar and non-solar RPO.

o. SHARING OF CLEAN DEVELOPMENT MECHANISM BENEFIT Entire proceeds of carbon credit from approved CDM project, to be

retained by the generating company.

p. BENEFITS UNDER THE POLICY

(i)SOLAR PV

For a single project a subsidy of Rs 10,000/kw shall be awarded by the state

government if the capital cost of the project during commissioning is in accordance

with the cost determined by the state commission during that financial year.

(ii)SOLAR THERMAL

For a single project a minimum capacity of 3 MW and a maximum capacity of 50

MW should be installed to avail the benefits.

A subsidy of Rs 1 crore per megawatt up to 5 crore (whichever is less) for a project

shall be provided by the State government.

(iii) ROOF TOP AND SMALL SOLAR PROJECTS

Projects having capacity of 1kW -1 MW shall be provided with 10% of the capital

investment and maximum of 50 lakhs (whichever is less) by the state government

if the capital cost of the project during commissioning is in accordance with the

cost determined by the state commission during that financial year.


FINACIAL OUTLAY OF THE SUBSIDY SCHEME

YEAR SPV (Rs Cr)

SOLAR THERMAL (Rs Cr)

ROOF TOP (Rs Cr)

TOTAL (Rs Cr)

2010-11 170 125 2.5 302.5 2011-12 170 125 2.5 302.5 2012-13 170 125 2.5 302.5 2013-14 170 125 2.5 302.5 2014-15 170 125 2.5 302.5 TOTAL 850 625 12.5 1512.5

SUBSIDY UNDER EACH PROJECT WILL BE DISTRIBUTED IN THREE INSTALLMENTS

BY THE STATE GOVERNMENT

INSTALLMENTS DURATION SPECIFICATIONS

1ST INSTALLMENT After commissioning of the project & on submission of report on the the functioning of the plant for first six months after commissioning

30% of the total amount of the subsidy.

2ND INSTALLMENT After 2 years of

commissioning 60% of the total amount of subsidy

3RD INSTALLMENT After 5 years of

commissioning 10% of the total amount of subsidy

q. CRITERIA TO AVAIL BENEFITS UNDER THE POLICY

The project developer should not procure any incentive/subsidy from

central government.

PPA should be signed with state DISCOM.

Capacity utilisation factor for SOLAR PV should be more than 19% for initial

2 years of installation and in case of SOLAR THERMAL projects a minimum

of 23% CUF should be maintained. An audited detailed report and energy generation report should be

submitted to MEDA.


r. POLICY INITIATIVES

(i) NET METERING

Net metering will be allowed (at multiple voltage levels) to promote roof top

penetration.

Net metering facility will be extended to solar power systems installed in

commercial establishments and individual homes connected to the electrical grid to

feed excess power back to the grid with “power credits” accruing to the

Photovoltaic energy producer.

SOLAR PV SYSTEM SIZE GRID CONNECTED

10kWp to 1MWp 415v

>1MWp 11kv

(ii) EXEMPTION FROM PAYMENT OF ELECTRICITY TAX

Exemption from payment of electricity tax to the extent of 100% on electricity

generated from solar projects used for self-consumption/sale to utility will be

allowed for 5 years.

s. FACILITATION BY NODAL AGENCY

MEDA shall endeavour to facilitate the development of the projects in the following

areas:-

All statutory clearances from Govt. departments / Agencies.

Evacuation approval from state transmission utility.

Connectivity to the substation of state transmission utility.

t. RESEARCH AND DEVELOPMENT AND CAPACITY BUILDING

Research and development on solar technologies / solar thermal storage systems,

testing facilities towards the development of solar technologies will be encouraged.

Technology demonstrations on innovative projects in association with reputed

institutions will also be encouraged.

To effectively implement this policy and to achieve the intended objectives, the

MEDA will promote capacity building in the area of solar energy.


17. FINANCIAL MODELLING (SOLAR PV PLANT)

INTRODUCTION

Renewable power generation capacity in India has been set up largely through private

sector investments. New investment is the most potent indicator of growth of the sector. As

per an estimate, in 2009 the total financial investment in clean energy in India was at INR

135 billion. India ranked the fourth most attractive country for renewable energy

investment in the world, only behind the United States, China, and Germany. But highly

aggressive bidding by developers in increasing fierce competitive environment and

uncertainty regarding the various costs incurred; increases the risk associated with making

an investment in setting up solar power plant.

A financial model helps the developer to explore in detail the financial benefits and costs

associated with the investment. This facilitates the identification of key variables affecting

the project value and enables financing decisions. The following section describe the key

items and assumptions that are included in the financial modeling of a typical Indian solar

PV project, and discusses the conclusions based on the calculation of various financial

parameters.

ASSUMPTIONS

(i) CAPITAL COST

The normative capital cost for setting up Solar Photovoltaic Power Project shall be Rs 800

Lakh/MW for FY 2013-14 as per MERC (Terms and Conditions for Tariff determination from

Renewable Energy Sources) Regulations, 2013. But the recent drop in module cost

accompanied by increase in level of competition has dragged down the overall project cost

quite substantially.

(ii) Annual Energy Yield

There are a number of factors (e.g. Air pollution, shading, soiling, ambient temperature,

module quality, downtime etc.) which affect the annual energy yield of a solar PV project.

The energy yield prediction provides the basis for calculating project revenue. In the

financial model energy yield prediction for 25 years is made taking into account annual

deration.

(iii) Certified Emission Reductions (CERs)

As India is a non-Annex 1 party under the UN Clean Development Mechanism (CDM),

qualifying Indian solar projects could generate Certified Emission Reductions (CERs). These

CERs can then be sold to Annex 1 parties and help them comply with their emission

reduction targets. Each CER is equivalent to the prevention of one tonne of carbon dioxide

emissions. The income from CERs can be substantial. However, this revenue source cannot


be predicted as it is uncertain whether the project will be accredited. Moreover, CER values

fluctuate considerably. The model has the flexibility of taking into account approximate

revenue from sale of CERs

(iv) Energy Price

Solar PV plant under REC mechanism can earn its revenue from selling grey.

In the financial model it is assumed that the grey component of energy is sold to state

discom at MSEDCL. Model is made flexible to vary starting, time period after MERC will

revise and escalation factor subjected to price revision.

(v) Operations and Maintenance (O&M) Cost

One of the major benefits of Solar PV power plants is less O&M costs as compared to

other renewable energy technologies. In the financial model O&M has been taken as per

MERC Tarff Regulation, 2013.

(vi) Financing Assumptions

The general financial assumptions for a project in India are as follows:

• Financing structure – equity 30% and debt 70% as assumed in MERC Tariff

Order.

• Debt repayment period is taken as 10 years. Interest Rate on term loan and

Working Capital is taken as 12.87% and 13.37% respectively. Though, model is

made with flexibility of varying moratorium period, repayment period, and

interest rate.

PLANT DETAILS UNITS VALUE

Installed Capacity MW 1 MW

CUF % 19%

Useful Life Years 25

CAPITAL STRUCTURE UNITS VALUE

Debt % 70%

Equity % 30%

Total Debt Amount Rs LACS 560

Total Equity Amount Rs LACS 240


CDM BENIFIITS UNITS VALUE

CERs (10 years) Million CERs .0150 RATE PER CER Euro/ton .30 1 EURO Rs/Euro 79.22 RATE PER CER Rupees 23.77 ESTIMATED PERIOD OF AVAILABILITY

Years 10

TOTAL INCOME FROM SALE OF CERS

Rs lacs 3.56

NPV OF CARBON CREDIT BENEFIT

Rs lacs 1.75

TAXES UNITS VALUE

BASIC TAX % 30% ADD: SURCHARGES % 5.00% ADD: CESS % 3% NET CORPORATE TAX % 32.45% MIN. ALTERNATE TAX % 18.50% ADD: SURCHARGE % 5.00% ADD: CESS % 3.00% NET MAT % 20.01%

DEBT SCHEDULE UNITS VALUE

LOAN AMOUNT Rs LACS 240 MORATORIUM PERIOD YEARS 0 REPAYMENT PERIOD YEARS 10 REPAYMENT STYLE MONTHLY INTEREST ON TERM LOAN % 12.87% INTEREST ON WORKING CAPITAL

% 13.37%

WORKING CAPITAL UNITS VALUE

O&M ECHARGES MONTHS 1 RECEIVABLES MOTHS 2 MAINTENANCE SPARES % OF O&M EXPENSE 15% WC LOAN 100%


O&M UNITS VALUE

O&M FY(2013-14) Rs LACS 11.23 ESCALATION FACTOR % 5.27%

DEPRICIATION UNITS VALUE

DEPRICIATION RATE FOR FIRST 10 YEARS

% 7.0%

AGGREGATE DEPRICIATION IN FIRST 10 YEARS

% 50%

TOTAL ALLOWED DEPRICIATED VALUE

% 90%

DEPRICIATION RATE FROM 11 YEARS ONWARDS

% 1.33%

PROFIT & LOSS(1ST YEAR) UNITS VALUE

REVENUE Rs LACS 149.72 PBDIT Rs LACS 138.49 PBDT Rs LACS 65.23 PBT Rs LACS 22.99 PAT Rs LACS 18.39

LEVELISED BENEFIT- 1.30 RS/UNIT

LEVELISED TARIFF- 9.00 RS/UNIT

LEVELISED TARIFF WITH AD- 7.70 RS/UNIT

PROJECT ECONOMICS AND FINANCIAL INDICATORS

Project financial model calculates a range of project value indicators in order to allow

developers, lenders, and investors to assess the project economics from several

perspectives.

From an investor’s point of view, a project is generally considered to be a reasonable

investment only if the internal rate of return (IRR) is higher than the weighted average cost

of capital (WACC). Investors will have access to capital at a range of costs; the return arising


from investment of that capital must be sufficient to meet the costs of that capital.

Moreover, the investment should generate a premium associated with the perceived risk

levels of the project.

Solar projects are usually financed with equity and debt components. As a result, the IRR for

the equity component can be calculated separately from the IRR for the project as a whole.

The developer’s decision to implement the project or not, will be based on the equity IRR.

As returns generated in the future are worth less than returns generated today, a discount

can be applied to future cash flows to present them at their present value. The sum of

discounted future cash flows is termed the net present value (NPV). Investors will seek a

positive NPV, assessed using a discount rate that reflects the WACC and perceived risk levels

of the project.

Lenders will be primarily concerned with the ability of the project to meet debt service

requirements. This can be measured by means of the debt service coverage ratio (DSCR),

which is the cash flow available to service debt divided by the debt service requirements.

The Average DSCR represents the average debt serviceability of the project over the debt

term. A higher DSCR results in a higher capacity of the project to service the debt. Minimum

DSCR represents the minimum repayment ability of the project over the debt term. A

Minimum DSCR value of less than one indicates the project is unable to service the debt in

at least one year.

Based on assumptions taken and calculations done in financial model following are values of

various financial indicators.

RETURN ON EQUITY- 45.6 RS LACS/YEAR

MINIMUM DSCR (AFTER 1ST YEAR)-1.04

AVERAGE DSCR-1.36

PROJECT IRR POST TAX WITH TAX SHELTER- 17%

MIRR POST TAX WITH TAX SHELTER- 15%

EQUITY IRR POST TAX- WITH TAX SHELTER-26%


18. BIBLIOGRAPHY

1. www.bp.com

2. www.unfccc.int

3. www.cdmindia

4. www.wikipedia.org

5. www.cea.nic.in

29.www.energyselfreliantstates.org

6. www.cercind.gov.in

7. www.moneycontrol.com

8. www.nldc.in

9. www.iexindia.com

10. State Load dispatch centre websites

11. State electricity regulatory commission websites

12. www.mnre.gov.in

13. State energy development agency websites

14. www.nvvn.co.in

15. www.powermin.nic.in

16. www.cdmrulebook.org

17. www.solarserver.com

18. www.dsireusa.org

19. www.solarfeedintariff.net

20. www.nrel.gov

21. www.iea.org

22. www.kpmg.com

23. www.luxresearchinc.com

24. http://mospi.nic.in

comparitive study of solar policies

Documents