Solar Power Plants FAQs

Solar Power industry in India is gaining more and more prominence with each
passing day. The domestic/off-grid industry is picking up speed too. Owing to the
queries we are receiving regarding the various issues pertaining to Solar Power
Plant setup, we thought it would be a great idea to put together a bunch of
questions and answer the same. We shall keeping adding to the list as we keep
receiving more queries. So, here are the most Frequently Asked Questions and
our answers for the same. Do let us know in case you would like us to answer any
more questions. Also, kindly point out any inaccuracies/mistakes that you may
find here so that we can correct the same for the benefit of everyone.

How much land is required to setup a 1 MW solar power generation Unit?

The land required for a 1 MW power plant setup is around 4.5-5 acres for
Crystalline technology and around 6.5-7.5 acres for Thin-Film technology. This is
only a rough benchmark and may vary based on technology and efficiency of
panels.

What is the life-time of a typical Solar Power plant?

The useful life of a typical Solar Power plant is considered to be 25 years. This is
the duration for which long-term PPAs are signed and financial models are built.
However, Solar Power plants can run beyond 25 years while producing a lower
output. Many Solar Panel manufacturers guarantee an output of 90% at the end
of 10 years and 80% at the end of 25 years.

What would be the total project cost excluding the cost of land?
Total project cost per MW would be in the range of Rs.6.5 Crores-Rs.8 Crores
depending on the kind of technology you are using, whether or not you are using

tracking systems, the kind of EPC Contractor you choose for power plant system
etc. CERC recently announced the benchmark tariff for setup of Solar PV and
Thermal Plants in India. Heres the link to the document containing more details:
http://www.cercind.gov.in/2013/orders/SO242.pdf
The table below indicates CERC determined benchmark cost for Financial Year
2013-14.

What would be the O & M cost?

Central Electricity Regulatory Commission (CERC) benchmark costs for O&M is
Rs.11.63 lakhs/year/MW for 2013-14 with a 5.72% increase every year. This varies
from project to project based on the number of people you employ for
maintenance, frequency of cleaning of panels, onsite-engineer availability etc..

What would be the per unit production cost?

Per unit production cost is dependent on how much cost you are setting up the
power plant for. Accordingly, the per unit sale cost can be set based on the
expected returns.

Is there any subsidy available for Solar Power plant setup?

Capital Subsidy of 30% is applicable only for captive power plants up to 100 KW.
This is expected to be increased to 500 KW for FY 2103-14 but an official
confirmation regarding the same is still awaited. Subsidy will not be applicable in
case of sale of power.

We would like to setup a Solar power plant in Andhra Pradesh but we have not
participated in AP solar bidding. What are the other options?
Since you have not participated in AP Solar Bidding, one other way would be the
REC route. You can sell the generated power to APTRANSCO or third party
consumer. Through this route, you sell power to APTRANSCO/third party and also
claim RECs for the same. This way, you will be able to get a base tariff (APPC) from
APTRANSCO and then additional revenue can be generated through sale of Solar
RECs. However, it is to be kept in mind that the following additional benefits may
be availed for a Solar PV Project commissioned before June 2014 subject to the
condition that REC benefits are not availed:

Exemption from Electricity Duty

Exemption of Wheeling Charges, Transmission Charges and Cross-subsidy
Charges
Refund of VAT
Refund of Stamp Duty and Registration Charges for purchase of

However, it has to be kept in mind that REC revenue is market driven and can
fluctuate as both demand and supply are pretty low on Solar front right now.

Kindly refer to our monthly newsletter REChronicles

(http://efficientcarbon.com/services/energy/renewable-energy-certificates) for
more and up-to-date information on the REC market.
Download documents relevant to Andhra Pradesh Solar Policy here:
http://nedcap.gov.in/PDFs/2012ENY_MS39.pdf
http://nedcap.gov.in/PDFs/Amendment_to_AP_Solar_power_policy.pdf

What would be the per unit expected sale price?

This depends on the mode of sale of power and the consumer of power. In the
case of sale of power to DISCOM, the prevailing Average Pooled Power Purchase
Cost (APPC) will be applicable. In the case of sale of power to 3rd Party consumer,
a mutually agreed price can be agreed upon and accordingly a PPA can be signed.
It is to be kept in mind that several additional charges such as Wheeling Charges,
Distribution Charges, Open-Access Charges, Cross-Subsidy Charges are applicable
in the case of sale of power to 3rd party. These charges vary from State-to-State
and DISCOM-to-DISCOM.

What permissions/clearances are required to setup a Solar PV Plant?

A certain set of permissions need to be obtained and documents need to be
submitted in order to setup a Solar PV plant. These may vary from state-to-state.
In order to get a Solar PV Project Accredited by AP State Load Dispatch Center (AP
SLDC) for REC mechanism, the following are the statutory clearances and
environmental clearances to be furnished:

Industrial Clearance
Land conversion (Agricultural to Non-Agricultural)
Environmental Clearance Certificate from APPCB, Hyderabad
Contract labour license from AP Labour Department
Fire Safety certificate from AP Fire Department
Latest tax receipt from the Municipal/Gram Panchayat for the factory land.

Auditor compliance certificate regarding fossil fuel utilization

Approval from Chief Electrical Inspector
Clearance from Forest department

Also, all necessary approvals/agreements before start of Solar PV project

construction are to be furnished as and when necessary. These include the
following:

Land purchase
Power Evacuation arrangement permission letter from DISCOM
Confirmation of Metering Arrangement and location
ABT meter type, Manufacture, Model, Serial No. details for Energy
Metering.
Copy of PPA (important as Preferential PPA projects are not eligible for REC
mechanism)
Proposed Model and make of plant equipment
Undertaking for compliance with the usage of fossil fuel criteria as specified
by MNRE
Details of Connectivity with DISCOM
Connectivity Diagram and Single Line Diagram of Plant
Details of pending court cases with APERC, Supreme Court of India, High
Court of A.P. or any other courts
Any other documents requested by AP SLDC

While these are the documents that AP SLDC requires for REC project
accreditation, these are typically the clearances/documents required in general
for a Solar PV project.