New Solar Power policy

The Central Government is gearing up to launch a new solar power

policy, Solar Mission, incorporating a slew of concessions and
incentives for those involved in the manufacture of solar power
generation equipment. Union Minister for New and Renewable Energy
Farooq Abdullah said here on 17th Sep 2009 that the new policy would
be announced on November 14. It will be based on National Solar
Mission as drafted on July 18th,2009. The mission aims for solar grid
parity by 2020 thereby achieving a generation capacity of 20,000MW
and a capacity of 100,000MW by 2030.

National Solar Mission

AIM

National Solar Mission in Indias National action plan on climate change

has the objective of making solar generated power a major source of
meeting Indias power needs in the coming decades.

• 20,000MW of installed solar generation capacity by 2020.

• Solar power cost reduction to achieve grid parity by 2020
• 100,00MW by 2030 or 10-12% of total power generation
capacity estimated for that year.
• 4-5GW of installed solar manufacturing capability by 2017

As per the aim of the mission an important aspect of its

implementation methods which could prove benefitial in our current
project are:

• Pilot projects to validate business models for large scale rural

electrification projects.

 Stand alone power plants with micro grid for remote villages to
provide electricity for residential, community and commercial
purposes.
 Small grid connected rural power plants upto 3MW for capacity
addition to existing rural grids. Such plants will typically be
connected to 11 KV grid.

Policies to be implemented in view of the national solar mission:

The policies which will prove beneficial to Mayur in its current rural
electrification project are listed out as below:

1) Incentives for solar electricity generation

• GBI to offset burden of utilities due to higher tariff for solar

power fixed by regulators. (Rs 10/kWhbe provided for 20 years
for projects for the first 3 years.)
• Fiscal incentives- tax holiday, customs duty, excise duty
exemption.
• Interest rate subsidy and favorable loan repayment for off grid
applications.

2) No capital subsidy or accelerated depreciation for power generation

programmes except for solar heating and rural electrificarion.
In case Roof top PV systems are used in the project these various
incentives will be provided by the government:
Central government will offer loans at the rate:

2% interest for 5 years for solar thermal water heaters for domestic
use

2% interest for 5 years for off grid solar PV(5-100 kW installed with
energy efficient light) ie for SLS to encourage its use particularly in
rural areas.

Generation Based Incentive For Grid

Interactive Solar Thermal Power Generation
Projects
Eligible organizations:
• All existing registered companies, central and state power
generation companies and public/private sector solar thermal
power project developers who have set up or propose to set up a
registered company in India will be eligible for consideration of
generation based incentive. Individuals, NGOs, financial
institutions, societies and other unorganized investors are not
eligible to participate directly.

• Grid interactive solar thermal Power Generation plants of a

minimum installed capacity of one MW per plant at a single
location will be eligible for generation based incentive. However,
one mega-watt capacity may be set-up through modular units to
make one megawatt at a single location.

• The grid interactive solar thermal power generation projects will

be undertaken on Build Own and Operate basis.

• In case any project developer is desirous of availing the

accelerated depreciation benefit for the project under section 32
of the Income Tax Act 1961, they would not be eligible for
generation-based incentive.

There is a set procedure to be followed to obtain GBI for the

solar thermal power plant from the MNRE.

The Generation Based Incentives include:

• States (in this case Maharashtra) having a fixed tariff set up by the State
Electricity Regulation Commission (MERC) for solar power during the
period for which the Ministry is providing incentive, the utilities will offer a
minimum of that tariff to the solar thermal grid interactive power projects
in their respective states.
• The Ministry may provide, through IREDA, a generation-based incentive of
a maximum of Rs. 10 per kWh to the eligible projects which are
commissioned by 31st December, 2009, after taking in account the power
purchase rate (per kWh) provided by the State Electricity Regulatory
Commission or utility for that project.
• The maximum amount of generation based incentive applicable for a project
will be determined after deducting the power purchase rate for which PPA
has been signed by the utility with a project developer, from a notional
amount of Rs. 13 per kWh. In all cases the maximum amount of generation-
based incentive shall not exceed Rs. 10 per kWh.
• Any project that is commissioned after 31st December, 2009 would be eligible
for a maximum incentive with a 5% reduction and ceiling of Rs. 9.50 per kWh.
 • The generation-based incentive will continue to decrease, as and when the
utility sign a PPA for power purchase at a higher rate. The proposed annual
escalations agreed with the utility, as in force, should be reflected in the PPA.
4.6 The generation based incentive approved for a grid interactive solar
thermal power generation project may be available for a maximum period of
ten years from the date of approval and regular power generation from that
project, provided the utility continues to purchase power from that grid
interactive solar thermal power plant.
• The Ministry may, at any given time, even before 31st March, 2010,
announce a new generation based incentive and guidelines, which will be
applicable to all such proposals / projects that have not been approved by
that time.
• The incentive will be released by IREDA to the eligible solar thermal power
project developer on quarterly basis.

In case of delay for setting up the power plant

A project developer will be informed about the time frame allowed for
setting up the power plant. Generally a project developer will be
allowed to commission a project as per the time schedule given by the
project developer in the DPR, unless communicated otherwise. The
penalty will be imposed only after that time limit has passed. Since the
generation based incentive under this demonstration programme is
available till 31st March 2010, therefore, it is necessary to complete
the commissioning work by 31st December 2009 so that in the
remaining time the other formalities for entering into agreement with
IREDA, inspection of the plant, rectification of deficiencies etc can be
taken care of. After 31st March, 2010 the Ministry may not be in a
position to grant incentive for any project as per the present set of
guidelines, which are not been approved by that time. In case, the
Ministry announces new guidelines after 31st March, 2010, any
incomplete project may apply afresh under the new guidelines and in
that case the incomplete project may be eligible for the new incentive
applicable at that time. Therefore, the early completion of projects
would be desirable to avail the incentive under the demonstration
programme.

INCENTIVES FOR SOLAR PHOTOVOLTAIC

 Silicon in all forms and undiffused silicon wafers have nil duty
rate and excise rate.
 Solar cells whether or not assembled in modules or panels are
free
 Solar lantern or lamp has 10.0% duty rate
 Equipment gadgets based on solar energy have 7.5% duty rate
  Specified raw materials for manufacture of solar cells & modules
have nil duty rate.
 Specified Non-Conventional Energy devices/systems have nil
excise rate
 Accelerated 80% depreciation on specified renewable energy
based devices/projects

Various government policies that can be benefitial for implementation

of Mayurs REenergy project are:
 SPV programme 2009-10
 Solar lanterns programme 2009-10


SPV Programme 2009-10

Central Financial Assistance (CFA) in form of capital subsidy will be
available from the Ministry for installation of the SPV systems as
follows:

SPV Home-lighting systems

2500 (18Wp)
4800 (37-74 Wp)

SPV Street Lighting systems

9600 (74 Wp)

Stand-alone SPV Power plants

- more than 1 kWp (with
capacity less than 1 kWp on
case to case basis.)
Rs125/Wp

- more than 10 kWp with

distribution line
Rs 150/Wp

Service Charges to SNAs/ Implementing Agency

SPV Home-lighting systems Rs.200 per system
SPV Street lighting systems (For Urban areas only) 2% of CFA

Support to Implementing Agencies for Promotional Activities:

The Ministry will provide Central Financial Assistance to the
Implementing Agencies for
the following promotional activities:
• Seminars/ workshops/ symposia/ training: Support upto a
maximum of Rs. 2
lakhs per event will be provided to State Nodal Agencies/ Municipal
Corporations
• Technical institutions for organizing seminars/ workshops/
symposia/ training to create awareness and training etc. on
installation of the systems in urban areas.
• Publicity & Awareness: Financial support upto a maximum of
Rs. 5 lakhs will
be provided for information and publicity

Implementing agencies should enter into a Comprehensive

Maintenance Contract (CMC) for the SPV systems ordered, atleast
for a period of three years after the expiry of the warranty period. The
scope of the CMC should cover supply of spares/ parts and services
during its tenure. The CMC should be a separate transaction and not
necessarily part of the order. The cost of the CMC should not be
included in the cost of the systems for the purpose of computing and
claiming subsidy.

Interest subsidy for SPV systems by IREDA

Rate of interest
7% (commercial borrowers, who can claim depreciation benefits)
5% (individuals and other organizations which undertake not to claim
depreciation benefits)
Loan period is 5 years
Amount of loan is Upto 80% of the cost of the project
No upper limits for a loan
Service Charge is 1% of the loan disbursed

Solar Lantern Programme during 2007-08

• The Ministry will provide a subsidy of Rs.2,400/- per solar
lantern to the eligible beneficiaries in the un-electrified villages,
hamlets of the (i) Special Category States and the (ii) UT islands
(Thus this will not be applicable to Maharashtra)
• Ministry will also provide Rs.100 per lantern as service charges
to the state nodal agencies/Departments and the Akshaya Urja
shops. MNES will also provide Rs. 100 per lantern to the state
nodal agencies/Departments towards inspection charges of solar
lanterns sold by the Akshaya Urja shops.
 • Subsidy will be provided only on eligible models of solar lanterns,
procured from the pre-qualified manufacturers, after competitive
bidding.
• With a view to encourage girl child to continue their studies, it is
proposed to
provide a solar lantern free of cost to a girl child belonging to a
BPL family residing in the un electrified villages and hamlets of
the special category states and UT islands.

Solar Thermal Energy Demonstration

Programme
The cookers will either be sold/ distributed by the concerned SNA
through their own network or could be directly sold by the
manufacturers as per the modalities decided by the SNAs. Only those
manufacturers would be eligible for supply of Dish Solar Cookers under
this programme whose product confirms to MNRE specifications and
has been tested at SEC/RTCs.
The pattern of financial support available from MNRE for concentrating
type solar cookers is as follows:

Promotion of Sale of Box Type Solar Cookers

The box type solar cookers including the cardboard designs will be sold
through outlets of SNAs as well as Akshay Urja Shops and private
establishments/ NGOs/ Cooker Manufacturers/ Women Welfare
Organizations/ Self Help Groups/ Institutions/ Petrol Pumps / LPG
agencies etc. The outlets other than those of
SNAs will be called as associated promoters of SNAs. The incentive to
the promoters will be disbursed after verification of the sale made and
the performance seen by the SNAs. Support may be provided to
reputed NGOs, Universities, Institutions, Regional Test Centres, etc. up
to a maximum of Rs.1.50 lakhs, towards organization of
promotional activities like publicity, cooking
demonstrations/competitions, seminars/ workshops,
evaluation studies, development of improved models, etc. on
solar cookers based on specific proposal received from them in the
prescribed format

Solar Dish Concentrator (ARUN-160) for Industrial Process Heat

Systems

Large area solar dish concentrator (ARUN-160) technology has been developed
and tested at a dairy for industrial process heat applications under a MNRE
supported R&D project to IIT Bombay and M/s Clique Development Private Ltd.
(CDPL), Mumbai. The technology has large potential in the industrial sector to meet
process heat requirements.

• Irrespective of the total cost of the projects, a fixed financial support of

Rs.12.0 lakhs will be provided for each ARUN-160 dish involved in a project.
The user organization will meet the balance cost of the solar system, and the
cost of integration of solar system with the existing system, cost of AMC, etc.
• The projects sanctioned to private sector organizations shall not be entitled to
grant / support from any other government organization.

Village energy Security Programme

• The objective of the programme is to provide energy security in villages
by meeting total energy needs for cooking, electricity and motive power
through various forms of biomass material based on available biomass
conversion technologies and other renewable energy technologies, where
necessary.
• Village identification: The village / hamlet identified could be a tribal or
forest-fringe village / hamlet. The selected village / hamlet should have
adequate availability of fallow, common or uncultivated non-grazing land
for raising plantations. A cohesive and progressive social structure is also
an important requirement. The village / hamlet should have minimum of
about 50 and maximum of 400 households and should be identified in
consultation with forest, tribal and rural development departments
/agencies. The test projects would be undertaken in unelectrified villages
 and hamlets that are not likely to be electrified through conventional
means.
• MNRE provides CFA of Rs. 20000/- per household for villages
with 50-400 households. This programme is run by implementing
agency such as department forest, department of rural
development, reputed and recognized NGOs, cooperatives and
SNAs etc. MNRE will provide 90% of project cost with the
maintenance cost of project, a balance cost will be ensured by
implementing agency.

Rural Village electrification Programme

2009-10
• The objective of the Programme is electrification through
renewable energy sources of those unelectrified remote census
villages and remote unelectrified hamlets of electrified census
villages where grid connectivity is either not feasible or not cost
effective.
• In accordance with the approved definition of village
electrification, remote villages/hamlets will be deemed to be
electrified if a minimum of 10% of the households are provided
with electricity and electricity is also made available for
community facilities and for dalit bastis (habitations) of the
village, if any.
• Central Financial Assistance of upto 90% of the costs of the
Renewable electricity generation systems (including the cost of
Annual Maintenance Contract (AMC), if any, for 5 years) will be
provided for approved projects for electrification of remote
unelectrified census villages and remote unelectrified hamlets.
The balance cost of projects can be financed through
contribution from State Plans, beneficiaries, or other sources.
However, it will be necessary that at least half of the balance
cost is met from state government’s funding.

Tariff decided as per MERC

Applicable Tariff for solar power projects within Maharashtra:
a) The tariff for solar power projects eligible under GBI scheme is
determined as Rs 3.00 per kWh, so that maximum possible incentive
(i.e., Rs 12.00 per kWh in case of solar PV and Rs 10.00 per kWh in
case of solar thermal) is available to the project developers, while at
the same time, distribution licensees and in turn, consumers are
required to bear minimum cost of Rs 3.00 per kWh for promoting solar
energy while gaining operational
experience from such projects.
b) While the current GBI scheme is applicable only for the first 10 MW
capacity addition within the State, in future, whenever GBI scheme is
extended to cover additional capacity, such project capacity shall also
be covered under the same mechanism.
Accordingly, applicable tariff for solar power projects eligible under
GBI scheme as per MNRE Guidelines shall be as under:

As generation based incentive (GBI) under MNRE scheme is available

for a period of 10 years, the above tariff shall be applicable for a
period of 10 years from the date of commissioning of the project or for
such other period as may be applicable under MNRE scheme.