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Solar Power Plant Project Setup Details


6. REC
18. FAQ'S



Solar photovoltaic power generation companies, who have submitted bids to set up units in Andhra Pradesh, or those now interested,
have been given time till September 30, 2013 to submit their proposals. The Government had recently decided to allow more companies
interested in taking part in the projects under the State solar power policy.
As a part of development of green power, particularly the solar, the Andhra Pradesh Government represented by AP Transco has given
opportunity to all the solar developers, including those who have not participated in the recently concluded competitive bidding for 1000
MW, to submit their applications for executing the solar projects.

The state energy department on Friday said citizens going for roof top solar power generation could get their system connected to the
grid or remain off the grid.

You need to invest just Rs 50,000 to set up a solar rooftop system with a capacity to generate power of one KW in Andhra Pradesh.

In a bid to turn Bheemili into a hub of dry fish trade, the Greater Visakhapatnam Municipal Corporation (GVMC) has mooted a proposal
of introducing solar dryers with the help of Hyderabad-based Society for Energy Environment and Development (SEED).

Around 500 hamlets across the state still lack power supply. Three years have passed since a Rural Electrification Plan was launched
but there are over 10 lakh un electrified rural as well as BPL households in the state.

of solar electricity solutions, will supply 25,720 REC Peak Energy Series solar panels aggregating to 6.5 MWp to power a ground-
mounted tracker system in Andhra Pradesh, India. All electricity produced 12,289,500 kWh of clean, green electricity each year will
be used for the printing of the Eenadu, the largest circulated Telugu newspaper in Andhra Pradesh, owned by the Ramoji Group.

LUXEMBOURG and DONGYING, China, July 30, 2013 /PRNewswire/ -- CNPV Solar Power SA, a public limited liability company
organized under the laws of the Grand Duchy of Luxembourg and a leading integrated manufacturer of solar photovoltaic products, today
confirmed their on-time progression with Rays Power Infra Private Limited, Jaipur, India ("Rays Power") as part of their 30 MW strategic
agreement. Started as a brain child of professors and students of Indian Institute of Technology (IIT), they are among the largest solar
power service provider in India. Today, Rays Power Infra has rapidly evolved into one of the biggest Solar park developer & service
providers in India. Services are offered in either a "turnkey" form or on an EPMC basis, making Rays Power Infra Private Limited. The
"one stop shop" for solar power plant projects.

BUILDING!!!14 july 2013
The country's first "net zero" conventional energy consumption multi-storey building - the new headquarters of the environment ministry -
will be completed in Jor Bagh next month. The building will meet its annual requirement of 14 lakh units of electricity by generating solar
power on the site.


Zuari Cement inaugurated its solar power project at Yerraguntla on 9th July 2013, a bold initiative towards energy sustainability in line
with the Italcementi Group energy policy.


Total 730 lakhs (7.30 Crores)

Mounting Structurers (with tracking - Single Axis) 80
Mounting Structurers (with tracking - Dual Axis) 140

Its a known fact that single axis and dual axis tracking technologies provide more than 15% additional generated power. However
technical experts choose to operate without both single axis and dual axis tracking systems, simply to avoid any moving part in the plant.
They want to avoid the risk of a breakdown ever.
Rs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 400 (REC)
Module Mounting Structure and associated civil works 80
Installation, Erection & Commissioning of Inverters 60 (AEG)
Cables and associated civil works 40
Testing & Commissioning of Transformer 18
H. T. Panel and associated civil works 15
Meters with C.T. & P.T., Isolators, four pole structure & related
evacuation system with switchyard lighting and civil works 18
SCADA, Weather station, Earthing & Lighting Protection 25
ACDB, DCDB, Batteries with Chargers, Control Panel etc. 08
String Combiner Boxes 12
Inverter & Control room, Boundary wall work, approach road with
water tank 30
Insurance 09
Engineering & Men Power & Out of Pocket Expenses 15

Even CERC has estimated the cost of a solar power plant without taking tracking systems.

There are some newer Tracking systems which claim lower costs and higher efficiencies. Costing less than 10 % of the project
cost and providing more than 25 % efficiency. These seem pretty good to go.

Heres a breakup of the costs for Solar PV projects as recommended by CERC:

SNO Particulars
Capital Cost Norm for
Solar PV project
(Rs.Lakh/MW) % of total cost
1 PV Modules 344.50 43%
2 Land Cost 16.80 2%
3 Civil and General Works 94.50 12%
4 Mounting Structures 105.00 13%
5 Power Conditioning Unit 60.00 7%
Evacuation Cost up to
Interconnection point
(Cables and
Transformers) 105.00 13%
Preliminary and Pre-
Operative Expenses
including IDC and
contingency 80.00 10%
Total Capital Cost 805.80


Rs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 360
Module Mounting Structure and associated civil works 80
Installation, Erection & Commissioning of Inverters 60 (BONFIGLIOLI)
Cables and associated civil works 35
Testing & Commissioning of Transformer 18
H. T. Panel and associated civil works 15
Meters with C.T. & P.T., Isolators, four pole structure & related
evacuation system with switchyard lighting and civil works 15
SCADA, Weather station, Earthing & Lighting Protection 20
ACDB, DCDB, Batteries with Chargers, Control Panel etc. 08
String Combiner Boxes 10
Inverter & Control room, Boundary wall work, approach road with
water tank 35
Insurance 09
Engineering & Men Power & Out of Pocket Expenses 15

Total 680 lakhs (6.80 Crores)


Nirvanas have the basic data of the component costs for solar PV power plants the panel cost, the balance of system cost, land costs,
installation & evacuation costs.

There is significant variability in practically all the cost components
Panels could be thin film or crystalline (not to mention CPV), and could be made in India, or imported from high-quality, high cost
countries such as Germany, or from our nice neighbor China at dirt cheap prices (with questionable quality of course)

Balance of systems It capital cost depends on whether you wish to use trackers or not, for instance. The cost of inverters can vary a
lot, based on the brand. Many of the other commoditized components, cables, transformers etc., can be estimated with a fair degree of

Land cost Is it 3 lakhs per acre or 10 lakhs per acre. Depends on where you put it up, doesnt it?

Installation costs EPCs come in many varieties, it is 5% of project cost or 7%? 2% is a lot of money when you are talking about project
costs upwards of 10 crores.

Taking low-end estimates for each of the above gives me the following number (all costs per MW)

Panels Rs 3 crores (thin film, 60 cents per W)
Balance of system Rs 4 crores
Land cost 0.12 crores (3 lakhs per acre)
Installation cost & evacuation 0.35 crores approx (5% of total cost)
The total comes to approximately 7.5 crores

Now, zip to the high end (all costs per MW)
Panels Rs 4 crores (crystalline, 80 cents per W)
Balance of system Rs 5 crores (super quality inverters and trackers)
Land cost 0.4 crores
Installation cost & evacuation 0.65 crores (7% of total cost)
The total comes to approximately 10 crores
Now, this is the band most of us have been talking about Rs 7.5-10 crores. Of course, there are folks talking about sub-7 crores as
well, and I would like to hear from them too how they arrived at those numbers.


Rs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 330
Module Mounting Structure and associated civil works 90
Installation, Erection & Commissioning of Inverters 55
Cables and associated civil works 35
Testing & Commissioning of Transformer 18
H. T. Panel and associated civil works 10
Meters with C.T. & P.T., Isolators, four pole structure & related
evacuation system with switchyard lighting and civil works 18
SCADA, Weather station, Earthing & Lighting Protection 15
ACDB, DCDB, Batteries with Chargers, Control Panel etc. 08
String Combiner Boxes 12

Inverter & Control room, Boundary wall work, approach road with
water tank 30
Insurance 09
Engineering & Men Power & Out of Pocket Expenses 15
Total 645 lakhs (6.45 Crores)

This is avoidable, solar power generation is a profitable project. With an investment of Rs.2 Crores one can earn upto 40 crores and
more in the ensuing 25 years, so its better to go with tier 1 panels, BOS and practices.

EPCs that use best brands. Best practices with proven performances.

Accelerated Depreciation of 80 % of the capital to companies with tax liability
REC route ideal for Companies with high tax liability, with AD benefit
Promoters equity approx Rs 2 cr/ MW
Detailed Project report cost included in the project cost
Bank loan can be 70%, with collateral security from promoter
Project viable even with own capital without bank loan,
It takes 6 months to complete a project

As per REC route Rs 12.60/ unit (discom2.60, rec9.30) can be realized, REC price range of Rs9.30-13.40 will be valid till 2017 march.
Post 2017 march the price band will be announced by MNRE .It is likely to be low to very low approx Rs 2-3.1 MW can generate approx
1.5- 1.7million units per year


Designing and Planning Detailed Project Report Power evacuation planning
DPR preparation Codes & Standards interpretations Regulatory approvals
Power Purchase Agreement (PPA) facilitation Technology Tie Ups Banking documentation
Financial closure Project Structuring & Designing Project Management
Security cover & major clause Electrical works Project commissioning

PPA Projects

Through competitive bidding Fixed tariff Allotment not assured
Average but fixed returns Limited allotments No trading
Minimum 5 MW Viable only to companies No Accelerated Depreciation benefit

REC Projects

Open access High but variable returns Any capacity
Allotment is assured Certificates to be traded Variable tariff
Unlimited allotments due to huge demand


Total Capacity (MW) = 5.75 | Number of Projects = (1)
Sr.No State Energy Source RE Generator Project No. Capacity (MW) Date of Accreditation Date of Registration
Pradesh Solar PV
LIMITED 001 5.75 08-04-2013




PPA stands for power purchase agreement. In the recently concluded government auction of 1000MW in Andhra Pradesh, The Andhra
Pradesh Government will provide PPA for solar purchase for the next 25years. THE GOVERMENT has announced the price of 6.49 per
unit. Only sun borne energy and easel mining industries bid 6.49 and 6.52 respectively. Together at best they will be able to do 70MW.
.This low unviable price literally opens up, the third party PPA plus REC route.

Third Party PPA is a power purchase agreement which a developer can use and claim REC. Third party PPA REC is normally got by
government authorized power trading companies. Companies that set up large solar plants of size 10MW and above can approach these
companies to avail the 3rd party PPA for their solar project in Andhra Pradesh. The current third party PPA for solar power doing the
rounds in Andhra Pradesh is Rs 4.50 - 5 per unit with 5% escalation once or twice a year. This third party PPA is available for 5 and 10
years tenure. Companies that avail 3rd Party PPA for their solar project in Andhra Pradesh can also avail REC benefits.


These companies are eligible to provide third part PPA. Third party PPA plus REC route provides probably the best revenue model
among the other sources of revenue in solar energy power generation. Companies in Andhra Pradesh desirous of monetizing, having
strong balance sheets and are capable of investing in large projects like 15MW and above can reach out to them to get a third party


The APPC price is 2.50 per unit. Adding APPC plus REC it works out to be rupees 11.80 ( REC 9.30).Appc prices will go up next year by
more than 5%. It will not be a surprise that if appx price reach Rs 3. This estimate of Rs 3 is based on a) AP Govt is planning to buy
1000MW or more solar power at Rs 6.49 per unit) AP GOVT has ordered a purchase of 450MW OF POWER AT RS 12.50 per unit for
the next six months.

An official from APERC on probing accepted that APPC can go up to Rs 6 in the next two or three years.

The Central Electricity Regulatory Commission (CERC) has released (APR 2013) a second set of (draft) amendments to their
REC guidelines.

REC and Reverse Bidding/Tendering Projects which have signed a PPA through any state tendering mechanisms (reverse bidding)
would be ineligible for procuring RECs. The objective of REC is to fund the gap between APPC and the viability.

APPC The guidelines now clarify that the PPA would have to be signed at a price equal to the APPC price which was prevalent the
previous year.

Electricity duty and captive generators - CERC has now proposed to remove the electricity duty exemption as a disqualification
criterion as the quantum of contribution to final tariff is quite miniscule. The other criteria for disqualification such as concessional
wheeling/banking would still be in force.

Time period for availing RECs current regulations state that there is a three month time window after approval from the SLDC to get
the required clearance from the central agency. However since the receipt of information from the SLDC sometimes takes more than
three months to reach the central agency, it has been proposed to extend the window to six months. In addition to this, currently the
application for receipt of the certificates can be made only on the 1st and 15th of each month. This has been revised to the 10th, 20th
and last day of each month.

No cap on minimum capacity previously, it was proposed that RE power plants with a capacity of 250 kW and above would only be
eligible for certificates under the REC mechanism (subject to approval by MNRE) even though the CERC guidelines do not dictate a
minimum requirement. CERC has clarified that there is no minimum capacity and that ANY RE generator would be eligible to claim REC
provided they satisfy the prescribed criteria.

Retention of RECs CERC has now clarified that all RECs generated through a RE captive power plant can be retained by the
developer (to fulfill their obligations) thereby reducing the overheads which is subject to verification by the SNA.

Shelf-life of RECs as reported earlier, RECs would now have a shelf-life of two years as opposed to one year and the regulations
would be amended accordingly.

Date of issuance any power plant setup under the REC mechanism would be eligible for RECs from the date of commercial operation
or from the date of registration of such plant by the Central Agency whichever is later.

All RE Generators are requested to pay fees & charges related to Registartion/Issuance inclusive of service tax @12.36% with immediate

The details of fees and charges of REC payable to Central Agency are as under: Registration Charges

Sr.No. Fee and Charges towards Registration Amount in Amount including Service @ 12.36%
1. Application Processing Fees (One Time) 1,000 1,124
2 Registration Charges (One Time) 5,000 5,618
3 Annual Charges 1,000 1,124
Revalidation Charge at the end of five (5)
years 5,000 5,618

Issuance Charges (Service tax @12.36% will be applicable on total amount)

Fee and Charges towards Issuance of
1. Fees per Certificate 10

All fees and charges shall be payable by way of Electronic Clearing system (ECS) only and Payment shall be made as per the details given

Name of the Account
Name Branch Name and Code IFSC Code
PAN of
CHARGES 931764650
Mehrauli Institutional
Area & 943 IDIB000M089 AAFCP2086B



26.4 lakh acres of non - agricultural land available and 20.6 lakh acres land available under barren and uncultivable land. Total of 47 lakh
acres of land available for solar power generation, If it takes approximately 5 acres of land for 1MW, we can produce more than 9,00,000
MW. Even if we have 1% of land that have access to substations if we use, We can produce about 9000MW.So there is a lot of potential.

Rocky lands are not ideal for solar power generation. Many times soil testing of the land is done before deciding the feasibility
Ideally the land has to be very close to a substation. 11 kva, 33 kva, 66 kva, 132 kva, etc

For a 1 mw plant 11 kva is substation required.

For each km the substation is away from your land, one has to incur about Rs 10 /12 lakhs for laying the transmission lines. Better than
that is to buy up the land between your land and the substation.

If there is some land between your land and the substation, there will ROW ie right of way issues.


At times some land brokers buy agricultural land and sell and want to sell it off as agricultural land itself to avoid short term capital gains
tax. It is advisable for the potential developers to buy the converted land by sharing the short term capital gains tax with land broker.

How many acres of land are required for a 1 MW solar power generation plant?

The most popular solar panels are Poly crystalline and it needs 5 acres of land.
3.5 to 4acres for crystalline silicon/ mono crystalline (c-Si) technology and 6 to 7 acres per MW for thin film solar (C- CIG, CdTe)

In reality, it depends on other parameters like cost of land, Ground Coverage Ratio (GCR)(to avoid inter array shading, GCR can be
0.45 to 0.65 and generation will vary based on GCR) and choice of sun tracking with sun trackers the land required will be about 6acres
per MW for crystalline solar modules).

Which are the ideal states for setting up of solar power projects?

Hot destinations are Rajasthan, Gujarat and MH, MP, Andhra, Karnataka, Tamil Nadu as far as solar radiation is concerned.

Will bankers finance Solar power generation plants?

The Debt Service Coverage Ratio (DSCR) works out to an average of 1.49 which is considered quite acceptable to commercial banks
for sanction of loan.

The maximum debt that is permitted as per CERC norms is 70% and most banks should find this acceptable based on the financial
strength and net worth of the company / promoters. The present policy driven by the National Solar Mission and PPA for 25 years with a
central PSU like NTPC's subsidiary should provide adequate confidence to the Banker to finance solar power projects."


Got Land for Solar power generation !!

Those of you, who have large acres of non cultivable lands in Andhra State near substations and do not have the resources to develop a
solar power plant, can register their lands here for
A) outright sale, B) lease for 26 years C) partnership with the power plant D) any other suggestion from the land owner

We need the following information.

Exact location of the land: Address of land including district and taluk,
Total area in acres
Right of way ( ROW)*
Proof of its ownership.
Name, address including district and taluk,
DNI of the location:
Type of the land in government records.
Agricultural/ non agricultural/ barren/ rocky/industrial/ waste/ dry/ any other specify
KVA rating of substation nearby and distance.
Capacity available in the substation
List of solar projects in the neighborhoods, if you know.
Rate per acre. ie current market price of land available nearby, adjoining your land
Expected sale price : minimum price expected per acre.
Open for partnership: Open for leasing for 26 years? Yes / No
Are there lands available nearby: how many acres: how much do these lands cost

* ROW - if you have direct access to the substation, it is fine. But if electricity produced has to go thru the neighboring lands,
that means you have a ROW issue.

Agricultural lands are not permitted to set up a solar plant, even if there is no water and no agriculture has been done for years.
If you are going to convert, your land from agricultural land to any other, say so.


With investors beginning to set up solar generation units in Anantpur, land prices in the district have shot up manifold. Already, these
units have started generating 33 MW of solar based power. Many more such units are to follow suit, thanks to the regions climate ideally
suited to solar power generation. Nearly 51 companies including the multinational companies have sought permission to set up their
units with a capacity of 585 MW of solar power generation.

With so many solar power generating units coming this nondescript district is also tipped to witness a massive real estate boom. In fact,
a private firm had purchased nearly 80 acres of land at Rs 2 lakh per acre that too in an interior village falling in Kadiri division recently.

5. Solar Power Project Financing

Various options available for getting funding for your Solar Power projects are,

1) Asset / Collateral based Funding
2) Balance Sheet based Funding
3) Project Funding

1) Asset Based Funding: Individuals and Companies

In asset based funding the lender provides loan for solar power plants based on valuation of the assets that your company has
or you have and that you can offer as collateral security for the loan.
You can even get 100 % funding depending upon the value of the collaterals.
Normally for most projects, the banks may demand 30 % equity and loan can be given for 70%.
Some banks in Hyderabad demand 35 % equity. But if the value of the collateral is high, it can be as said before, 100 % loan..
Many banks ask for urban property as collateral. It is not actually necessary. Once the banks get used to the performance of
solar power generation plants, they will minimize the need for collaterals.
Already many banks are accepting less than 70 % of collaterals when the projects are pledged.

2) Balance Sheet Based Funding: Companies only

The profit that the company has made in the last three years, the reserves and surplus it has etc will be taken into account and the bank
can then fund.

Companies that can avail Accelerated Depreciation for solar power generation will find it easier to avail loans and lower rates.
Companies should note that it is not a fixed rate of interest. Good rapport based on good performance in the past can bring the interest
percentage down.

3) Project Funding: Companies and Individuals

The projected cash flow of the project or more specifically the PPA will determine the decision to fund. Payment security is important.
Many of these types of funding can be got from India as well as from abroad.

With hedging the cost of international funds also tend towards 11%. Indian banks are now getting closer to 12.5 % and if the asset /
balance sheet / PPA are sound one could look at lower rate of interest.

The project cash flow is much better in companies that can avail accelerated depreciation for solar power generation.


There are many Chartered Accountants who help individuals form a company and they also act as agents to get bank loans.
Commission for getting bank loan is approximately 1- 2% at present in Andhra Pradesh.

These agents normally help put the loan application for solar power generation plant and submit with two to three banks. This helps them
get the best interest rate for solar power generation plants in AP.

For companies, this may not be the ideal route, as they themselves will have a finance /accounts department with access to several
banks. Whereas for individuals and NRI's, it makes more sense to go thru such chartered accountants who also help get loans, than
trying it on their own.

Individuals can try on their own, if they have 30% or more equity and or good collaterals. They can then go to more than one bank and
try to get the best rate of interest.




Solar power plant projects for loan proposal are new to Andhra Pradesh and particularly to the bankers. It is difficult for them to
comprehend a business proposition with no raw material and little capital like a solar power generation project. After a few years, once
several loan sanctions happen for solar power projects. The process will become more simple as the bankers will have a better idea.


A solar power generation plant can be started in any one of the following constitutions i.e.

(1) Proprietary Concern, (2) Partnership Firm, (3) Private Limited/Limited Companies,


1. Proprietary Concern

Bio-data of the proprietor by way of copies of PAN Card / Passport / Voters identity card / Bio-data with photo and signature attestation
by Gazetted Officer.

2. Partnership Firms that are applying for a bank loan for a solar power generation plant

a. Copy of Partnership Deed
b. Copy of Firm Registration Certificate
c. Extract of Form-A from Registrar of Firms (for old firms and in case of additional loans) regarding existing partners as on date.
d. Bio-data of partners and copies of PAN card/passport/voters identity card/bio data with pass port size photograph and signature duly

3. Private Ltd Companies or Public limited companies applying for a loan for solar power generation plants

a. Memorandum & Articles of Association.
b. Bio-data of Promoter Directors affixing colour photo duly attested /
Copies of PAN Card/Copies of Passport./voters identity card.
c. Resolution of Board of Directors of the company authorizing two directors to raise loans from and sign necessary loan security
documents and affix common seal thereof.
d. Copy of certificate of incorporation if it is a Private Limited Co.
e. Copy of Certificate of Incorporation and Commencement of Business in the case of Limited companies.
f. Copy of General Body Resolution u/s.293 (i) (d) of Companies Act in case of Limited Companies, permitting the company to borrow in
excess of paid-up capital and free reserves and Resolution u/s.293 (1) (a) of Companies Act for mortgaging the fixed assets of the
company in favour of the Corporation.
g. Consent letters from the Directors about furnishing of their personal guarantee with copies of property documents.
h. Search Report from CA/Extract of register of charge from ROC in case of existing companies and companies seeking additional loans.


The primary security can be either leasehold interest or freehold interest. If the solar power plant is going to be started i n a leasehold
lands, it is called leasehold and if the solar power plant is going to be started in own lands, it is called freehold.

Original Regd. title deed in the name of the Proprietor/ Firm / Company along with certified copy having clear approach road.
Pattadar Pass Book/title deed issued by MRO/RDO in the name of the proprietor/firm/company/society.
Original/Copies of link documents (Vendors title deed) pertaining to the property under the scheme along with copies of Pass
Book and Title Deed reflecting the sale entry. If pass book and title deeds are not issued, a certificate from MRO to that effect
is required.
Extracts of revenue records i.e. Khasra Pahani for 1954-55 along with Pahanies in Telangana Area and 10 (1) along with
Adangals in Andhra Area for the last 13 years.
No PT Certificate in case of Telangana Area.
E.C for 13 years (or) from the date of document if title deed is of beyond 13 years to the date of deposit disclosing all
ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.
Permission from Urban Development Authority/ Building Plans if the site is within the Master Plan of Urban Development
Affidavit by promoters to the effect that there are no courts cases pending against the property under the scheme.


Generally, Banks insists for Collateral Security and the percentage of Collateral Security is dependent upon the location and the nature
of industry and the nature of loan. Also many Banks insists for preferably urban immovable property towards Collateral Security and
preferably belonging to the borrowers. The Collateral Security can be either in the form of vacant land, house, apartment, fi xed deposits,
Bank Guarantee.

Vacant land:

a. Original Regd. title deed in the name of the surety along with certified copies.
b. Original link documents (Vendors title deed).
c. Extracts of revenue records i.e. Khasra Pahani for the year 1954-55
e. E.C for 13 years from the date of document and in case title deed is beyond 13 years from the date of document to the date of deposit
disclosing all transactions.
f. ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.
g. Copy of the Approved Layout/Sketch drawn by Mandal Surveyor demarcating the site/plot with Sy.No and boundaries and a land mark
for identification.

If it is house:
A. Original Regd. Conveyance Deed along with certified copy.
B. All the relevant Link Documents.
C. EC for 13 years (or) from the date of document in case title deed is beyond 13 years to the date of deposit disclosing all transactions.
D. Tax Demand & Receipt/Ownership Certificate/ Extract of property tax demand register for the last 13 years.
E. Approved building plans from Competent Authority.

If it is an Apartment:
Original Registered Sale deed in the name of the surety.
Copy of the development agreement and link documents.
Copy of the approved building plan.
Encumbrance Certificate for the last 13 years.
It shall be established that the original title deeds of the project are not mortgaged to bank or any financial institution availing
project finance, by way of declaration from Builder/Landlord.
Mutation in favour of the surety.
Tax Demand and Receipt / Ownership certificate/ EPPDR.

Fixed Deposits as collateral for loan for a solar power plant

The beneficiary/payee of fixed deposit should give a consent letter for pledging the fixed deposit with the Bank as Collateral
Security in consideration of sanction of loan to the unit to which the security is being offered.
The beneficiary/payee of the fixed deposit should also assign the proceeds of fixed deposit in favour of the Corporation by a
proper endorsement by the concerned bank.
A discharge voucher from the beneficiary/payee of fixed deposit duly affixing necessary revenue stamp (without mentioning the
date) on the backside of the FDR.

Bank Guarantee:

Individuals who have good banking record and good rapport with the local bank can get bank guarantee to the lending bank.
Such bank guarantees can be considered as collaterals.

The collateral security can be offered by the borrower by way of Bank guarantee also in such a case the following documents shall be

Bank guarantee executed by the concerned Bank on required stamp paper by the authorized signatories of the Bank affixing their rubber
stamp containing the serial number of the signatory as per the Bank rules.
A confirmation copy shall be forwarded by the Bank Manager to the lending Bank in a sealed cover by post.
A letter from the Bank that they will pay the amount in case the Bank guarantee is invoked in time.

Format for Bank Guarantee

(To be furnished on non-judicial stamp paper of appropriate value as per Stamp Act relevant to place of execution.)

(Note: - Bank Guarantee is to be submitted on or before estimate processing for evacuation of power generated (A) or before executing
any agreement for wheeling/sale of power generated (3 rd party/captive/pooled costs) (B) or 45 days from issuance of technical
feasibility, whichever is earlier (A/B/C) and the bank guarantee amount is Rs.2 lakhs per MW.)

The Stamp Paper of Rs. 100/- Non Judicial Paper should be in the name of the Executing Bank.

The purpose of this bank guarantee is for early completion of the project within two years from the date of issuing of this Bank Guarantee.

This bank guarantee is valid for two years and two months till the date------------ with additional claim period of one month till the date.

In consideration of the ----------- [Insert name of the solar power developer ] (herein after referred to as solar power developer) submitting the proposal
for establishment of solar power project of the capacity of ______ MW, at [Insert the location], for supply of solar power to APCPDCL (herein
after referred to as DISCOM) under third party sale / captive utilization purpose / pooled cost sale to Discom.

This guarantee shall be valid and binding on this Bank up to and including ___[Insert Date]___________ and shall not be terminable by notice or any
change in the constitution of the Bank or the term of contract or by any other reasons whatsoever and our liability hereunder shall not be impaired or
discharged by any extension of time or variations or alternations made, given, or agreed with or without our knowledge or consent, by or between
parties to the respective agreement.

Our liability under this Guarantee is restricted to Rs._______(Rs._ only). Our Guarantee shall remain in force until [Insert date] / The DISCOM shall be
entitled to invoke this Guarantee till [Insert date].

The Guarantor Bank hereby agrees and acknowledges that the DISCOM shall have a right to invoke this PERFORMANCE BANK GUARANTEE in part
or in full, as it may deem fit.

The Guarantor Bank hereby expressly agrees that it shall not require any proof in addition to the written demand notice by DISCOM, made in any
format, raised at the above mentioned address of the Guarantor Bank, in order to make the said payment to DISCOM.
The Guarantor Bank shall make payment hereunder on first demand without restriction or conditions and notwithstanding any objection by -------------
[Insert name of the Solar Power Developer] . The Guarantor Bank shall not require the DISCOM to justify the invocation of this PERFORMANCE BANK
GUARANTEE, nor shall the Guarantor Bank have any recourse against the DISCOM in respect of any payment made hereunder

This PERFORMANCE BANK GUARANTEE shall be interpreted in accordance with the laws of India and the courts at Andhra Pradesh shall have
exclusive jurisdiction.

The Guarantor Bank represents that this PERFORMANCE BANK GUARANTEE has been established in such form and with such content that it is fully
enforceable in accordance with its terms as against the Guarantor Bank in the manner provided herein.

This PERFORMANCE BANK GUARANTEE shall not be affected in any manner by reason of merger, amalgamation, restructuring or any other change
in the constitution of the Guarantor Bank.

This PERFORMANCE BANK GUARANTEE shall be a primary obligation of the Guarantor Bank and accordingly the DISCOM shall not be obliged
before enforcing this PERFORMANCE BANK GUARANTEE to take any action in any court or arbitral proceedings against the Solar Power Developer /
Project Company, to make any claim against or any demand on the Solar Power Developer / Project Company or to give any notice to the Solar Power
Developer / Project Company or to enforce any security held by the DISCOM or to exercise, levy or enforce any distress, diligence or other process
against the Solar Power Developer / Project Company .

The Guarantor Bank acknowledges that this PERFORMANCE BANK GUARANTEE is not personal to the DISCOM and may be assigned, in whole or in
part, (whether absolutely or by way of security) by the DISCOM to any entity to whom the DISCOM is entitled to assign its rights and obligations under
the PPA dated: .

Notwithstanding anything contained here in above, our liability under this Guarantee is restricted to Rs. _________(Rupees ___________ only) and it
shall remain in force until [Insert date] with an additional claim period of thirty (30) days thereafter. We are liable to pay the guaranteed amount or any
part thereof under this Bank Guarantee only if the DISCOM serves upon us a written claim or demand.

Signature Power of Attorney No.


Name [Insert Name of the Bank]

Banker's Stamp and Full Address.

Dated this day of , 20


1. Signature 2. .. Signature
Name and Address Name and Address


For purchase of land, which is an Inam land, occupancy certificate/Form-B patta from competent authority shall be obtained.
Assigned lands should not be purchased without prior written permission of RDO.
For purchase of joint family property, the borrower should ensure that all the co-parceners of the vendor family join in the
execution of the sale deed.
For purchase of lands covered under Master Plan of the respective Urban Development Authority, the borrower shall ensure
that the proposed land is falling within the Industrial Zone.
If the borrowers are seeking loans on land & buildings, the borrower shall purchase the lands in the name of
proprietor/firm/company/ society as the case may be.
Generally, the Corporation will not accept third party collateral security.

The following are the loan security documents to be executed by the borrowers in favour of the Bank and the required documents for a
particular loan are to be taken from amongst the documents mentioned below:

1. Deed of Hypothecation
2. Memorandum of Deposit of Title Deeds
3. Guarantee Agreement
4. Loan Agreement
5. Promissory Note
6. Assignment of Development Rights

The applicable documents from out of the above shall be executed by the borrowers in favour of the Bank.

The solar power developer, in this case the borrower shall pay the necessary stamp duty that is to be payable and applicable in the State
of Andhra Pradesh on the security documents.

The above list is not exhaustive and after scrutiny of the documents that are submitted, if some more documents are required for
establishing a valid marketable title for the properties being offered as security for the loan sanctioned by the Bank, the entrepreneurs
have to submit the same. For any clarifications, you may contact the Legal Officer in the Branch or Legal Department in the Head Office.


Brief project report
Copy of company registration certificate
Bio-data of proprietor / partners / directors with 2 pasport size colour photographs as per preform along with copies of certificates
regarding academic qualifications, experience etc.
Solvency declaration of proprietor / partners / directors as per proforma (on rs.20 non-judicial stamp paper)
Copy of partnership deed & firm registration in respect of firms/memorandum and articles of association & certificate of incorporation in
respect of companies.
Copy of land sale deed/ sale agreement / allotment letter of apiic ltd.
Building plans (approved plans in respect of hotels/nursing homes/commercial & residential complexes proposals)
Civil estimates
Letter from the lessor expressing willingness to let out the building and execution of regd. Lease agreement for 25 years in the unit is
proposed in leasehold lands with rough plan.
Quotations for machinery and equipment from standard suppliers alongwith comparartive quotations.

Copy of panchayat / municipal approval.
Copy of power feasibility letter from A.P.TRANSCO.
Copies of collateral security property documents.
Working results (audited balance sheets and profit & loss accounts) for the last 3 years in respect of existing units and the provisional for
the current year with all schedules.
Working results (audited balance sheets and profit & loss accounts) for the last 3 years of associated concerns of promoters, in the case
of existing cos.
Particulars of available assets (land, buildings, machinery) in respect of existing unit.
Other details such as raw material & market tie-ups, technology tie-up with background of technical consultant etc.
.Copy of PPA
Credentials of the party providing PPA
URL of the party providing PPA
Service charge @ 0.5% of loan applied 12.36% service tax on the service charges at the time of filing the application.
Upfront fee @ 0.5% of the loan sanctioned 12.36% service tax on upfront fee at the time of first disbursement.

Steps involved

Register a company (Proprietorship or Partnership or Pvt Ltd or Public Limited) for setting up Solar power Project. Get accredition. Get
registered with mnre. Preferred for REC projects.

Open a bank account in the new company name if you are an individual . Old name will do if you intend running the solar power
generation in the old companys name.

Acquire adequate land on your company name for setting up Solar Power Project. Create provision for evacuation or atleast get flow
study done.

Deposit 10% of the project cost in the bank account on company name and take proof of funds from the bank.
GET Accredition from local NLDC. GET flow study approval from Transco. Prepare DPR

PPA copy to be there in the DPR or bank loan application. Get permission to feed power to the T&D network

Bank loan application to have

1) Proof of Land Ownership , patta, unencumberance certificate
2) DPR,
3) PPA /
4) Company incorporation certificate by an auditor
5) Bank Balance in the new bank account.

Equity funding: This is probably the best way to fund and manage a solar power project. Not many developers will have their own funds.
Pre financing by EPC companies: This can be done by EPCs.But mostly most EPCs operate on tight budgets. The profits in EPC
business is not much and hence to expect funding from them is not right.

Suppliers credit: Normally given by module manufacturers from usa and china to large customers, it is not equity funding, but it helps a
lot. It is also possible to get such credits from Inverter makers and Tracking systems makers. That is in case you are going for a tracking
system. Especially those tracking systems that claim over 25 % increase in efficiency can afford to give some credit as they can recover
their money from the increased power generated. Many of these companies are funded by VCs and may have provision to give suppliers

Non-recourse project financing

This is the preferred financing structure, wherein the lending institutions would provide debt to a special purpose vehicle set-up for the
project and would have a lien on the projects cash-flows. However as this structure does not provide recourse to the developers
balance sheet, lending institutions require rock-solid agreements for revenues from the projects.

The above structure gives an option for obtaining non-recourse Project Financing. However the developer needs to ensure that the
following are in place to make the lending institutions comfortable Performance Contractual guarantees from technology providers for
the long-term performance of the plant revenues Long-term power purchase agreements with credible consumers, i.e. direct
power sale to the consumer. As discussed above, the current structure of the JNNSM PPA may not be bankable due to the credibility of
many states.

The government has been contemplating a tri-partite agreement between the developer, state discom and the Reserve Bank of India
to ensure the PPAs bankability, however this is not confirmed yet.

Renewable Energy Certificate developers can forego the preferential tariff and trade the RECs on the energy exchange. However the
market is in its nascent stage and depends on the states renewable purchase obligations.

Project viability In addition to the above, developers must convince lenders that projects are viable and have the capability of
repaying debt without outside assistance. This could mean that the project has to fund a Debt-Service-Reserve-Account in addition to
having healthy

Debt-Service Coverage-Ratios, Other options for financing

Other non-conventional options for financing include:

Foreign funding Large project developers can tap international banks to get lower rates of finance. However, hedging can put a
substantial dent in the rate differential and only someone ready to take the currency risk should resort to this option.

The idea of collecting large number of small projects and approaching exim bank, it can probably operate as suppliers credit at best.

SBICAPS SBI Capital Markets (SBICAPS) finances solar projects. Foreign banks in general are open to lending to Indian investment
banks for a portfolio of similar projects. This debt is then passed on to the developers with a margin and a hedging charge. The actual
lending to the developer takes place based on RBI guidelines.

SBICAPS has been involved with the financing of projects developed by Tata Power Co., Kiran Energy, Sunborne, Alex Astral and Acme
Tele Power.

There are other investment banks operating in India include the Bank of America, Barclays Capital, BNP Paribas, Lazard, Credit Suisse,

IREDA: The Indian Renewable Energy Development Agency (IREDA) is a development funding institution but operates as a NBFC
under the administrative control of MNRE for providing term loans for renewable energy and energy efficiency projects.

IREDA has a Rs 13 billion of credit from KFW for a broad mandate of promoting renewable power in India but has not been particularly
active in financing utility scale solar projects till date. IREDA also provides loans to other banks at interest rates as low as 2-5% so as to
incentivize them to finance renewable projects. Your bank manager can work with IREDA to get low cost funding. It is a less known and
less used route.

ADB: ADB provides financing support under the India Solar Generation Guarantee Facility (ISGGF), under its Asia Solar Energy
Initiative (ASEI) . Apart from providing debt as per ADBs LIBOR-based lending facility towards solar transmission infrastructure in
Gujarat, ADB also considers direct financing and/or guarantees for projects greater than 25 MW. Reliance Powers 100 MW CSP plant
has been partially financed with both debt and equity participation by ADB. Under ISGGF, ADB provides partial credit guarantees
(PCGs) available to local and foreign commercial banks that finance private sector solar power plants in the country. This guarantee
covers up to 50% of the payment default risk on bank loans made to project developers. Currently, two commercial banks have been
approved by ADB as eligible partner banks: L&T Infrastructure Finance Company Limited (India) and the Norddeutsche Landes bank
(abbreviated Nord/LB, Germany). ADB aims to support 3 GW of solar power capacity in developing member countries by May 2013.


About the scheme :This is a scheme of The Ministry of New and Renewable Energy (MNRE) Government of India, New Delhi for
promoting commercial marketing of solar energy systems and devices in the country. This scheme is being implemented as soft l oan
scheme for off grid applications of solar energy (Both Photovoltaic & Thermal) under capital subsidy.

Models eligible for Loaning: MNRE finalized 11 model projects in consultation with IREDA and NABARD. Projects that are not specified
by the MNRE, to be eligible for funding need prior approval from the PAC of MNRE.
Applicable to Flat plate and evacuated Tube collector based solar water heating systems manufactured/installed by the BIS approved
manufacturers subjected to fulfillment of terms and conditions.

Implementation period: The scheme will be in operation up to 31.03.2013 and continuation of scheme shall be informed from time to
time. Loan Amount: Bank loan is 50%, subsidy 30%,and margin 20%.

Eligibility: Employees of Central /state Government, public sector undertakings.
Salaried employees with confirmed service of 5 years and take home monthly salary of not less than Rs. 2000/- after meeting the
proposed loan installment.
Professional and self employed persons with Annual net income of Rs. 60000/- as evidenced by Income tax return or chartered
Accountants certificate and supported by satisfactory P&C from their Bankers.
In addition to the above, any individual, Institution, non commercial organization or commercial organizations including Hostels, company
Townships, Hostels and colleges etc. are also eligible for finance

Note: End users (other then individuals) have to give an undertaking that no depreciation allowance will be claimed under Income Tax

Rate of Interest and Lock in period of Bank loan

1. Rate of interest is @ 5% p.a. on residual project cost.(project cost minus capital subsidy and borrowers margin)
2. The loan repayment period would have minimum lock in period of 3 years from the date of disbursement of the first installment of the

Release of Capital Subsidy:

The capital subsidy component would be released to the suppliers on behalf of the borrower by the financing bank only after satisfactory
installation and commissioning of the system.

Repayment: Maximum period of 5 years
Processing and other service charges: To be levied as applicable to consumer durable Loans.
Penal rate of interest: @ 2% over and above the stipulated interest rate for defaulted loans for the defaulted installments /amount

Security norms:

1. Hypothecation of assets created out of bank finance.
2. Suitable guarantor/ co obligation good for the loan amount.
3. No collateral security up to the credit limits of Rs. 50,000/-
4. If the credit limits exceeding Rs.50, 000/- adequate approved securities as collateral are to be obtained.


The unit should be insured for full value and for all possible risks.

6. REC

State RPO Target for 2011-12 RPO Target For 2012-13 RPO Target For 2013-14
Andhra Pradesh 0.00% 0.25% 0.25%


Procedure to be followed by RE generators while applying for Accreditation from APSLDC:

Log on to and enter the details of RE generator including the land registration / lease details, etc as per
the CERC guidelines dated 09-11- 2010.
Take print out of Acknowledgement; sign on each paper and submit along with application.
Sign the declaration form & strike-off the non-applicable paragraphs for claiming eligibility and also fill the details of possession
of land.
Submit the Application (hard copy) along with following documents to the Chief Engineer, APSLDC, Vidyutsoudha, Hyderabad.

1. Undertaking of availability of land in possession for setting up generating station or Certified copy of the Registered lease/Sale
2. Power Evacuation Arrangement permission letter from the host state Transmission utility or the concerned Distribution
3. Confirmation of Metering Arrangement and Metering location with single line diagram.
4. Enclose ABT Meter Type, Manufacturer, Model, Serial Number, class and Accuracy etc. for Gross Energy Consumption,
Auxiliary consumption and self- consumption (for CPPs).
5. Documentary evidence for Date of Commissioning of RE project for existing eligible RE project or proposed date of
Commissioning for new RE project for accreditation.
6. Undertaking regarding Off-take/Power Purchase Agreement. Documentary evidence in case the generator is a Captive Power
7. Proposed Model and Make for critical equipment (say WTG, STG, PVModule) for the RE project. Confirmation of compliance
of critical equipment with relevant applicable IEC or CEA standards.
8. Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE.
9. Demand Draft towards application processing fees.
10. Demonstrate Compliance with the Eligibility conditions as prescribed by MNRE/Competent Authority.
11. Enclose connectivity Diagram/Single Line Diagram of the station clearly identifying the units to be considered for Accreditation
and showing the Metering Arrangement.
12. Attach the copy of clearances/Approvals.

A. MoU between the company & NED cap.
B. Environment Clearance Certificate from AP pollution control board, Hyderabad(if applicable).
C. Boiler Certificate from AP boiler inspection department, Hyderabad (if applicable).
D. Contract labour license from AP labour department.
E. Fire safety certificate from AP fire department(if applicable).
F. Latest tax receipt from the Municipal/Gram panchayat for the factory land(if applicable).
G. Auditor compliance certificate regarding fossil fuel utilization.
H. Approval from Chief Electrical Inspector.

I. Clearance from forest department (if applicable).

13. Enclose Memorandum of Association & Articles of Association of a company and Certificate of Incorporation, in case of Pvt Ltd
company/ Certificate of incorporation & certificate of Business commencement, in case of public Ltd company.
14. Appointment of Statutory Auditor.
15. Details of pending court cases, if any, with Honble APERC, Honble Supreme Court of India, Honble High Court of A.P. or any
other Court.
16. Any other related documents as requested by APSLDC.

E) Fee particulars for processing of Accreditation:

The application for accreditation of RE Generation Projects shall be accompanied by a non-refundable one-time Accreditation
Processing Fees at the rate of Rs.5618 /- per application (including service tax at 12.36 %).

Checklist to be submitted by State Agency to Central Agency:

To be submitted on letter head of concerned State Agency

Checklist to be submitted by State Agency to Central Agency while recommending project for Registration under REC

Name of RE Generator:
Accreditation Number:

Total Capacity of Project
(MW) Accredited Capacity (MW)
Accredited Capacity under third
party/ APPC sale (MW),
if applicable
Accredited Capacity utilized
for self consumption (MW),
if applicable

S.N. Checklist
(Please tick, if
applicable )
(Please tick, if
Remark / Any other
1. Is RE Generator opting for third party sale
Is RE Generator selling power to discom at APPC
Is RE Generator a CPP opting for self
Is RE Generator a CGP opting for for self
Whether all procedures for accreditation
according to CERC REC Regulations and
approved REC Procedures have been followed

In case RE Generator is CPP/ CGP/ RE Generator opting for REC Scheme for self consumption then please provide following
Whether electricity duty is leviable and being paid.
If not, then reasons along with documentary
support be furnished by the said CPP/CGP/RE
Whether benefits of concessional/promotional
transmission or wheeling charges are availed
c. Whether banking facility benefit is availed

It is also certified that all procedures for accreditation according to CERC REC Regulations, approved REC Procedures have
been followed at our end.

Place: Name of Authorised Signatory
Date: Name of State Agency


All communication regarding REC Mechanism is to be addressed as follows: "The Nodal officer, REC Mechanism,1st Floor National
Load Despatch Centre (NLDC) office,Power system Operation Corporation Limited (POSOCO),B-9, Qutab Institutional Area,
KatwariaSarai, New Delhi-110016".
All dak regarding REC Mechanism shall be accepted only through services of India Post and no dakshall be accepted by hand or
through courier services.
The Application(s) for issuance of RECs/Registration of Project or other issues should be sent by the RE generator(s) on individual
project basis and the name of the RE Generator and 'Accreditation number' / 'Registration number', as applicable has to be clearly stated
on the envelope.

SOLAR REC AT Rs4/- AND Rs 6.50 /- ?! ?! MNRE ?!

Floor Price: Solar PV
The Commission determined Solar PV tariff for FY 2013-14 at Rs. 8.75 per kWh. (Without Accelerated depreciation benefit) As per the
proposed REC Regulations, the floor price is the maximum difference between the Minimum viability for that technology and the APPC
cost for states for that year. The minimum viability is the tariff comes out to be Rs. 6.17 per KWh. Maximum difference between minimum
viability and APPC of various States, comes out to be (6.17-2.26) 3.91 Rs./KWh. Rounding off to the nearest hundreds place, the floor
price for the year 2013-14 comes out to be Rs. 4000 per kWh.

Forbearance Price: Solar PV
The forbearance Price as per the CERC REC Regulations is the maximum difference between the tariff determined by the Commissi on
and the States APPC. For the year 2013-14, the Forbearance price comes out to be 6.49 Rs./KWh (8.75-2.26). Rounding off to the next
hundreds place, that Forbearance price comes out to be Rs. 6500 per MWh.

Vintage based Multiplier for Solar PV Projects registered so far
Floor price proposed for the Solar PV projects commissioned now onwards in FY2013-14 to Rs. 4000/REC in FY 2013-14. It is proposed
that the Solar PV projects registered so far considering the Floor price of Rs. 9300 per MWh would be issued higher number of Solar
RECs 31.03.2017, for 1 MWH of generation. The factor will be called VBM and this will be calculated as (Floor price during FY12 divided
by the floor price of FY13). Therefore 2.32 (9300/4000 =2.32) RECs will be issued for each MWh of generation and the plant
commissioned already registered so far be issued 2.32 REC for each MWh of generation.

It is also proposed that in future 1.04 2017 if Floor price fixed below the proposed Floor price of 2013-14, for the projects
registered so far denomination of RECs will be adjusted accordingly.

Beyond 1.04 2017, it is proposed that the projects already registered will issued one Solar PV RECs for generation and
injection of one MWh and will be traded between the Floor and forbearance price determined for the projects commissioned
beyond 1.04 2017.

Vintage based Multiplier for Solar PV Projects
It is proposed that, in case of future reduction in Floor price, Solar PV projects commissioned after the date of this Order, in a particular
year will be issued RECs considering their vintages for next 10 years. The Commission will determine suitable VBM for such projects
and protect the interest of such projects.


State Current purchase price by state discoms/ ebs
Rs per unit
Andhra Pradesh 2.50
Gujarat 2.98
Haryana 2.77
Himachal Pradesh 2.23
Karnataka 2.66
Kerala 1.99
Madhya Pradesh 2.09
Maharashtra 2.62
Punjab 2.71
Rajasthan 2.60
Tamil Nadu 3.38
Uttarakhand 2.34
Uttar Pradesh 2.62
West Bengal 2.43

* Please visit the respective state websites for the current prices, they may be marginally more by10 to 20 paise.
* In a bid to relieve the state of power crisis, the AP Gov announced its Solar Energy Policy-2012 and invited developers to invest in
solar power plants while announcing several incentives for them.

The sops will be extended to solar power developers who commission their plants by June 2014 and the incentives will be in force for a
period of seven years from the date of implementation of their projects. There will be no wheeling and transmission charges from the
projects to the desired locations for captive use or sale to a third party within the state through a 33 KV system subject to industries
keeping within its contracted demand. However, wheeling and transmission charges for wheeling of power for sale outside the state will
be as per APERC regulations.
Cross-subsidy surcharge shall not be applicable for Open Access obtained for third party sale within the state subject to the industries
maintaining their demand within its contracted demand with the Discoms. It is not applicable for captive use. All solar projects will be
exempted from electricity duty for captive consumption and third-party sale within the state.

VAT for inputs required for the projects will be refunded by commercial taxes department. The industries department will provide
incentive in terms of refund of stamp duty and registration charges for land purchased for setting up of the projects. All projects
developed with the above incentives will also be eligible for REC benefits. Power generated from a project shall be injected at an
appropriate voltage to the nearest sub-station of the AP Transco.

Land acquisition: The state government made it clear that no fossil fuel like coal, gas, lignite, naphtha and wood shall be allowed to be
used in a solar power plant.

The New and Renewable Energy Development Corporation of AP Ltd (NEDCAP) will act as a nodal agency and implement the policy. A
high-level committee headed by the principal secretary (energy) will monitor the progress of executon of solar power projects under the
new policy.

AP's advantage: Andhra Pradesh is one of the most suitable locations in the country for installing solar power projects as, on an average,
it gets about 300 sunny days in a year with solar insolation of 5.5 to 6 KWh/m. Also, well-networked power grid will facilitate projects
with easy connectivity.


What is Accelerated Depreciation in solar power generation and how can I benefit from it?

There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.
At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.

Depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market,
the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
Example: Let us assume that the total project cost is Rs7crores.

If a solar power generation plant costs Rs7crores, the company setting up that plant can claim 80 % depreciation in the first year itself.
Depreciation of 80 % is allowed on plant and machinery of the solar power plant.

Deducting Rs20 lakhs (approximately) from the project cost for land costs, which are eligible for only 10 % depreciation, we get

80 % of this is Rs5.44crores. This can be depreciated in a new solar power generating plant in year one itself. This is why they call it
Accelerated Depreciation (depreciating 80% in one year instead of 20%).

33.99% of Rs5.44cr is about Rs1.85 cr. So, in a solar power generation plant of Rs7crores, Rs1.85cr is the tax saving that the company
gets using Accelerated Depreciation.

AD benefit in year one is Rs1.85 cr. So, the actual project cost of solar power plant for an AD client is Rs5.15cr
In fact the Accelerated Depreciation or AD client will be able to depreciate 80% of the written down value of the project, next year. Thus
the saving in taxes will be nearly Rs2.1crores.

Calculation of AD (as done by First Green Consulting): (Table Source)

Let us try to understand how AD works in a 1MW solar power generation:
Project cost (capital cost) to be Rs800 Lakhs (Rs8 Cr)
The depreciation amount to be 90% (assuming 10 % scrap value)
Book depreciation (on fixed assets) to be 5.28 % (Dep. As per companies act)
Tax depreciation rate to be 80% (under AD benefit)
Effective tax rate (as per government) to be 33.99%

*Can a group company of a tax paying company set up a solar plant and claim depreciation?

It is a case of set off of laws under the same head of income (section 70) of the income tax act. There are 6 heads of income under the
income tax act.

(Section 1961)

There are 5 heads of income under which income of assesse is being assessed under the income tax:

1. Income from salaries
2. Income from house properties
3. Profit and gains of business and profession
4. Income from capital gains
5. Income from other sources

It is a case of income under Profits and gains of business and profession.
And as per section 70 of income tax act, set off of laws under the same head of income can be done.

Years Unit 1 2 3 4 5
Book Depreciation 2.64% 5.28% 5.28% 5.28% 5.28%
Book Depreciation (Capital cost*Book depreciation) Rs Lakh 21.12 42.24 42.24 42.24 42.24
Opening % 100% 60% 12% 2%
Allowed during the year % 40% 48.00% 9.60% 1.92%
Closing % 60% 12% 2.40% 0.48%
Accelerated Depreciation Rs Lakh 320.00 384.00 76.80 15.36

Net Depreciation Benefit Rs Lakh 298.88 341.76 34.56 -26.88
Tax Benefit Rs Lakh 101.59 116.16 11.75 -9.14

It means a group company which is taxpaying on account of business or profession can set off its loss under the head business or
profession arising from solar activities can be set off.

*How do we claim the AD for a solar power generation plant? By regular tax returns or is there any special form for claiming
the Accelerated Depreciation for a solar power generation plant?

The rate of depreciation allowed under the income tax for solar power generation units is 80 % and it is an accelerated rate of
depreciation. So we have to file the regular tax returns only. There is no special form prescribed for claiming the depreciation benefit.

What solar energy devices, equipment and processes those are eligible for 80 % accelerated depreciation?

1. Flat plate collectors
2. Concentrating and pipe type solar collectors
3. Solar cookers
4. Solar water heaters and systems
5. Solar crop driers and systems
6. Solar refrigeration
7. Solar cold storages
8. Solar air-conditioning systems
9. Solar desalination systems and solar steels
10. Solar power generating systems
11. Solar pumps based on solar thermal
12. Solar pumps based on solar PV
13. Solar PV modules and panels for water pumping

*What is this stipulation of 31
March and 1
Sep in the claiming of Accelerated Depreciation benefit for a solar power
generation plant?

As per income tax provision, if an asset is put to use for less than 6 months, only the 50 % of the prescribed rate of depreciation is
allowed to be deducted from the profits of business in that year. It means if the asset is put to use for more than 6 months, even for a
single day more than 6 months, then 100 % of the prescribed rate of depreciation will be allowed to be deducted from the profits of the

*Many times a group of companies come together to bid for solar power generation projects of state governments or for
JNNSM. How will a consortium plan the depreciation? Is it enough if one of the companies has tax liability? What happens if a
foreign company has tax liability in its country? Or will only the Indian tax liabilities be taken into account?

In case of consortium agreements, the consortium is normally formed for the purpose of capital infusion, or if there is any statutory
requirement as in the case of foreign cos.

Normally after a successful bid, the consortium is asked to form a new company or special purpose vehicle (SPV) to take up the project.
In that case all the assets are purchased by the new company the benefit of depreciation will go to the new company.

*Can individuals set off depreciation benefit in a partnership firm?

No. Any individual having any profit or loss cannot be assessed in the hands of a partnership firm in which he or she is the partner. So
the benefit of depreciation in the case of an individual cannot be passed to the partnership firm.

But as per section 70 of income tax act a loss because of business or depreciation can be set off under the same head of income. It
means if an individual is having income under the head business or profession he/she can set off her business loss arising out of solar

In other words an individual having huge business profits can enter into the business of solar power generation for the benefit of claiming
accelerated depreciation so that his or her tax liability can be minimized.

*Is there a standard price for depreciation?

Cost of the plant and machinery will be the basis of calculating depreciation. Even the PPA will play an important role.

*In how many years does a small solar company stand a chance to get bought?

Only infrastructure companies can buy to avail the section 80(I) A. Even after absorption of full depreciation, the small company can
make for an attractive proposition to be purchased because it is tax free income source up to 15th year from the commencement of

Assume an income of Rs1.5cr per annum and the total project cost of plant was Rs7cr. So, the selling price of solar power generation
plant will be based on tax free income i.e. Rs1.5cr as against the cost of plant Rs7cr, so that deal can be concluded on the basis of IRR.

*For its depreciation potential besides its normal business returns??
*A partnership solar company, can it sell a part and let the buyer benefit from sellers share of depreciation?

*Is there any lock in period for solar companies before they can sell?

*What are the buildings in a solar plant?

The office space is the building, the rooms for inverter, etc. are not considered as building.

*Can the Government change the depreciation policy with relevance to solar power generation, without any prior intimation??

Government can change the rate of depreciation ANYTIME. Rate of depreciation is announced one year in advance by the income tax

*Wouldnt that be a risky proposition to small firms which havent claimed their depreciation?

Government can change the rate of depreciation ANYTIME. Rate of depreciation is announced one year in advance by the income tax
dept. The plant established in a particular year cannot be denied the rate of depreciation as per the existing rate of depreciation.As the
loss gets carried forward, the small firms nor the big companies stand to lose.

*What all constitute plant and machinery in a solar plant?
*Isnt everything other than land is depreciated?

*When are the profits from a solar plant taxable?
After 15 years

*Doesnt it make sense to hike the project cost for a solar plant so as to avail the extra benefit from accelerated depreciation?

Yes. But the banks are clever to find out. Setting up such a solar power generation plant with an eye on gaining extra from Accelerated
Depreciation, will result in the Bankers viewing the project with a suspicious eye. Because there are many solar projects that are coming
up, the bankers will have an idea already as to which projects are genuine and which wont be pursued seriously after claiming
accelerated depreciation benefit.

*A solar company makes about Rs2crores in a year. By this depreciation rule it gains 33.99 % for an existing tax paying
company. Does it make sense to borrow money at 14% (for equity) to build a plant?
What are the opportunities for a small solar company with its depreciation?
After claiming 80 % depreciation, the plant fails? What happens?
The plant is commissioned, it produces power for a few days / months and after that it fails. Can depreciation be claimed? 80%

*For how long can depreciation benefits be carried forward?
Indefinite period.

*Company A sets up a solar plant for Rs8cr avails 80 % depreciation and sells it to B, say at Rs4 cr. , whereas its written down
value (WDV) is Rs1.6 Cr. How much depreciation can be claimed? At what rate?

*At what stage of commissioning can one claim depreciation?

* Indias Andhra Pradesh state introduced its first solar-energy policy, offering tax benefits to projects and exemptions from power-
transmission fees as the local government seeks investment to curb electricity shortages.

Plants built by June 2014 will be able to claim the incentives for seven years, according to an order issued yesterday by the state energy

If executed appropriately, this policy would enable Andhra Pradesh to get a huge influx of investment from solar developers, said Vishal
Pandya, director at REConnect Energy Solutions Pvt., which advises companies in the industry.

The southern state, which says it gets some of Indias highest sun irradiation, is promoting solar energy to boost generation capacity
after suffering a 17.3 percent power deficit in July. Its working with other states toward a national goal of becoming one of the worlds
fastest-growing solar markets, with a targeted 20,000 megawatts across India by 2022.

Andhra Pradesh didnt set a specific goal for solar installations or announce higher tariffs, unlike the central government and Gujarat and
Karnataka states, which have awarded above-market rates to developers for a limited amount of capacity.

To attract investment, Andhra Pradesh will waive transmission fees for using state-owned infrastructure. It also wont charge a so-called
cross-subsidy fee, which is levied to compensate state-owned distributors for losses they incur on supplying power below cost to
households and farmers.

Solar projects will get refunds on value-added tax paid for equipment and on land duty and registration charges for sites. In addition, the
state plans to speed up the approvals process, issuing permits to build grid connections within 21 days.


During the recent bids (APRIL 2013) the following substations got no bids , hence people having lands in and around these substations
have great chance to start up the project soon. They have to for PPA plus REC route and third party PPA plus REC route.


That means there is scope for capacity addition in these substations. MORE........................ There are another 40 substations which did
not get fully bid. That is Underbid.


As per Andhra Pradesh Solar Policy, 2012, vide G.O. Ms No: 39 Dt: 26.09.2012, Vide item(9), Grid Connectivity and Evacuation facility,
the power generated from a Solar Power Project shall be injected at an appropriate voltage to the nearest sub-station of the

The evacuation line from interconnection point to grid substation shall be laid by the APTRANSCO or DISCOM at the cost of the project
developer. However, if the project developer wishes to lay evacuation line by themselves, they can do so by paying the supervision
charges, Engineering charges and Service Tax etc., as communicated by APTRANSCO / DISCOM to the respective organisation.
The intending private developers shall submit the grid connectivity application in the prescribed format to APTRANSCO / DISCOMs
under copy to NREDCAP.

Description To whom application is to be filed
For Plant Capacity of 1MW to 10MW
at 33KV level and below to be connected to 33/11KV SS at
DISCOM Substations depending on existing power transformer
capacity OR
Dedicated 33KV feeder from 132K/33KV of STU Substations

Chief General Manager Commercial & IPC Respective DISCOMs
of AP

Above 10 MW at EHT level based on
Executive Director,
Planning, RAC & Reforms
Room No 149, A Block,
Vidyut Soudha, APTRANSCO,
capacity at 132KV/220KV/400KV Khairatabad, Hyderabad


The Application fee for Grid Connectivity is as follows

Sr. No Quantum Power to be injected into Intra State Transmission system Non-refundable Application Fees (Rs. Lakhs )
1 Up to 100 MW 2.00
2 More Than 100 MW and upto 500 MW 3.00
3 More Than 500 MW and upto 1000 MW 6.00
4 More than 1000 MW 9.00

The Application fee has to be paid by way of Demand Draft Drawn in favour of PAY OFFICER, APTRANSCO payable at Hyderabad to
process Application.




Status /Information
I. Company Details
Name of the Applicant
/Organisation & Address for Correspondence
2 State Whether the applicant

/organisation is a
a) Company Registered under Indian Companies act 1956.
b) Co-Operative Society.
c) Any other corporate entity.
d) R.O.C
a) Telephone No
b) Fax No:
c) email Address
ii) Authorised Person
Prime Contact Person
Designation Phone Number (Landline) Phone

Alternate Contact person
Phone Number (Landline) Phone Number(Mobile)
Fax: E-Mail
In case of any other Corporate
entity, give details of Partners/Directors/ Owners
5 Income Tax Permanent Account No:


Vidyut Soudha, Khairatabad, Hyderabad -500 082, Website:


1. Ready to move & start facility for any solar power developer with clear title land.

2. Proper North-South oriented plots to be allotted so as to reduce land wastage, which are ideal for solar plant designing

3. Reduction in time to both start and execute the project.

4. No ROW (right of way) issue will be there for laying of transmission line, which will be done only once and common to all.

5. Ease of work execution and management will be there.

6. Relief from local issues which again will result into time and money saving in project execution.

7. Evacuation from individual project will be done right from the individual plot to the discoms sub station at 132KV level.

8. Reduced transmission losses to the tune of 1/16th of the normal at 33KV.

9. Individual plant metering at pooling substation for ease of billing.

10. Security, preventive maintenance of approach roads & transmission line etc. will be done on periodic basis.

11. Grid down time is also minimum for 132 kV sub-station, which means higher revenue generation

12. Better financials than in your own lands.


1. Your project is not in your state, benefitting your people

2. Your project is not in your lands. Absence of Prestige value in the neighborhood.

3. You cant to do the maintenance of the solar power plant directly and daily in your village

* Dont have lands. See solar as a business opportunity. Go for Solar Park.

* Want to invest in and reap regular dividends with least hassles. Go for Solar park

* Interested in availing accelerated depreciation and making decent safe returns, invest in a solar park.


There are seven steps involved in designing a successful captive solar PV installation
Scoping of the project
Calculating the amount of solar energy available
Surveying the site
Calculating the amount of energy needed
Sizing the solar system
Component selection and costing
Detailed design


As with any project, you need to know what you want to achieve. This basically involves detailing what you want from the captive PV
installation, once installed. Do you want it to completely provide your day time electricity usage? Or do you want it to support a part of
your usage? To start with, the scope of the project can be simple and later as we progress we can flesh it out to suit the requirements.
Defining the scope is in fact the most important step because once the basic scope is wrong, we might not be able to get the system do,
what we exactly want it to do.


Solar insolation is the amount of electromagnetic energy (solar radiation) incident on the surface of the earth. Basically that means how
much sunlight is shining down on the area under consideration.

The values are generally expressed in kWh/m
/day. This is the amount of solar energy that strikes a square metre of the earth's surface
in a single day. Of course this value is averaged to account for differences in the days' length. There are several units that are used
throughout the world.

By knowing the insolation levels of a particular region one can determine the number of PV modules that are required. An area with poor
insolation levels will need a larger number of PV modules than an area with high insolation levels. Once the regions insolation level is
known, one can more accurately calculate collector size and energy output.

The typical thumbrule that is used for the amount of electricity that solar PV can produce is as follows: On average, 1 W of solar PV, at
current crystalline silicon panel efficiencies, can produce about 4 Wh of electricity per day. This is however only an average estimate and
based on the location, this could be a bit lower or higher than the average.


A site survey basically consists of a brief interview with the developer to get a feel for their electricity needs and a physical inspection of
the proposed array site to see if it is suitable for solar. When a qualified photovoltaic design professional visits a potential solar site, he or
she has many things to watch out for.

Primarily, they will be checking the roof's orientation (azimuth) and solar access. Orientation refers to the direction the roof faces -
directly south is ideal, with some leeway to the Southwest or Southeast.

Solar access quantifies the percentage of time when the proposed array location will be receiving the full unshaded power of the sun
during different days of the year. A shady roof might disqualify a site from receiving incentive money from the state, and is not a
responsible choice for solar anyway. There are ways to get around shade issues - either by looking at alternate sites, trimming or
removing trees, or by using micro-inverters in the system design rather than one large central inverter.


The next big task for any photovoltaic system designer is to determine the system load. This load estimate is one of the key factors in the
design and cost of the stand-alone PV system.

A simple way to determine the approximate ceiling for the solar PV system capacity for all electricity needs is as follows:

1. Find out your total monthly electricity consumption. Lets say it is 100000 kWh
2. Divide it by 30 to get an approximate daily consumption. In the example, it is about 3300 kWh.
3. Using the thumbrule that 1 W of solar PV can approximately produce 4 Wh of electricity per day, you can determine the
approximate maximum solar PV capacity you will require to power all your systems using solar PV. In this case, if the total
daily consumption of electricity is 3300 kWh, you will require a maximum of 3300/4 = 825 kW.
4. It is however very unlikely that you would require such a high capacity for solar PV as you will need solar PV primarily as a
backup power source, perhaps as a replacement for diesel based power generation.
5. Ceiling for the solar PV required for complete diesel replacement
6. In most cases, you will be using solar only as a backup power source to replace diesel based power production.
7. One simple way to determine the amount of solar PV for this purpose is to determine the total amount of electricity you
produce using diesel every month. In the example provided, out of the 100000 kWh of total electricity you consume every
month, lets say 10% or 10000 kWh is generated from diesel gensets. This provides you the ceiling for the solar PV system
capacity for complete diesel replacement. In this case, it is 82.5 kW.
8. As a thumb rule, one liter of diesel produces 4 kWh, so you can also compute the above with the data for the amount of diesel
used every month.
9. While estimating the load, the designer should consider energy conserving substitutes for items that are used often. Identifying
large and/or variable loads and determining if they can be eliminated or changed to operate from another power source will
save cost.

Step 5 SIZING THE system

From the results obtained in step 2 and step 4, we can determine the size of the solar system that will be needed to power the site. The
necessary systems involved in the setting up of captive power plants are:

1) Array(collection of solar PV modules)
2) Charge controllers
3) Batteries
4) Inverters
5) Mounting systems

Note: The exact procedure for sizing of a solar system has to begin with calculating the amphere hour (Ah) of each load under
consideration. Without knowing this it is impossible to size the PV system.

PV array sizing Array sizing is determined by taking into account the daily energy requirement (in Kilowatt hours) and average daily
peak sunshine hours in the design month.

No part of a PV array can be shaded. The shading of small portions of a PV module may greatly reduce output from the entire array. PV
modules connected in series must carry the same current. If some of the PV cells are shaded, they cannot produce current and will
become reverse biased. This means the shaded cells will dissipate power as heat, and over a period of time failure will occur.

However, since it is impossible to prevent occasional shading, the use of by pass diodes around series - connected modules is
recommended Hybrid Indicator

At this point, the basic PV system configuration and size have been determined. Before proceeding to specify components for the
system, a simple test is recommended to see if the application might be a candidate for a hybrid system.

Two main indicators work together to alert the designer to a possible hybrid application; the size of the load, and the seasonal insolation
variability at the site. The larger the load the more likely a hybrid PV-generator system will be a good economic choice. Likewise, in
cloudy climates you need a larger system to meet the load demand; thus having a higher array/load ratio. Plotting the load versus the
array/load ratio gives an indication of whether a hybrid system should be considered. There may be other reasons to consider a hybrid
system: for example, systems with high availability requirements or applications where the load energy is being provided by an existing
generator. A word of caution--the controls required for a hybrid system are more complex because the interaction between engine
generator, PV array, and battery must be regulated. Obtaining advice from an experienced designer is recommended if you decide to
install a hybrid system.

Controllers - Charge controllers are included in most photovoltaic systems to protect the batteries from overcharge or excessive
discharge. Overcharging can boil the electrolyte from the battery and cause failure. Allowing the battery to be discharged too much will
cause premature battery failure and possible damage to the load. The controller is a critical component in your PV system. Thousands of
rupees of damage may occur if it does not function properly. In addition, all controllers cause some losses (tare loss) in the system. One
minus these losses, expressed as a percentage, is the controller efficiency. The cost of the controller increases rapidly as the current
requirement increases. Controllers for 12-volt and 24-volt systems with currents up to 30 amperes are available at a reasonable cost.
Controllers with 30- 100 amperes are available but 2-5 times more expensive. Controllers that will switch currents over 100 amperes are
usually custom designed for the application. One way to work with currents over 100 amperes is to connect controllers in parallel. It is
often less expensive to use five 20- ampere rated controllers in parallel than one 100-ampere unit.

The controller must be installed in a weather resistant junction box and can be located with other components such as diodes, fuses, and
switches. Excessive heat will shorten controller lifetime so the junction box should be installed in a shaded area and venting provided if
possible. Controllers should not be mounted in the same enclosure with batteries. The batteries produce a corrosive environment that
may cause failure of electronic components.

Battery sizing - To determine the size of the battery storage required for a stand-alone PV system, it is required to make a number of
decisions. Before making these choices, one should study and understand battery parameters and the concept of system availability.
First, you must choose the amount of back-up energy you want to store for your application. This is usually expressed as a number of no
sun days, in other words, for how many cloudy days must your system operate using energy stored in batteries. There is no ri ght
answer to this question. It depends on the application, the type of battery, and the system availability desired.

Inverters - Power conditioning units, commonly called inverters, are necessary in any stand-alone PV system with ac loads. The choice
of inverter will be a key factor in setting the dc operating voltage of your system.
When specifying an inverter, it is necessary to consider requirements of both the dc input and the ac output. The choice of inverter will
affect the performance, reliability, and cost of your PV system. Usually, it is the third most expensive component after the array and

The selection of the inverter input voltage is an important decision because it often dictates the system dc voltage.
An inverter should be installed in a controlled environment because high temperatures and excessive dust will reduce lifetime and may
cause failure. The inverter should not be installed in the same enclosure with the batteries because the corrosive gassing of the batteries
can damage the electronics and the switching in the inverter might cause an explosion. However, the inverter should be installed near
the batteries to keep resistive losses in the wires to a minimum.

Mounting structures- Ground mounting of PV arrays is recommended for stand-alone systems. Regardless of whether you buy or build
the mounting structure make sure it is anchored and the modules are restrained. Many module manufacturers and distributors sell
mounting hardware specifically designed for their modules. This hardware is intended for multiple applications and different mounting

techniques and considerations like wind loading have been included in the design. Using this mounting hardware is the simplest and
often the most cost effective. Customized array mounting structures can be expensive.

Others- It is important to select wire, connectors, and protection components such as switches and fuses that will last for twenty years or
more. To obtain this long life, they must be sized correctly, rated for the application, and installed carefully. Connections are particularly
prone to failure unless they are made carefully and correctly.


Once the various components have been sized, the next important step is the selection and costing of the components.
There are many players in the market vying to establish their products. At this juncture, the system developer has to select components
by taking into account factors like technical specifications, reliability, and lifetime of the components in addition to the cost.

Investment for the solar modules is for a period of 25 years, so selecting a high efficient solar panel is of prime importance. The
manufactures of the batteries claim a lifetime of about 7 years, whereas inverters guarantee at most 2 years. As can be seen from these
numbers, selection becomes a crucial part of the captive solar PV installation.


Now that the major components have been sized and selected, it is time to consider how to interconnect everything as a working system.

The detailed design is the more actionable form of the captive solar PV installation. The system developer accumulates all the data
collected from the previous 6 steps and prepares a layout of the installation on paper. The developer removes obvious engineering
fallacies and prepares a corrected version of the layout on paper.

The confirmed design will have all the necessary data like the average consumption per day(kWh), the insolation levels at the area under
consideration(in hours) , the optimal plant size, the area required for the same, the number of panels required to be installed in that area,
the number of charge controllers, batteries, inverters required for the determined plant size, the cost of all the components and many
more intricate details like the viability of installing tracking systems etc.

Stand-alone PV systems will be reliable power producers for more than two decades if properly sized for the application, engineered
well, and installed carefully. PV arrays for stand-alone systems are installed in many unique and innovative ways. However, there are
common issues involved in any installation, whether the array is fixed or tracking, mounted at ground level, or on a pole or building.

Preventive Maintenance

The integral part of any completed installation is the periodic checks that are recommended for any stand-alone PV system so that little
problems can be found and corrected before they affect system operation. The system should be checked soon after installation when it
is presumably operating well.


The state government, which is now gradually shifting its focus on non-conventional energy sources to bridge the widening gap between
the demand and supply of power, has approved a plan mooted by The New and Renewable Energy Development Corporation of Andhra
Pradesh (NEDCAP) to generate 100 MW of solar power from Anantapur district.

Solar Government ORDER: GO 22

State Government has announced its policy for encouraging solar power production in the State vide G.O. 1st to 3rd read above.
Keeping in view the good potential for harnessing solar power, it is felt that net metering facility may be provided to the consumers to
generate solar power for self-consumption and feeding excess power into the grid when it is not being consumed by them.

APTRANSCO has already installed 100 kW solar plant at Vidyut Soudha, Hyderabad on a pilot basis and is following the net metering
facility. CMD, APTRANSCO has proposed that net metering facility can be implemented for the consumers who intend to encourage
solar green energy and set up solar PV plants at unutilized places on rooftops, waste lands, buildings of individual households,
industries, offices, institutions, residential complexes etc., considering that there exists subsidy from the Government of India through

NREDCAP up to 30% of the cost of the panel up to a capacity of 500 KW without battery support.

Government after careful examination permits implementation of Net Metering Facility for the consumers who intend to encourage the
solar green energy and set-up solar PV plants. Implementation of this facility will be as per the following guidelines:

Under this facility, consumer will generate solar power for self consumption and feed excess power into the grid.

Net metering is the concept which records net energy between export of generated energy and import of DISCOM energy for a billing
month. Alternatively, the meter, having the feature of recording both the import and export values, besides other parameters notified by
CEA metering regulations and APTRANSCO /DISCOM procedures in vogue, shall also be allowed for arriving net energy for the bil ling
period. PTO

The net metering facility shall be allowed only for 3 Phase service consumers. Single Phase consumers are not eligible for net
metering to avoid imbalance in the phases.

The SPV generator shall pay for the net energy in a billing month as per applicable retail supply tariff decided by regulatory commission
to the concerned DISCOM, if the supplied energy by the licensee is more than the injected energy by the solar PV sources of the
consumer(s). Any excess/ surplus energy injected in to the grid in a billing month will be treated as inadvertent and no payment
will be paid for such energy.

The SPV generator is required to provide an appropriate protection system on their incoming side/ consumer premises with the feature of
Islanding the SPV generator when grid fails.

The SPV generator shall bear the entire cost of metering arrangement provided including its accessories. The installation of
meters including CTs & PTs, wherever applicable, shall be carried out as per the departmental procedures in vogue with prior
permission of DISCOMs.

Such SPV generator will submit the required information in the prescribed format to the DISCOM & DISCOM will give acknowledgement
for the same for the net metering as per the applicable billing period.

The Solar PV panels proposed to be installed shall meet the requirements of Indian as well as IEC standards.

They can avail any prevalent Government of India in this regard. Subsidy offered by The Chairman & Managing Directors of all
DISCOMs & Vice Chairman & Managing Director, NREDCAP are requested to take necessary action accordingly.


Lack of Clarity in Policy issues and clearances regarding solar energy in AP

The Federation of Andhra Pradesh Chamber of Commerce and Industries today said about 750 MW of solar power projects are stranded
for want of clarity in policy issues and clearances in Andhra Pradesh.

While the AP Government announced its Solar Power Policy in September 2012 seeking to encourage solar power projects, those at
various stages of execution were impacted by a lack of clarity, it said.

Enthused by the States interest to tap solar power, developers who had initiated projects were still unable to complete them due to local
issues. Applications for about 750 MW were submitted and many more are in the pipeline awaiting clarity, Devendra Surana, President,
Fapcci, said.

The Andhra Pradesh solar policy announced a few days ago has generally been hailed as a very investor-friendly policy and one that
has the scope to make the State another Gujarat.

But nevertheless, some experts see red in the details.

Higher feed-in tariff

The policy does not provide a higher feed-in tariff, instead gives project developers a host of concessions, such as exemptions from
several charge and tax credits on inputs, and encourages them to avail themselves of the tradable renewable energy certificates.

The RECs can be traded in one of the two energy exchanges in India (IEX or PXIL) and the prescribed minimum price is Rs 9.3 a unit of

But now it is dawning on many that things may not be all that simple. The policy, which relies heavily on the REC mechanism to induce
developers to put up projects in the State, goes against the very principle of renewable energy certificates that the entity will get the
certificates only if it does not avail itself of other benefits.

The certificates are issued by the National Load Despatch Centre, a body of the Ministry of Power.
NLDC follows the guidelines of the Central Electricity Regulatory Commission (CERC).

CERC guidelines

The CERC guidelines clearly say that RECs will be available only to those developers who do not avail themselves of other concessions,
such as lesser or exempt wheeling and banking. NLDC is allowed to follow the guidelines of the respective State Electricity Regulatory
Commission, too. However, in the case of Andhra Pradesh, again the APERCs guidelines also say (in Clause 6 (c) that those who get
concessions are not eligible for RECs.

The big worry in the minds of investors is whether NLDC will refuse to issue RECs to the solar projects set up in Andhra Pradesh.

The State solar policy is expected to create a serious conflict with APERC as well as CERC regulation on REC. The State Nodal
Agency being appointed by APERC, would naturally follow the guidelines issued by the APERC. This means, solar project developers
participating into REC mechanism might not be able to claim all the benefits that are proposed under the State solar policy, says Vishal
Pandya, Director, REConnect, a consultancy that helps companies secure and trade in RECs.

Things to do to set up a MW scale solar power plant

Designing and Planning, Detailed Project Report, power evacuation planning, DPR preparation, Codes & Standards
interpretations, Regulatory approvals,
Power Purchase Agreement (PPA) facilitation , Technology Tie Ups, Banking documentation, Financial closure, Security cover
& major clause, Project Structuring & Designing, electrical works, Project Management , Project commissioning
1. What is the space / area / land required for the plant?
Generally, it is assumed at 3.5 to 4acres for crystalline silicon (c-Si) technology and 6 to 7 acres per MW for thin film solar (a-Si
or CdTe) technology. In reality, it depends on other parameters like cost of land, Ground Coverage Ratio (GCR)(to avoid inter
array shading, GCR can be 0.45 to 0.65 and generation will vary based on GCR) and choice of sun tracking with sun trackers
the land required will be about 6acres per MW for crystalline solar modules).
2. Which are the ideal states for setting up of solar power projects?
Hot destinations are Rajasthan, Gujarat and MH, MP, Andhra, Karnataka, Tamil Nadu as far as solar radiation is concerned.
Presently, only Andhra Pradesh Rajasthan, Tamilnadu and Gujarat have a clear policy and guidelines on the procedures for
setting up solar power projects. Other states may also initiate the policy and procedures soon now that Jawaharlal Nehru
National Solar Mission has been launched by Government of India.
3. Are Banks interested in financing solar power projects?
The Debt Service Coverage Ratio (DSCR) works out to an average of 1.49 which is considered quite acceptable to commercial
banks for sanction of loan. The maximum debt that is permitted as per CERC norms is 70% and most banks should be find this
acceptable based on the financial strength and net worth of the company / promoters. The present policy driven by the
National Solar Mission and PPA for 25 years with a central PSU like NTPC's subsidiary should provide adequate confidence to
Banker to finance solar power projects.


Apart from large scale capacity projects, it is proposed to encourage Rooftop and Small Solar Power plants also of capacity 100 KW to 2
MW, connected at distribution network at voltage levels below 33 KV. The Ministry of New and Renewable Energy (MNRE), has
proposed to launch these systems by extending Generation Based Incentive (GBI). The programme is called as "Rooftop PV and Small
Solar Generation Programmers (RPSSGP)."
Under Phase-I of JNNSM, it is envisaged to encourage Small Solar Power projects of capacity 100 kW to 2 MW, limiting the total
capacity to 100 MW for the entire country, with a ceiling of 20 MW capacity for each State.

Under the scheme, the Project Developer will be paid tariff as fixed by the A.P. Electricity Regulatory Commission (APERC) and a
Generation Based Incentive (GBI). The GBI shall be equal to the difference between the tariff determined by Central Electricity
Regulatory Commission (CERC) and the tariff decided by APERC. As per the proposed arrangement under the scheme, the GBI portion
will be reimbursed to the DISCOMs by Indian Renewable Energy Development Agency (IREDA). The tariff will be paid for a period of 25

The APERC has issued tariff orders for Rooftop and Small Solar Power Plants on 06.07.2010. The tariff applicable for SPV Power
Projects is Rs.17.91 ps. per Kwh and the tariff is applicable for a period of 25 years.

NEDCAP has issued notification calling Expression of Interest for selection of Project Proponents under Rooftop PV and Small Solar
Power Generation program and selected the Project Proponents by draw of lots after allowing firm allotment to Govt. Public
Undertakings and SPV manufacturers. 20 MW capacity projects were sanctioned to 22 Project Proponents. The selected Project
Proponents registered with India Renewable Energy Development agency (IREDA) on 15.07.2010. IREDA has finalised the list of Project
Proponents of total capacity 120 MW on 16.08.2010 based on first come first serve basis. Fourteen Project Proponents from A.P. State
are in the final list. These developers are asked to sign PPAs with DISCOMs and to register again with IREDA on 23.08.2010.
Accordingly, the Project Proponents have signed PPAs with DISCOMs and completed the web based registration process with IREDA.

* AP Solar Policy Amendment

Solar project developers will be eligible for renewable energy certificates subject to applicable CERC/APERC guidelines.
The developers may choose between availing themselves of eligible incentives under the AP solar policy or only the incentives
permissible under the CERC/APERC guidelines.

The amendment brought in effectively cautions solar power producers that they might get market tradable RECs only if the guidelines of
the Central Electricity Regulatory Commission and the Andhra Pradesh Electricity Regulatory Commission permit. By doing so, it
address a lacuna in the policy.

The AP policy essentially sought to encourage solar projects in the state by offering them exemptions from a number of charges such as
wheeling and banking, cross-subsidy and electricity duty. These exemptions of course applied only to power sold within the state.

AP to add 1,000 Mw solar energy under these guidelines, the officials will soon invite bids from private solar power

Clean and Green Energy Development of Solar Power in Andhra Pradesh Andhra Pradesh Solar Power Policy Order Issued.

G.O. Ms. No.39 Dt. 26-09-2012

In order to promote generation of power from Solar Power, the State Government hereby introduce the Andhra Pradesh Solar Policy
2012, as mentioned below :-


Solar power is one of the important renewable energy sources. GoI have recognized the importance of Solar Energy as one of the future
sources of energy and accordingly National Solar Mission was launched on 14.11.2009, under the brand name Solar India with an
objective to maximize generation of power from solar energy.

Andhra Pradesh is one of the suitable locations for installing Solar Power Projects due to the following favorable factors:

Availability of about 300 sunny days in a year with solar insolation of 5.5 to 6 KWh/m.
Availability of widespread electric grid network, which facilitate Projects with easy connectivity.
Growing energy demand in the State.

The present situation prevailing in the State with regard to substantial gap between the demand and supply position of power calls for
taking immediate measures to augment production of energy through non conventional sources on fast track. Keeping in view the
conducive environment present to encourage solar power and also the fact that the production of solar power is less time consuming, it
has been decided to formulate the following policy to encourage generation of solar power in the State.


Main objectives of the Solar power policy are:

1. To encourage, develop and promote solar power generation in the State with a view to meet the growing demand for power in
an environmentally and economically sustainable manner.
2. To attract investment in the state for the establishment of solar power plants.
3. To promote investments for setting up manufacturing facilities in the State, this can generate gainful local employment.
4. To promote the Off-Grid Solar applications to meet the power needs on Stand-alone basis.
5. To contribute to overall economic development, employment generation and improvement in public services by provision of
electrical energy for various needs.
6. To encourage Decentralised, Distribution Generation system in the State to reduce T&D losses.

The policy shall be known as the Andhra Pradesh Solar Power Policy 2012

Operative Period: The policy shall come into operation with effect from the date of issuance and shall remain applicable till 2017.

Eligible Developers: All registered companies, Central and State power generation/ distribution companies and public / private sector
solar power project developers will be eligible for setting up of Solar Power Projects, 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 desiring 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 to the Nodal Agency.

Installed capacity

Utility Grid Power Projects for Captive use /direct sale to 3rd Party/States other than A.P. State
The State will promote Solar Power Developers to set up Solar Power Plants for captive use or sale of power to 3
party/States other
than AndhraPradesh.

Utility Grid Power Projects for sale through RE (Solar) Certificate Mechanism
The State will promote Solar Power Developers to set up Solar Power Plants for sale through RE (Solar) Certificate mechanism. The
Solar Power Developers will be required to apply for accreditation to the State Accreditation Agency and thereafter to Central Agency for
registration and issuance of RE (Solar) certificate under REC mechanism as per order/regulations of appropriate Commission issued in
this regard. SLDC will give clearance for REC applications within 15 days from the date of application.

The Power generated from these power projects shall be purchased by AP DISCOMs at Pooled Cost of Power Purchase as determined
by A.P.E.R.C. from time to time. The Solar Power Developers will sell RE (Solar) Certificates as per the regulations/orders of A.P.E.R.C.

Open Access for Third Party Sale

If the Open Access is granted to any developer, they shall pay the applicable Open Access charges and losses as approved by APERC
from time to time for sale to third party outside the State.

Wheeling and Transmission Loss: Producer will bear the wheeling and transmission losses as per actual.


Banking of 100% of energy shall be permitted from January to December of that year. There will be no banking for energy produced
being consumed on the same day. However, banked units can not be consumed/redeemed between February to June and also during
peak hours i.e. 6.30 PM to 10.30 PM. Developer will be required to pay 2% of the banked energy towards banking charges. The energy
unutilized by December of that year gets lapsed.


In order to encourage the immediate production of Solar Power to reduce the present gap in demand and supply position of power and
provide industries with a possibility to utilise the power produced through solar power, following incentives will be extended to those solar
power Developers who commission their solar plant by June 2014. These incentives will be in force for a period of seven years from the
date of implementation.
a. Wheeling and Transmission Charges
There will be no wheeling and transmission charges for wheeling of power generated from the Solar Power Projects , to the desired
location/s for captive use/third party sale within the state through 33 KV system subject to industries maintaining their demand within its
contracted demand. However, wheeling and transmission charges for wheeling of power generated from the Solar Power Projects for
sale outside the state will be as per APERC regulations

b. Cross Subsidy charges
Cross subsidy surcharge shall not be applicable for Open Access obtained for third party sale within the state subject to the industries
maintaining their demand within its contracted demand with the DISCOMs. It is not applicable for captive use.

c. Electricity Duty exemption
All Solar Power projects will be exempted from paying Electricity Duty for captive consumption and third party sale within the state.

d. VAT refund
VAT for all the inputs required for solar power projects will be refunded by the Commercial Tax Department.

e. Refund of Stamp Duty and Registration charges
Industries Department will provide incentive in terms of refund of Stamp Duty and Registration charges for land purchased for setting up
solar power project.

f. REC
All projects developed with the above incentives will also be eligible for REC benefits. Deemed injection into the grid for in-house captive
solar generation plant (in the same premises) will be considered for issue of REC.

Grid Connectivity and Evacuation facility
The power generated from a Solar Power Project shall be injected at an appropriate voltage to the nearest sub-station of the AP Transco
/ Distribution Licensee.

The evacuation line from interconnection point to grid substation shall be laid by the APTRANSCO or DISCOM at the cost of the project
developer. However, if the project developer wishes to lay evacuation line by themselves, they can do so by paying the supervision
charges to APTRANSCO/DISCOM. APTRANSCO/DISCOMs will ensure the technical feasibility for evacuation is granted within 21 days
of applying.

Land: It is the responsibility of the Project Developer to acquire the land required for the project.

Restriction on use of Fossil Fuels: No fossil fuel viz., Coal, gas, lignite, naphtha, wood etc., shall be allowed to be used in a Solar
Power Plant.

Reactive Power Charges: The drawl of Reactive Power by the solar power plant shall be charged as decided by the APERC.

Nodal Agency: New and Renewable Energy Development Corporation of A.P. Ltd
(NREDCAP) shall be the State Govt. Nodal Agency for clearance, facilitation and implementation of the proposed Solar Power Policy.

Project Monitoring
A High Level Committee constituted with the following members will monitor the progress of implementation of the Solar Power projects
cleared under the proposed policy:

If any difficulty arises in giving effect to this policy, the High Level Committee is authorized to issue clarification as well as interpretation
to such provisions, as may appear to be necessary for removing the difficultly either on its own motion or after hearing those parties who
have represented.


State Govt. will undertake review of this policy after a period of two years.

The following incentives are the main attraction:

Banking: 100% banking is permitted from January to December of the year. However, banked units cannot be adjusted during February
to June and during evening peak hours 6.30 PM to 10.30 PM. The banked energy will attract banking charge of 2%.

Exemption of Wheeling and Transmission Charges: For all the intra-state open access transactions (through 33kV sys-tem), wheeling
and transmission charges are exempted.

Exemption of Cross Subsidy Surcharge (CSS): Consumers purchasing power from solar projects are exempted from CSS. This will be a
great relief for consumers as CSS remains the major cause of worry for consumers as well as develop-ers opting for third-party sale /
open access.

Exemption of Electricity Duty: E-Duty is also exempted for all the solar power projects opting for third party sale and/or captive usage.

Refund of VAT, Stamp Duty and Registration Charges: Solar developers will be able to get the refund of the said charges.
The above incentives are applicable only if the project is commissioned by June 2014. The incentives are extended for the period of 7

The major concern is for the CPPs in the state as they cannot claim RECs on availing the above benefits. It will raise confli ct regarding
the state and central regulation on REC mechanism.


The policy shall come into operation with effect from the date of issuance (26/9/2012) and shall remain applicable till 2017.

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 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

Projects claiming above benefits can claim REC benefits provided they are in line with the APERC/CERC regulations.

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

Land: It is the responsibility of the Project Developer to acquire the land required for the project.

Reactive Energy charges:

Reactive charges applicable to the project developer as per APERC regulation. Amendment to Andhra Pradesh Solar Policy


A stand-alone PV plant for AC and DC loads: The broad steps involved in designing a roof-top stand-alone solar PV plant are:

o Estimation of total loads and energy
o Selection of an inverter
o Sizing of battery bank
o Sizing of PV array
o Selection of other components
o Installation and commissioning
o Testing and evaluation

Estimation of total loads and energy:

Sum the total AC connected watts
Sum the total DC connected watts
Calculate the AC average daily energy requirement
Divide this by the inverter efficiency to obtain the DC energy required to the AC load
Calculate the total energy requirement due DC loads
Add the DC energies obtained by step 4 and step 5
This quantity is the total DC energy load on the battery bank

Selection of inverter:

The capacity of the inverter must be more than that of the total daily average AC loads, including their surge requirement
The nominal DC input voltage of the inverter will be the battery bank voltage and is decided by the design of the inverter
The output will be single phase or three phase , 230/440V & 50Hz, to be compatible to the AC loads requirement
The conversion efficiency at minimum load (10%) should be 80%
Total Harmonic Distortion (TDH) < 3%
The wave shape, crest factor, power factor etc, to be as per the load requirements

Battery bank sizing:

The total DC energy the nominal input voltage gives the daily Ampere Hour (AH) requirement from the battery bank
The daily AH hours X autonomy discharge limit provides the battery bank Ampere hour capacity
Battery bank AH capacity/Individual battery AH gives the number of batteries in parallel (generally it is 1)
AC system voltage the battery voltage gives number of batteries in series

PV array sizing:

Average daily AH requirement from the battery battery columbic efficiency gives the AH to be put in by the PV array in a day
AH required from PV array average peak sun hours in a day of the site gives Amperes required from PV array
Amperes from array peak panel (or module) peak ampere gives number of PV panel strings required in parallel
Nominal system DC voltage nominal operating module voltage gives the number of SPV modules in one series string
Number of modules in one series string X number of parallel strings gives the total number of SPV modules in the power plant
Number of PV modules X PV module wattage is the total PV array wattage

Other components:

Charge controller maximum current capacity should be one and half times that of total short circuit current of all parallel strings
The total open circuit voltage of all the modules in series should give the maximum voltage of the charge controller
The cables connecting the module to Junction boxes, to that of DC board and battery bank should be selected as per the
Cut-outs, fuses and other control components should be as per the National standard of Electrical current ratings

Easy Steps to Plan your solar roof top solution

Nirvanas Group (Solar Power Plant Basic Process Information)