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MERC, Mumbai
Submitted By:
August 2013
COMPARITIVE STUDY OF SOLAR POLICIES
DECLARATION
I, Anish Kumar Deb, Roll no. 14 / Semester 3rd / Class of 2012-14 of the MBA (Power
Management) of the National Power Training Institute, Faridabad hereby declare that the
Countersigned
ACKNOWLEDGEMENT
Learning experience is like no other, but to learn one seeks a teacher, a guide,
and I found all of these in MR. Vijay L. Sonavane (MEMBER MERC) who were
my project guide during my stay at MAHARASHTRA ELECTRICITY REGULATORY
COMMISION.
I would also like to thank MR. Anant Sant (DY DIRECTOR, TECHNICAL, MERC)
for the valuable teachings, Sir the inputs given by you will always be with me.
I would like to thank MR. Amit Chilwe (REGULATORY OFFICER, MERC) who
helped me throughout my learning of each and every aspect. His guidance and
support made the learning easy and enjoyable.
I would like to each and every person in MERC who helped me and
contributed in my project.
It is a known fact that Sun is the ultimate source of energy and mankind has been
harnessing Suns energy ever since the dawn of civilization. In modern era electricity has
become fundamental need of every human-being and the demand of it is rising by the day.
The world has awakened towards the need of alternate sources of electricity; hence almost
all major countries are coming up with policies to attract investors and industrialists. A study
of federal policies, regulations and incentives given in countries namely GERMANY, ITALY,
CHINA, UNITED STATES, JAPAN, FRANCE, AUSTRALIA and UNITED KINGDOM was done
during the training period.
To unite the effort towards reducing environmental pollution, nations united and formed
Kyoto protocol in which inter-country methods were designed to fulfil the binding target
set.
This report contains the provisions and important statements in the Indian federal
legislative documents relating to solar/renewable energy.
Comparative study of rules, regulations, policies and tariff components related to solar
technologies has been done of the states of India namely GUJARAT, RAJASTHAN,
KARNATAKA, MADHYA PRADESH, ANDHRA PRADESH, TAMIL NADU and CHATTISGARH.
Pros and Cons of state policies and regulations are mentioned from a developers point of
view after comparing them on the basis of parameters namely eligible producer, land
allotment, operative period, sale of power and tariff, wheeling, banking of electricity,
power, evacuation & grid interfacing and incentives & general.
The project proceeds with MERC initiative to develop solar power in Maharashtra. A model
solar policy is been prepared during the training period which may be helpful to encourage
more and more solar power generators across the state of Maharashtra.
Last but not the least a financial modelling of a Solar PV plant has been prepared for a
capacity of 1MW to determine various financial indicators i.e. IRR, NPV, DSCR and various
other parameters has been taken in to account for the project viability of a Solar PV plant.
COMPARITIVE STUDY OF SOLAR POLICIES
Contents
1. GLOBAL SOLAR POWER SCENARIO ................................................................................................. 1
2. COUNTRY WISE SOLAR POWER INSTALLATIONS ACROSS THE WORLD .......................................... 1
3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER ..... 3
3.1 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE ........................................ 3
3.2 KYOTO PROTOCOL ........................................................................................................................ 3
4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP SOLAR POWER GENERATION.......... 4
4.1 GERMANY...................................................................................................................................... 4
4.2 ITALY.............................................................................................................................................. 5
4.3 CHINA ............................................................................................................................................ 6
4.4 UNITED STATES ............................................................................................................................. 7
4.5 JAPAN ............................................................................................................................................ 8
4.6 FRANCE.......................................................................................................................................... 9
4.7 AUSTRALIA .................................................................................................................................. 10
4.8 UNITED KINGDOM ...................................................................................................................... 11
5. INDIAS SOLAR POWER SCENARIO ................................................................................................ 12
6. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER ... 13
6.1 ELECTRICITY ACT 2003 ................................................................................................................ 13
6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP)................................................................................ 14
6.3 NATIONAL TARIFF POLICY 2006 (NTP) ........................................................................................ 14
6.4 NATIONAL ACTION PLAN ON CLIMATE CHANGE ........................................................................ 14
7. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION ....................................................................... 16
8. REC MECHANISM OVERVIEW:....................................................................................................... 20
9. OPERATIONAL FRAMEWORK OF REC MECHANISM ...................................................................... 21
10. STATE WISE RPO (SOLAR & NON SOLAR) .................................................................................. 22
11. STATEs SOLAR POLICIES ............................................................................................................ 24
11.1 GUJARAT SOLAR POLICY 2009................................................................................................... 24
11.2 RAJASTHAN SOLAR POLICY 2011 .............................................................................................. 26
11.3 KARNATAKA SOLAR POLICY....................................................................................................... 31
11.4 MADHYA PRADESH SOLAR POLICY 2012................................................................................... 33
11.5 ANDHRA PRADESH SOLAR POLICY 2012 & FIRST AMENDMENT .............................................. 37
COMPARITIVE STUDY OF SOLAR POLICIES
11.6 TAMIL NADU SOLAR POLICY 2012............................................................................................. 39
11.7 CHATTISGARH SOLAR POICY 2012-17 ....................................................................................... 42
12. CONCLUSION ............................................................................................................................. 44
13. MAHARASHTRA STATE SOLAR POWER SCENARIO.................................................................... 45
14. LEGAL EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER .......... 46
15. MERC INITIATIVE TO DEVELOP RENEWABLE ENERGY .............................................................. 46
15.1 Renewable Purchase Obligation ............................................................................................... 46
15.2 Renewable Tariff ....................................................................................................................... 47
16. MAHARASHTRA MODEL SOLAR POLICY .................................................................................... 48
17. FINANCIAL MODELLING (SOLAR PV PLANT) .............................................................................. 54
1. GLOBAL SOLAR POWER SCENARIO
Solar energy has experienced an impressive technological shift. While early solar
technologies consisted of small-scale photovoltaic (PV) cells, recent technologies are
represented by solar concentrated power (CSP) and also by large-scale (PV) systems that
feed into electricity grids. The costs of solar energy technologies have dropped substantially
over the last 30 years.
The rapid expansion of the solar energy market can be attributed to a number of supportive
policy instruments, the increased volatility of fossil fuel prices and the environmental
externalities of fossil fuels, particularly greenhouse gas (GHG) emissions.
Germany is the world's top photovoltaic (PV) installer, with a solar PV capacity as of
December 2012 of more than 32.5 gigawatts (GW).The German new solar PV installations
increased by about 7.6 GW in 2012, and solar PV provided 18 TWh (Trillion kilowatt-hours)
of electricity in 2011, about 3% of total electricity. Some market analysts expect this could
reach 25% by 2050.
The overall capacity installation across the world has increased from 39.78 GW in 2010 to
102.024 GW in 2012.
It is visible that though energy usage from renewables is increasing but still the majority of
energy is supplied by fossil fuels and there is a long time before world becomes
independent from fossil-fuel usage. There is a need of continuous improvement and
implementation of renewable technologies.
The 370 MW Ivanpah Solar Power Facility, located in California's Mojave Desert, is the
worlds largest solar thermal power plant (SINGLE TOWER TYPE) project currently under
construction.
The Solana Generating Station is a 280 MW solar power plant which is under construction
about 70 miles (110 km) southwest of Phoenix, Arizona.
COMPARITIVE STUDY OF SOLAR POLICIES
3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY
INCLUDING SOLAR POWER
India acceded to the Kyoto Protocol in August 2002 and one of the objectives of acceding
was to fulfill prerequisites for implementation of Clean Development Mechanism projects,
in accordance with national sustainable priorities, where-under, a developed country would
take up greenhouse gas reduction project activities in developing countries. MoEF is
pursuing capacity building projects with GTZ (Gesellschaft fr Technische Zusammenarbeit),
UNDP (United Nations development programme) and ADB (Asian Development Bank). CDM
is explained in detail in the later part of this report.
COMPARITIVE STUDY OF SOLAR POLICIES
4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP
SOLAR POWER GENERATION
4.1 GERMANY
In the electricity sector, as of July 2010, feed-in tariffs for solar PV have been lowered
substantially while the incentive for auto-consumption (captive) was increased.
In addition, the degression rates where increased for 2011 and a flexible breathing cap
was introduced in order to adapt the degression rates to PV market development.
Different additional benefits are granted for certain characteristics, such as innovative
technology, the fulfilment of sustainability criteria, auto-consumption or high efficiency.
New installations are supported at different rates to modernized or retrofitted installations.
Investment costs for commercial systems (incl. Planning and installation) can be depreciated
over a 20 year period and other costs can be considered as operations cost
10000
INSTALLED CAPACITY
5000 3470
432 1144
87
0
2007 2008 2009 2010 2011 2012
Feed-in tariffs (15 years) for electricity produced by renewable energy plants with a
maximum power output of 1 MW (0.2 MW for wind energy), as an alternative to the green
certificates;
An incentive scheme (Conto Energia) for photovoltaic and solar thermodynamic plants
through the feed-in premium mechanism.This defines a premium for PV production
differentiated by size and level of architectural integration. The premium is constant for 20
years. The electricity produced can be used for own consumption, sale, or exchange with
the network (net metering up to 200 kW installed capacity). The initial premiums of 2007
have been reduced by 2% per year, and will be reduced by a further 2% for plants beginning
production in 2010.
Electricity suppliers can fulfil their obligation using tradable Green Certificates, issued by
GSE, the body in charge of collecting resources from electricity suppliers and giving them to
the producers.The quota had an annual increase of 0.35%, from 2004 to 2006, and of 0.75%
from 2007 to 2012, though a change in the support system is expected in 2011.
Italys Conto Energia V solar incentive programme will expire on 6 July 2013 having reached
its cap of 6.7 billion and therefore cease any further investment into solar power.
COMPARITIVE STUDY OF SOLAR POLICIES
4.3 CHINA
6000
2000 800
100 140 300
0
2007 2008 2009 2010 2011 2012
Chinese government has employed most internationally recognized policies to stimulate the
development of renewable energies, e.g., mandatory renewable portfolio standards,
subsidies, special development funds, feed-in tariff, tax credits and etc.
Renewable Energy Law of Peoples Republic of China was first launched in 2006, followed
by Medium and long term development plan for renewable energy development and then
The eleventh five-year plan for renewable energy development in 2008. According to
these programs andregulations, the proportion of renewable energy in Chinas primary
energy consumption will be increased to 10% by 2010, and 15% by 2020.
The subsidys upper limit was set at 20 Yuan/Wp for the year of 2009, which can cover 30-
50% the production cost of the manufactures. This can be interpreted as a strong policy
driver for solar energy utilization, especially PV utilization.
Golden Sun Project aiming at accelerating the PV industries was launched in July, 2009.
The subsidies can go as high as 50% of the initial investments for the on-grid electricity and
its dispersion systems, 70% for the independent electricity generating system for the
remote areas.
If a national FIT policy for utility scale-solar plants is adopted, it is predicted that this new
type of solar policy will drive much faster growth in the Chinese solar market as compared
to Chinas existing roof-top subsidy and Golden Sun program, which focuses on remote
off-grid installations. It is expected that the tariff will fall between US $0.16 and US $0.22
per kilowatt hour of electricity produced at large-scale photovoltaic arrays.
COMPARITIVE STUDY OF SOLAR POLICIES
4.4 UNITED STATES
3000
0
2007 2008 2009 2010 2011 2012
In the first 5-year round of solar deployment, the FIT subsidy levels are $0.11/kWh for CSP ,
$0.11/kWh for PVCAES, and $0.2/kWh for distributed PV. The FIT subsidy levels are
reduced in the second 5-year round of solar deployment to $0.07/kWh for CSP, $0.03/kWh
for PVCAES, and$0.1/kWh for distributed PV. The FIT subsidies are paid over the entire 30-
year capital recovery period.
The Property Tax Exemption for Solar Systems is a product of the California Revenue and
Taxation Code, section 73. Active solar energy systems installed between January 1, 1999
and January 1, 2006 are not subject to property taxes when assessing property for property
tax purposes.
COMPARITIVE STUDY OF SOLAR POLICIES
4.5 JAPAN
INSTALLED CAPACITY IN MW
8000
7000
7000
6000
4914
5000
4000 3618
INSTALLED CAPACITY
3000 2627
1919 2144
2000
1000
0
2007 2008 2009 2010 2011 2012
In December 2008, the Ministry of Economy, Trade and Industry announced a goal of 70% of
new homes having solar power installed, and would be spending $145 million in the first
quarter of 2009 to encourage home solar power.
The government enacted a feed-in tariff on November, 2009 that requires utilities to
purchase excess solar power sent to the grid by homes and businesses and pay twice the
standard electricity rate for that power.
On June 18, 2012, a new feed-in tariff was approved, of 42 Yen/kWh, about 0.406 Euro/kWh
or USD 0.534/kWh. The tariff covers the first ten years of excess generation for systems less
than 10 kW, and generation for twenty years for systems over 10 kW. It became effective
July 1, 2012. In 2013, Japan is expected to install 5-9 GW of solar power.
In July, 2012, Japan's Ministry of Economy, Trade and Industry (METI) introduced a
restructured feed-in tariff in order to spike investments in large-scale renewable energy and
photovoltaic. Market segmentation and development in Japan are anticipated to change
significantly in the near future, with residential market share projected to fall sharply by
2013 and shift towards commercial, industrial, and small and large utility markets. These
sectors are expected to grow quickly through 2016, creating more room for foreign
manufacturers.
COMPARITIVE STUDY OF SOLAR POLICIES
4.6 FRANCE
INSTALLED CAPACITY IN MW
4500 4027.6
4000
3500
2948.6
3000
2500
2000 INSTALLED CAPACITY
1500 1197.3
1000
500 289.3
98.2 103.9
0
1 2 3 4 5 6
The support scheme for PV projects was largely modified in December 2010. A clear
distinction between projects under 100kWp and projects above 100kWp has been made.
The impact is particularly important for large installation above 100kWp.
The government justifies this change by the fact that France is well on track on the
development of its solar portfolio, and that the industry has reached a satisfying inertia. The
government therefore now aims at stabilizing the yearly installation rate at 500MW (against
expected yearly installation rates of 1000MW to 1500MW between 2011 and 2012).
Large installations, above 100kWp, are not eligible for the feed-in tariff anymore. For
smaller installations, the tariff has been reduced progressively from December 2009, and
three categories have been created: integrated PV, partially integrated PV and ground based
installations.
As of January 1, 2011, larger projects (above 100kWp), or ground based projects will benefit
from a reduced feed-in tariff (120/MWh against a previously existing tariff of 328 /MWh).
Full integration of PV panels requires the panels to take a vital role in the structure of the
building (e.g.watertightness). A partially integrated installation requires panels to be fixed
on an existing building. For these installations tariffs range from 460 /MWh to
288.5/MWh. The table below details the different feed-in-tariffs.
COMPARITIVE STUDY OF SOLAR POLICIES
4.7 AUSTRALIA
2000
1500 1298
INSTALLED CAPACITY
1000
504
500 330
100 170
0
2007 2008 2009 2010 2011 2012
The Australian Government provided a rebate program that offered up to A$8,000 rebates
for installing solar panels on homes and community use buildings (other than schools),
through the Solar Homes and Communities Plan.The Solar Flagships program sets aside $1.6
billion for solar power.
Schools were eligible to apply for grants of up to A$50,000 to install 2 kW solar panels and
other measures through the National Solar Schools Program beginning 1 July 2008, which
replaced the Green Vouchers for Schools program. Applications for the program ended 21
November 2012. A total of 2,870 schools have installed solar panels. The output of each
array can be viewed, and compared with that of up to four other schools.
Feed in tariffs were introduced by a number of states to increase the amount of solar PV
power generated. They can be classified by a number of factors including the price paid,
whether it is on a net or gross export basis, the length of time payments are guaranteed, the
maximum size of installation allowed and the type of customer allowed to participate. Many
Australian state feed-in tariffs were net export tariffs, whereas conservation groups argued
for gross feed-in tariffs. In March 2009, the Australian Capital Territory (ACT) started a solar
gross feed-in tariff. For systems up to 10 kW the payment was 50.05 cents per kWh. For
systems from 10 kW to 30 kW the payment was 40.04 cents per kWh. The payment was
revised downward once before an overall capacity cap was reached and the scheme closed.
Payments are made quarterly based on energy generated and the payment rate is
guaranteed for 20 years.
COMPARITIVE STUDY OF SOLAR POLICIES
4.8 UNITED KINGDOM
The primary support mechanism for Renewable energy development in the UK is the
Renewables Obligation (RO), a quota system with tradable green certificates known as
Renewables Obligation Certificates (ROCs).
The RO is periodically revised. The RO was introduced in England, Wales and Scotland in
April 2002 and in April 2005 in Northern Ireland. The scheme was originally set to run until
March 2027. In 2010, the previous Government administration extended the scheme until
2037 However in December 2010 the new Coalition Government proposed in the Electricity
Market Reform (EMR).
From April 2010, plants under 50kW will no longer qualify for support under the RO, but are
instead eligible for support under the recently introduced FIT scheme. Maximum size limits
are in place for specific technologies.
Innovative funding programme has budget of 200 million pounds, of which 160 million have
been allocated to various schemes. Funding help is provided to innovators / Entrepreneurs
who develop and demonstrate low carbon technologies.They will be able to apply for 1
million pounds funding from government and can use that funding to leverage additional
funds from private sector investors. They will also be able to get support from experts on
how to bring their products to market. Of the 35 million, 20 million will initially support
energy efficiency technologies and 15 million will expand the call into power generation at
later stage.
COMPARITIVE STUDY OF SOLAR POLICIES
5. INDIAS SOLAR POWER SCENARIO
India is densely populated and has high solar insolation, an ideal combination for using solar
power in India. Considering, Global perspective,India is 5th largest contributor in wind
energy sector. In the solar energy sector, some large projects have been proposed, and a
35,000 km2area of the Thar Desert has been set aside for solar power projects, sufficient to
generate 700 GW to 2,100 GW.
With about 300 clear, sunny days in a year, India's theoretical solar power reception, on
only its land area, is about 5000 Petawatt-hours per year (PWh/yr) (i.e. 5000 trillion kWh/yr
or about 600 TW). The daily average solar energy incident over India varies from 4 to 7
kWh/m2 with about 15002000 sunshine hours per year (depending upon location), which
is far more than current total energy consumption. Assuming the efficiency of PV modules
were as low as 10%, this would still be a thousand times greater than the domestic
electricity demand projected for 2015.
According to a 2011 report by BRIDGE TO INDIA and GTM Research, India is facing a perfect
storm of factors that will drive solar photovoltaic (PV) adoption at a "furious pace over the
next five years and beyond".
The falling prices of PV panels, mostly from China but also from the U.S., has coincided with
the growing cost of grid power in India. Government support and ample solar resources
have also helped to increase solar adoption, but perhaps the biggest factor has been need.
India, "as a growing economy with a surging middle class, is now facing a severe electricity
deficit that often runs between 10 and 13% of daily need.
SECTION 4
SECTION 61 (h)
The section states that while specifying term and conditions of tariff determination
the commission shall consider the promotion of generation from renewable sources
of energy along with other factors.
The section states that state commission shall promote generation of electricity from
renewable sources of energy and also tells that it shall be done by providing suitable
measures for connectivity with the grid and sale of electricity to anyone. A
percentage of total consumption in distribution licensees area shall be satisfied from
renewable sources specified by the commission.
COMPARITIVE STUDY OF SOLAR POLICIES
6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP)
Section 5.2
This section states the importance of hydro power by notifying hydroelectricity as a
clean and renewable source of energy. The section states that in upcoming time
maximum emphasis would be laid on the full development of the feasible hydro
potential in the country. It emphasises the importance of harnessing hydro potential
for economic development and also reinforces governments commitment to cater
huge capital requirements by making policy that will help debt-financing of viable
projects. The section also talks about safeguarding environmental concerns &
concerns of the families affected due to the projects through proper implementation
of National Policy on Rehabilitation and Resettlement (R&R) and by suitable
mechanism for monitoring of implementation of Environmental Action Plan.
Section 5.12
The section states that there is urgent need to promote energy generation from
renewable sources of energy because of their environmental friendliness. Efforts
must be directed to reduce the capital cost of these projects. It also states that the
share of electricity from non-conventional sources through competitive bidding
would need to be increased as prescribed by State Electricity Regulatory
Commissions and the Commission may determine an appropriate differential in
prices to promote these technologies.
The plan identifies eight missions under National Missions running through 2017 and
directs ministries to submit detailed implementation plans to the Prime Ministers Council
on Climate Change by December 2008.
COMPARITIVE STUDY OF SOLAR POLICIES
Emphasizing the overriding priority of maintaining high economic growth rates to raise living
standards, the plan identifies measures that promote our development objectives while
also yielding co-benefits for addressing climate change effectively.
It says these national measures would be more successful with assistance from developed
countries, and pledges that Indias per capita greenhouse gas emissions will at no point
exceed that of developed countries even as we pursue our development objectives.
NATIONAL MISSIONS
a. MISSION OBJECTIVE
The objective of the Jawaharlal Nehru National Solar Mission is to establish India as a global
leader in solar energy, by creating the policy conditions for its large scale diffusion across
the country as quickly as possible. The Mission adopted a 3-phase approach, spanning the
period of the 11th Plan and first year of the 12th Plan (up to 2012-13) as Phase 1, the
remaining 4 years of the 12th Plan (2013-17) as Phase 2 and the 13th Plan (2017-22) as
Phase 3.
At the end of each plan, and mid-term during the 12th and 13th Plans, there will be an
evaluation of progress, review of capacity and targets for subsequent phases, based on
emerging cost and technology trends, both domestic and global. The aim would be to
protect Government from subsidy exposure in case expected cost reduction does not
materialize or is more rapid than expected.
c. PHASE I OF JNNSM
Phase I of National Solar Mission was divided into two Batches i.e. batch I & II. In Batch I,
capacity addition of 150 MW of grid connected solar PV plants and 500 MW of grid
connected solar thermal plants was envisaged. Whereas in Batch II, the remaining targeted
capacity for Solar PV i.e. 350 MW was awarded.
Apart from these grid connected large scale plants, small rooftop plants of capacity less than
2MW each were also allotted under GBI scheme in Rooftop PV and small Solar Power
Generation Programme (RPSSGP).
COMPARITIVE STUDY OF SOLAR POLICIES
BUNDLING OF SOLAR POWER
In order to facilitate grid connected solar power generation under the first phase, without
any direct funding by the Government, Government approved NTPC VidyutVyapar Nigam
(NVVN) as the nodal agency to purchase 1000 MW of solar power from the project
developers, bundle it with the unallocated power available from the NTPC coal-based
stations and sell this bundled power to the Distribution Utilities. Bundling concept was
introduced to keep the cost of bundled power approximately Rs 5/kWh. It was decided to
select projects of 500 MW capacity each based on solar thermal and solar photovoltaic (PV)
technologies.
Total 30 SPV projects were selected after bidding process and subsequently 28 project
developers signed PPAs for 140 MW capacity with NVVN. Similarly seven solar thermal
projects were selected after bidding process and signed PPA with NVVN. Average tariff for
selected SPV projects was 1216 Paise/kWh which was 32% lower than the CERC approved
benchmark tariff of 1791 Paise/kWh. For solar thermal projects, average tariff for selected
projects was 1141 Paise/kWh which was 25% lower than the CERC approved benchmark
tariff of 1531 Paise/kWh for solar thermal plants.
In batch-I, a total of 704 MW capacity grid connected solar power projects have been
selected, which comprise of 500 MW capacity of solar thermal power projects and 204
MW of PV power projects.
BATCH II SOLAR PV
CERC APPROVED TARIFF FOR SOLAR PV (NORMAL DEPRICIATION)
1539 Paise/kWh
Maximum discount offered(Paise/kWh) Minimum discount offered(Paise/kWh)
790 595
FINAL TARIFF AFTER DISCOUNT FOR SOLAR PV
749 944
COMPARITIVE STUDY OF SOLAR POLICIES
Under Batch II of Phase I, the total aggregate capacity of grid connected Solar Projects was
350 MW for the deployment of Solar PV Power Projects.SPV projects worth 350 MW were
awarded with an average tariff of 877 paise/kWh which was 43% lower than the benchmark
tariff approved by CERC.
SOLAR PV
(ii)BATCH-1, PHASE-2
The mission targets 200 MW of off-grid solar PV installed capacity by 2013 and 2,000 MW by
2022. Given the lack of electrification and access to clean energy sources in Indian villages
coupled with T&D losses, decentralised distributed systems make very good sense.
Therefore, the targets set for off-grid capacity could be bolder. A capital subsidy of `150 per
Wp is available for rural microgrids as against `90 per Wp for other applications.
Even if all the 200 MW was allocated to rural microgrids, the total subsidy would amount to
only `30 billion (this outlay is expected from tax revenues). Even if the capacity is increased
substantially (set aside for utility-scale PV), the total subsidy would work out to be still
considerably less than the incentive offered for the utility scale.
To address all these challenges and to turn the environmental salubrity of renewable energy
into a marketable entity, the concept of Renewable Energy Certificates was developed.
Apart from facilitating inter-state RE transactions, RECs also have some other objectives as
well, which can be identified as:
In the Indian context, generation of 1 MW of RE allocates a REC to the generator, which can
be sold in an energy exchange to an obligated entity which cannot find a RE generator to
fulfil its RPO obligations, thereby overcoming the geographical constraints the transaction of
RE poses.
There are some important points of note here. REC mechanism is not an incentive scheme.
It is simply a market mechanism to enable various obligated entities to meet their RPO
norms as set by their respective SERCs. The mechanism co-exists with all the current
incentive schemes as, these schemes offer incentives for generation only. Also it is not
related to carbon credits. The two mechanisms operate parallel to each other for the
benefit of RE generators.
COMPARITIVE STUDY OF SOLAR POLICIES
9. OPERATIONAL FRAMEWORK OF REC MECHANISM
As can be seen from the figure above, the easiest route of selling RE to the obligated entities
is through the grid, as established by the connection (1).The accounting of the RE produced
by the generators is carried out by the SLDCs (1) the information of which is forwarded to
the national registry (3). If the generator chooses to sell their RE electricity through the REC
route, he makes an application to the national registry (2), after which a RECs is issued to
the generators (4) as per the amount of power generated, which they can trade in the
power exchanges. If these obligated entities cannot achieve their RPOs, they buy RECs in the
exchange to make up for whatever is the deficit in their supply mix (5), which are
redeemable at the national registry itself (6). The compliance reporting is done to the
monitoring committee of each state (7), which submits a quarterly report to each states
SERC.
COMPARITIVE STUDY OF SOLAR POLICIES
10. STATE WISE RPO (SOLAR & NON SOLAR)
In order to give thrust for solar development, states also come up with Solar Policy to
attract the investor in this sector.
The Gujarat Solar Policy is operative till 31st March 2014.Any Solar Power Generator (SPG)
commissioned during the operative period shall become eligible for incentives declared
under this policy for a period of 25 years.
SALIENT FEATURES
CAPACITY
Only new plants and machinery will be eligible under this Policy. No fossil fuel
shall be allowed for Solar Thermal Project.
The minimum capacity of for Solar PV and Solar Thermal projects will be 5
MW each. A total of 500MW SPG shall be allowed for installation during the
operative period of this policy.
CROSS-SUBSIDY CHARGE
Cross subsidy surcharges shall not be applicable for Open Access obtained for
third party sale within the state.
WHEELING CHARGES
As per determined by GERC.
ELECTRICTY DUTY
Exempted from payment of electricity duty for sale through all modes(self-
consumption/sale to third party/sale to licensee)
Exemption from demand cut to the extent of 50% of installed capacity
PPA
PPA duration will be 25 years
BANK GUARANTEE
Developer to furnish a BG @Rs 50Lakhs/MW at the time of PPA signing with
Distribution Licensee.BG to be refunded if the developer commissions the
project in time as per PPA.
METERING OF ELECTRICITY
COMPARITIVE STUDY OF SOLAR POLICIES
Electricity generated would be metered jointly on a monthly basis by
GEDA/GETCO. Metering to done at sending sub-station of 66 kV or above,
located at the site.
TRANSMISSION INFRASTRUCTURE
Transmission line from SPG switch yard to GETCO sub-station shall be laid by
GETCO.SPG to inject power at 66kV.
PROs CONs
SALIENT FEATURES
The Policy will come into operation with effect from 19.4.2011 and will remain in force until
superseded or modified by another Policy.
To achieve the objectives of this Policy, the targets under the policy are mentioned below:
1. The State Government has sanctioned two Solar Power Projects of 5 MW capacity under
the GOI guidelines for Generation Based Incentive scheme for Grid Interactive Solar Power
Generation Projects issued by MNRE. The power evacuation transmission line from
generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be
laid by STU/Home Discom as per the prevailing orders of RERC.
2. The Rajasthan State has sanctioned 66 MW solar power projects in compliance of the
RERCs orders. These sanctioned projects were migrated to National Solar Mission by the
State Government. The power produced from these solar power plants shall be procured by
NVVN as per mechanism provided under National Solar Mission Phase-1. The Discoms of
Rajasthan shall purchase this solar power from NVVN along with the equivalent amount of
MW capacity from the unallocated quota of NTPC stations allotted to NVVN by Ministry of
Power, GoI. The power evacuation transmission line from generating plant sub-station to
the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as
per the prevailing orders of RERC.
3. The Rajasthan State will develop 50 MW SPV and 50 MW Solar Thermal Power Plants
through selection of developer(s) by the tariff based competitive bidding process on
concept of bundling of Solar Power with equivalent amount of MW capacity of conventional
power. The successful bidder will set up Solar Power Plant in Rajasthan and supply
equivalent amount of MW capacity of conventional power from Conventional Power Plants
located anywhere in India. The power evacuation transmission line from generating plant
sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by
STU/Home Discom as per the prevailing orders of RERC.
4. The Rajasthan State will promote setting up of Solar Power Plants connected at 33 kV &
above level under the guidelines of National Solar Mission (NSM). The minimum/maximum
capacity allocation to each Solar Power Producer will be as per MNRE guidelines. The power
evacuation transmission line from the Generating plant sub-station to the RVPN/Discom
receiving Sub-station will be laid as per provisions of the orders of appropriate Commission.
COMPARITIVE STUDY OF SOLAR POLICIES
5. The state government will support setting up of 100 MW solar photovoltaic power plants
and 100 MW solar thermal power plants under phase I of the Rajasthan Solar Energy Policy
2011 for direct sale of power to discoms in the state. Under phase II (2012-2017), the state
governmentplans to add another 400MW of solar power through tariff based competitive
bidding process. The power evacuation transmission line from generating plant sub-station
to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as
per the prevailing orders of RERC.
The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of
unlimited capacity for captive use or sale of power to 3rd party/States other than Rajasthan.
There will be no upper ceiling for power projects. The power evacuation transmission line
from the Generating plant sub-station to the RVPN/Discom receiving Sub-station will be laid
as per provisions of the orders of appropriate Commission.
7. The Rajasthan State will promote deployment of Roof-top and Other Small Solar Power
Plants connected to LT/11kV Grid as per guidelines of MNRE under Rooftop PV & Small Solar
Generation Programme (RPSSGP) of NSM. The minimum/maximum capacity for power
project sanctioned under this category will be as per the guidelines issued by MNRE. The
power evacuation transmission line from generating plant sub-station to the receiving
RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the
prevailing orders of RERC.
8. The State will promote setting up of small solar power plants connected at 11 kV grid of 1
MW capacity each for direct sale to State Discoms of Rajasthan. The total capacity under
this category will be 50 MW. The selection of the projects will be through tariff based
competitive bidding process. There will be no upper ceiling for power projects.
9. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of
unlimited capacity for sale through RE (Solar) Certificate mechanism. The power evacuation
transmission line from the Generating plant sub-station to the RVPN/Discom receiving Sub-
station will be laid as per provisions of the orders of appropriate Commission
10. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants
along with Solar PV manufacturing plants in Rajasthan. The target under this category will
be 200 MW up to 2013.
11. The Rajasthan State will also promote decentralized and off-grid solar applications,
including hybrid system such as solar water heaters, solar cooling systems, air drying, steam
cooking, power generation, sterling engine. The off-grid solar applications shall be promoted
for replacement of diesel based generators sets. The Rajasthan State will also consider
incentives for promotion of decentralized and off grid solar applications.
12. Rajasthan also intends to set up Pilot Demonstration Projects under National Solar
Missions R&D initiatives in Phase 1 of Solar Mission. This will include:
COMPARITIVE STUDY OF SOLAR POLICIES
a. 50-100 MW Solar thermal plant with 4-6 hours storage (which can meet both
morning and evening peak load and increased plant load factor up to 40%)
c. A 100-150 MW Solar hybrid plant with coal, gas or bio-mass to address variability and
space-constraints.
d. 20-50 MW Solar plant with or without storage, based on central receiver technology
with molten salt/steam as working fluid and other emerging technologies.
The capacity allocation for pilot demonstration project will be finalized in consultation with
MNRE.
The maximum capacity to be commissioned under this Clause will be decided by the
Rajasthan Government after studying the subsidy pattern for these demonstration projects
under NSM
13. The Rajasthan State will develop Solar Parks (with RREC as nodal Agency) of more than
1000 MW capacity in identified areas of Jodhpur, Jaisalmer, Bikaner and Barmer districts in
various stages. RREC will allocate budget for development of infrastructure in Solar Parks to
SPV.The SPV will develop the initial infrastructure from the funds allocated by RREC, which
will be subsequently recouped from the Solar Power Producers whose project are located in
Solar Parks by levying development charges.
14. The Rajasthan State will promote Solar Water heating system by adopting the key
strategy of making necessary policy changes for mandatory use of solar water heating
system (SWHS) on Industrial, commercial, residential and other establishments.
DEVELOPMENTAL CHARGES
For Solar power projects established for sale of solar power to parties other
than Discoms of Rajasthan, the Solar Power Producer shall deposit non-
refundable development charge of Rs. 10 Lacs per MW to Rajasthan
Renewable Energy Corporation Ltd. within one month from the date of issue
of in-principle clearance for availing benefits, facilities and concessions under
the provisions of this policy. For solar power projects established for sale of
solar power to Discoms of Rajasthan State, no development charges will be
leviable from the Solar Power Producers.
COMPARITIVE STUDY OF SOLAR POLICIES
CREATION OF RAJASTHAN RENEWABLE ENERGY INFRASTRUCTURE DEVELOPMENT
FUND
The resources mobilized by collection of development charges will be
credited to Rajasthan Renewable Energy Infrastructure Development Fund.
This fund will be utilized for creation of infrastructure such as transmission
network, roads etc. for accelerated development of renewable energy.
GRID CONNECTIVITY
For creation of proper facility for receiving power, the Solar Power Producer
shall pay Grid Connectivity charges as finalized by RERC from time to time to
Discoms of Rajasthan/RVPN as applicable.
The power evacuation transmission line from generating plant sub-station to
the receiving RVPN/Discoms of Rajasthan sub-station will be laid by
STU/Home Discom or as per the prevailing orders of RERC.
For grid connectivity/construction of line to be arranged by RVPN/ Discoms of
Rajasthan, the Solar Power Producer shall submit time-frame for construction
of their plant along with Bank Guarantee equivalent to the cost of bay and
transmission/ distribution line with an undertaking to use the system within
prescribed period. In case there is any delay in utilization of system, a penalty
@ 12% per annum for the period of delay on the amount of Bank Guarantee
will be levied by RVPN/ Discoms of Rajasthan. The Bank Guarantee shall be
returned to the Solar Power Producer after commissioning of the project on
depositing amount of penalty, if any on account of delay in the utilization of
the system.
ELECTRICITY DUTY
The energy consumed by the Power producers for own use will be exempted
from payment of the electricity duty.
METERING OF ELECTRICITY
Metering arrangement shall be made as per Central Electricity Authority
(Installation & Operation of Meters) Regulations, 2006, the grid code, the
metering code and other relevant regulations issued by RERC/CERC in this
regard.
PROs CONs
SALIENT FEATURES
PROPOSED CAPACITY
It is proposed to install 200 MW up to 2015-16, for the purpose of
procurement by the ESCOMS. This will be in addition to the allotment
received under JNNSM.
The minimum capacity shall be 3 MW and max. capacity will be 10 MW for
Solar PV projects and min. capacity shall be 5 MW for Solar Thermal projects
Power evacuation shall be through 11 KV and above voltage will only be
permissible.
REC SCHEME
Under the REC mechanism the project developers can sell their power at the
pooled cost of power purchase only to the ESCOMS. A capacity of 100 MW
can be installed under this scheme.
CDM PROCEEDS
Sharing of CDM proceeds will be as per bidding documents.
METERING
Metering arrangement shall be made as per Central Electricity Authority
(Installation & Operation of Meters) Regulations, 2006, the grid code, the
metering code and other relevant regulations issued by KERC/CERC in this
regard
The state will continue to implement JNNSM and all other schemes of the
MNRE.
COMPARITIVE STUDY OF SOLAR POLICIES
PROs CONs
State government provides land if Land Owners to be equity partners of gross
available. energy generated.
Banking of power is allowed. Wheeling charges on the higher side.
Solar grid connected projects above 1 MW For projects not under JNNSM the project
are given additional incentives up-to Rs capacity shall be 3 MW to 10 MW for PV
12/kWh for solar PV &Rs. 10/kWh for solar and minimum for solar thermal be 5 MW.
thermal in addition to tariff by KERC.
KREDL assists in availing CDM benefits.
Karnataka govt. to reserve 50 MW capacity
for solar plants to bundle it with thermal
projects outside state.
COMPARITIVE STUDY OF SOLAR POLICIES
11.4 MADHYA PRADESH SOLAR POLICY 2012
All Solar energy based power project Developers (Solar PV/Solar thermal) and
manufacturing units of equipments, ancillaries related to Solar Power projects shall be
eligible for benefits under the Policy. Only new plant and machinery shall be eligible for
installation under the Policy.
SALIENT FEATURES
Category II:
Projects, of unlimited capacity (subject to single project capacity limitation described
below), to be set up for captive use or sale of power to 3rd party within or outside
the state or for sale of power to other states through open access . Only project
capacities to be installed in the state of Madhya Pradesh shall be eligible for
incentives under this Policy.
Category III:
Projects, of unlimited capacity, to be set up under Renewable Energy Certificate
(REC) mode. The minimum and maximum single project capacity for accreditation
under REC mechanism will be as per the Guidelines/Orders/Regulations issued by
CERC/MPERC from time to time.
Projects on Private Land: For projects proposed to be set up on private land, any
enterprise fulfilling the requirements/criterion as specified under CERC REC
mechanism may apply to the State Nodal Agency as per the procedures laid down by
CERC and/or MPERC. Such developers can apply for registration any time. In case the
project is set up on private land then developer is exempted from submitting any
performance guarantee
Category IV:
Projects under Jawaharlal Nehru National Solar Mission. The minimum and
maximum project capacity will be as per JNNSM guidelines.
PERFORMANCE GUARANTEE
Category I project: It will be as per the guidelines specified in the
qualification/selection document issued by GoMP.
Category II Projects and Category III: The Developer shall submit Performance
Bank Guarantee (for projects being setup on government land at the rate of
Rs. 5.0 Lac/MW or part thereof to New & Renewable Energy Department
(GoMP). The Bank Guarantee shall be valid for a period of twenty four (24)
months for Solar PV projects and for a period of forty (40) months for Solar
thermal projects respectively.
METERING
Metering equipment, as may be stipulated by MPPTCL or by respective MP
Discom, shall be installed at the interconnection point which shall be line
isolator of outgoing feeder on HV side of the pooling substation. Developers
will install metering equipments at their own cost.
COMPARITIVE STUDY OF SOLAR POLICIES
GRID EVACUATION & EVACUATION FACILITY
The developer shall be responsible for laying of power evacuation line from
generating station to the nearest substation or interconnection point. He
shall also be responsible for interconnection arrangement which includes
transformer panel, protections, metering etc., at the substation or
interconnection point.
ELECTRICITY DUTY
Policy provides 10-year (from COD) exemption in electricity duty (including
captive units).
BANKING
Banking (2% banking charges) of 100% of energy in every financial year shall
be permitted. The balance energy, if any, at the end of a Financial Year after
return of banked energy shall be purchased by the concerned State
Distribution Company/ State Power Trading Company in accordance with the
rules/ directions of MPERC.
VAT
Equipments purchased for installation of Solar power plants will be exempted
as per VAT rules and entry tax.
CDM BENEFITS
CDM benefits to the solar power project Developers/Investors shall be as per
the provisions specified by MPERC.
COMPARITIVE STUDY OF SOLAR POLICIES
PROs CONs
The state government provides land if Developer to commission project in 15
available, and if not, provides half months.
exemption from stamp duty. A huge amount of registration fee is to
Subsidy on wheeling. be paid. (Rs. 50000 per MW max Rs.
Banking allowed with 2% as banking 500000)
charge.
Carbon credit benefits to investor.
No open-access charges.
Reduction in contracted demand upto
50% installed capacity is allowed if any
consumer of MPSEB sets up captive plant
or purchases solar power.
Solar technology parks shall be
established.
Training programmes offered.
COMPARITIVE STUDY OF SOLAR POLICIES
11.5 ANDHRA PRADESH SOLAR POLICY 2012 & FIRST AMENDMENT
The policy shall come into operation with effect from the date of issuance (26/9/2012) and
shall remain applicable till 2017.
SALIENT FEATURES
INSTALLED CAPACITY
It intends to promote utility grid power projects for Captive Use/ Direct Sale
to third party/within the state and Utility Grid Power Projects for sale
through RE (Solar) Certificate Mechanism. Also, it intends to promote the Off-
Grid Solar applications to meet the power needs on Stand-alone basis.
BANKING
Banking of 100% of energy shall be permitted for one year from the date of
banking. The settlement of banked energy will be done on monthly basis.
However, banked units cannot be consumed/redeemed from February to
June and also during TOD hours as amended from time to time. Developer
will be required to pay 2% of the banked energy towards banking charges.
OA CHARGES
Intra-state Open Access clearance for the whole tenure of the project or 25
years whichever is earlier will be granted within 15 working days of
application to both the generator and consumer irrespective of voltage level.
ADDITIONAL INCENTIVES
EVACUATION INFRASTRUCTURE
The evacuation line from interconnection point to the grid substation shall be
laid by the APTRANSCO or DISCOM at the cost of the developer.
SALIENT FEATURES
RPO MECHANISM
3% solar RPO requirement till December 2013 & 6% solar RPO requirement
from 2014
RPO to be applicable to:
o Special Economic Zones (SEZs)
o Industries guaranteed with 24/7 power supply
o IT Parks, Telecom Towers
o All Colleges & Residential Schools
o Buildings with a built up area of 20,000 sq.m. or more
o This mechanism will require generation of 1000 MW by 2015.
COMPETITIVE BIDDING
State will select developers through competitive bidding. Investments
through Joint Ventures by State Public Sector Undertakings will also be
encouraged at competitive tariffs.
NET METERING
Net metering will be allowed (at multiple voltage levels) to promote rooftop
penetration.
Net metering facility will be extended to Solar power systems installed in
commercial establishments and individual homes connected to the electrical
grid to feed excess power back to the grid with power credits accruing to
the Photovoltaic energy producer.
COMPARITIVE STUDY OF SOLAR POLICIES
ELECTRICITY TAX
Exemption from electricity tax to the extent of 100% of electricity generated
from solar power used for self-consumption/sale to utility will be allowed for
5 years.
COMPARITIVE STUDY OF SOLAR POLICIES
11.7 CHATTISGARH SOLAR POICY 2012-17
The Govt. of Chhattisgarh has released the solar energy policy on 20th November 2012. This
policy will be operative till 31st March 2017. Solar power plants approved, installed and
commissioned during this period would be eligible for the benefits of this policy.
SALIENT FEATURES
The state govt. aims to achieve a target solar power generation capacity between
500MW to 1,000MW by March 2017. This would be achieved through three routes:
Grid Connected Solar Power Projects for Captive Use, Direct Sale to a licensee or any
other person (Third Party) or a state other than Chhattisgarh.
Grid connected solar power projects for sale through Renewable Energy (Solar)
Certificate Mechanism. The power generated from these projects can be purchased
by State DISCOMs at Pooled Cost of Power Purchase as determined by CSERC from
time to time. CSPDCL will take a final decision in this regard considering the supply
and demand position of power in the state.
For sale to DISCOMs to fulfill Renewable Purchase Obligation (RPO).
ELECTRICITY DUTY
State government shall exempt all soar power projects from paying Electricity
Duty on auxiliary consumption and captive consumption within the state.
Following incentives will be extended to those solar power developers who
commission their solar plant by March 2017. These incentives will be in force
for a period of 7 years from the date of implementation of the project.
VAT
Exemption of VAT by the Commercial Tax Department for all
equipments/materials required for solar power project.
COMPARITIVE STUDY OF SOLAR POLICIES
OPEN ACESS SURCHARGE
Charges for Open Access and losses shall be applicable as approved by the
CSERC/central regulatory body for third party sale outside the state.
WHEELING AND TRANSMISSION CHARGES
Shall be applicable based on the CSERC regulations.
CROSS SUBSIDY
Cross subsidy surcharge shall not be applicable for Open Access obtained for
the Third Party Sale within the state subject to the industries maintaining
their demand within the contracted range. Further it is also not applicable on
captive users.
BANKING
Energy banking facility allowed at mutually agreed terms and wherever
necessary approval of appropriate electricity regulatory commission shall be
obtained.
GRID CONNECTIVITY
Grid connectivity and evacuation facility shall be provided by the CG Transco
or DISCOM at the cost of project developer. Further, if the developer wishes
to lay the evacuation line by themselves, the same can be done without
paying supervision charges to CGTRANSCO.
PROs CONs
Government of Chhattisgarh fulfils the The policy directives are without
land requirement of project. operative period and hence there is
CSEB carries out the maintenance work uncertainty as new policy can be drafted
of lines and equipment of power anytime.
evacuation system. CSEB purchases power at comparatively
Electrical duty exempted for five and lower rate of Rs. 2.25 per unit.
three Years for plant capacity below 10 Banking of power is not allowed.
MW and 10 MW or above respectively.
There is no restriction on generation
capacity.
COMPARITIVE STUDY OF SOLAR POLICIES
12. CONCLUSION
India has a vast solar potential and almost every region is endowed with more than 320 days
of sunlight in the year. States have come up with renewable energy policies but there is a
need to issue separate solar policy by each state to tap the solar potential with main focus
of bringing solar at par with conventional sources. The existing policies provide many
incentives but there is need to nurture entrepreneurship so that more projects can come
up. The policies should also address the delay in statutory clearances.
MERC through its Suo Moto tariff order has notified generic levelised tariff of Rs. 8.98/unit
for projects which have signed the PPA after March 31, 2013 and are commissioned during
FY 2012-13.
MSPGCL is presently executing a 125 MW solar PV facility in Sakri, Dhule. The scope of work
of the project player includes design, engineering, manufacture, supply, erection, testing
and commissioning of 75 MW of Crystalline Solar PV technology and/or 50 MW of Thin film
solar PV technology including 10 years of operation & maintenance of the same on turnkey
basis. The project developer will get 85% of the contract value up to the successful issue of
Final Acceptance Test" certificate and remaining 15% of contract value spread over next 10
years after successful completion of O&M period of the contract (with 2% paid every year).
ADB is considering funding of approximately USD 500 Million towards cost of developing
renewable power projects of MSPGCL over the 12th five year plan along with the
development of associated evacuation and system strengthening infrastructure of MSETCL.
MSPGCL is exploring different public private partnership models for implementing the solar
projects.
For the future solar projects, MSPGCL is evaluating the Performance Linked Revenue Sharing
Model. For all these projects MSPGCL has signed or will sign PPAs with MSEDCL for off-take
of Power at MERC determined tariff. In this model the project developer receives a portion
(50%) of his EPC cost after the work is awarded. The bid parameter could be the share in
revenue that the project developer is asking for. The developer will receive this share of the
revenue from this project over its operating life. This pay-out will be a natural incentive and
penalty mechanism linked to actual generation from the plant. In this model the project
developer will have greater commitment as recovery will happen over the life of the project.
COMPARITIVE STUDY OF SOLAR POLICIES
14. LEGAL EVOLVEMENT TO PROMOTE RENEWABLE ENERGY
INCLUDING SOLAR POWER
MERC notified two Regulations on 7 June, 2010. Based on RE Tariff Regulations, 2010, the
Commission determines RE Tariff for different RE technologies including solar technology, at
the beginning of each financial year.
8.1 The Commission shall notify the generic preferential tariff on suo-motu basis pursuant
to issuance of revised norms by Central Electricity Regulatory Commission at the beginning
of each year of the Control Period for renewable energy technologies for which norms have
been specified under the Regulations. Provided that for the first year of Control Period, (i.e.
FY 2010-11), the generic tariff on suo-motu basis may be determined within a period not
exceeding three months from the date of notification of these Regulations.
Distribution Licensee(s)
Captive User(s) with installed capacity of 1 MW and above
Open Access Consumer(s) with contract demand of 1 MVA and above
In order to promote solar energy in the state, MERC has specified separate RPO for solar
energy. The RPO specified by MERC is as shown below:
YEAR FY 12 FY 13 FY 14 FY 15 FY 16
SOLAR 0.25% 0.25% 0.25% 0.50% 0.50%
MINI HYDRO 0.1% 0.1% 0.1% 0.2% 0.2%
OTHER 5.65% 6.65% 7.65% 8.30% 8.30%
TECHNOLOGY
TOTAL 6% 7% 8% 9% 9%
COMPARITIVE STUDY OF SOLAR POLICIES
YEAR FY 12 FY 13 FY 14 FY 15 FY 16
PROJECT ELECTRICITY 141,382 151,024 161,430 172,681 184,890
DEMAND OF
MAHARASHTRA(DRAFT
18TH EPS ACTUAL AS
PER FY 12)(MUs)
a. PREAMBLE
Conventional energy sources like coal, oil, natural gas, etc. are limited in quantity, and if
these continue to be depleted at the present rate, it will exhaust in coming decades.
Solar energy offers a clean, climate friendly, abundant an inexhaustible energy resource to
mankind. Due to Government intervention and development of competitive market
amongst the solar manufacturers, the costs of solar energy have been falling rapidly every
year and are entering new areas of competitiveness. Solar thermal electricity (STE) and solar
photo voltaic electricity (SPV) are becoming competitive against conventional electricity
generation in tropical countries.
Maharashtra has reasonably high solar insolation (4-6 kWh/sq. m) with around 280-300
clear sunny days in a year.
Eastern Maharashtra is considered to be one of the most suitable regions for solar projects.
As on 31.03.2013 Maharashtra has a total installed capacity of 205340.26 MW out of which
50.15 MW is solar installed capacity.
Knowing the importance of promoting solar power, the government of India has launched
Jawaharlal Nehru National Solar Mission (JNNSM) under the National Action Plan for Climate
Change (NAPCC). The goal of the mission is to provide tariff subsidies to increase scale and
drive down costs to grid parity for achieving target of 22,000 mw by 2022 in a phased
manner.
c. OBJECTIVES
To generate 1000 mw of solar energy by 2015.
To achieve grid parity by 2015.
To put in place an appropriate investment climate, that could leverage the Clean
Development Mechanism (CDM).
Promotion of R&D and facilitation of technology transfer.
Promotion of local manufacturing facilities.
COMPARITIVE STUDY OF SOLAR POLICIES
d. OPERATIVE PERIOD
Solar power generators (SPGs) installed and commissioned during the operative
period shall become eligible for the incentives declared under this policy, for a
period of twenty five years from date of commissioning or for life span of the SPGs,
whichever is earlier.
e. INSTALLED CAPACITY
A maximum of 1000 MW SPG shall be allowed for installation during operative
period of the policy.
f. CAPACITY CAP
The minimum project capacity of a SPG, in case of Solar Photovoltaic (SPV) and
Solar thermal (ST) shall be 3MW.
g. ELIGIBLE UNIT
Any company or body corporate or association or body of individuals, whether
incorporated or not, or artificial juridical person will be eligible for setting up of
SPGs either for the purpose of captive use and/ or for selling of electricity in
accordance with the Electricity Act-2003, as amended from time to time.
The entity to set up solar power project, either for sale of power and/ or for captive
use of power within the state, shall submit a proposal, with requisite details, as
may be specified to the nodal agency, for qualifying for setting up of the project.
j. METERING OF ELECTRICITY
The electricity generated from SPGs, shall be metered on a monthly basis jointly by
MEDA/MSETCL at a sending substation or located at site. Solar based generation
projects will have to provide ABT compliant meters at the interface points.
Interface metering shall confirm to the CENTRAL ELECTRICITY AUTHORITY
(Installation and Operation of meters) regulations, 2006.
(i)SOLAR PV
For a single project a subsidy of Rs 10,000/kw shall be awarded by the state
government if the capital cost of the project during commissioning is in accordance
with the cost determined by the state commission during that financial year.
(ii)SOLAR THERMAL
Projects having capacity of 1kW -1 MW shall be provided with 10% of the capital
investment and maximum of 50 lakhs (whichever is less) by the state government
if the capital cost of the project during commissioning is in accordance with the
cost determined by the state commission during that financial year.
COMPARITIVE STUDY OF SOLAR POLICIES
FINACIAL OUTLAY OF THE SUBSIDY SCHEME
Net metering will be allowed (at multiple voltage levels) to promote roof top
penetration.
>1MWp 11kv
To effectively implement this policy and to achieve the intended objectives, the
MEDA will promote capacity building in the area of solar energy.
COMPARITIVE STUDY OF SOLAR POLICIES
17. FINANCIAL MODELLING (SOLAR PV PLANT)
INTRODUCTION
Renewable power generation capacity in India has been set up largely through private
sector investments. New investment is the most potent indicator of growth of the sector. As
per an estimate, in 2009 the total financial investment in clean energy in India was at INR
135 billion. India ranked the fourth most attractive country for renewable energy
investment in the world, only behind the United States, China, and Germany. But highly
aggressive bidding by developers in increasing fierce competitive environment and
uncertainty regarding the various costs incurred; increases the risk associated with making
an investment in setting up solar power plant.
A financial model helps the developer to explore in detail the financial benefits and costs
associated with the investment. This facilitates the identification of key variables affecting
the project value and enables financing decisions. The following section describe the key
items and assumptions that are included in the financial modeling of a typical Indian solar
PV project, and discusses the conclusions based on the calculation of various financial
parameters.
ASSUMPTIONS
The normative capital cost for setting up Solar Photovoltaic Power Project shall be Rs 800
Lakh/MW for FY 2013-14 as per MERC (Terms and Conditions for Tariff determination from
Renewable Energy Sources) Regulations, 2013. But the recent drop in module cost
accompanied by increase in level of competition has dragged down the overall project cost
quite substantially.
There are a number of factors (e.g. Air pollution, shading, soiling, ambient temperature,
module quality, downtime etc.) which affect the annual energy yield of a solar PV project.
The energy yield prediction provides the basis for calculating project revenue. In the
financial model energy yield prediction for 25 years is made taking into account annual
deration.
Solar PV plant under REC mechanism can earn its revenue from selling grey.
In the financial model it is assumed that the grey component of energy is sold to state
discom at MSEDCL. Model is made flexible to vary starting, time period after MERC will
revise and escalation factor subjected to price revision.
One of the major benefits of Solar PV power plants is less O&M costs as compared to
other renewable energy technologies. In the financial model O&M has been taken as per
MERC Tarff Regulation, 2013.
Financing structure equity 30% and debt 70% as assumed in MERC Tariff
Order.
Debt repayment period is taken as 10 years. Interest Rate on term loan and
Working Capital is taken as 12.87% and 13.37% respectively. Though, model is
made with flexibility of varying moratorium period, repayment period, and
interest rate.
Installed Capacity MW 1 MW
CUF % 19%
Useful Life Years 25
Debt % 70%
Equity % 30%
Total Debt Amount Rs LACS 560
Total Equity Amount Rs LACS 240
COMPARITIVE STUDY OF SOLAR POLICIES
Project financial model calculates a range of project value indicators in order to allow
developers, lenders, and investors to assess the project economics from several
perspectives.
Solar projects are usually financed with equity and debt components. As a result, the IRR for
the equity component can be calculated separately from the IRR for the project as a whole.
The developers decision to implement the project or not, will be based on the equity IRR.
As returns generated in the future are worth less than returns generated today, a discount
can be applied to future cash flows to present them at their present value. The sum of
discounted future cash flows is termed the net present value (NPV). Investors will seek a
positive NPV, assessed using a discount rate that reflects the WACC and perceived risk levels
of the project.
Lenders will be primarily concerned with the ability of the project to meet debt service
requirements. This can be measured by means of the debt service coverage ratio (DSCR),
which is the cash flow available to service debt divided by the debt service requirements.
The Average DSCR represents the average debt serviceability of the project over the debt
term. A higher DSCR results in a higher capacity of the project to service the debt. Minimum
DSCR represents the minimum repayment ability of the project over the debt term. A
Minimum DSCR value of less than one indicates the project is unable to service the debt in
at least one year.
Based on assumptions taken and calculations done in financial model following are values of
various financial indicators.
AVERAGE DSCR-1.36
18. BIBLIOGRAPHY
1. www.bp.com
2. www.unfccc.int
3. www.cdmindia
4. www.wikipedia.org
5. www.cea.nic.in
29.www.energyselfreliantstates.org
6. www.cercind.gov.in
7. www.moneycontrol.com
8. www.nldc.in
9. www.iexindia.com
10. State Load dispatch centre websites
11. State electricity regulatory commission websites
12. www.mnre.gov.in
13. State energy development agency websites
14. www.nvvn.co.in
15. www.powermin.nic.in
16. www.cdmrulebook.org
17. www.solarserver.com
18. www.dsireusa.org
19. www.solarfeedintariff.net
20. www.nrel.gov
21. www.iea.org
22. www.kpmg.com
23. www.luxresearchinc.com
24. http://mospi.nic.in