India Solar Investing
India Offers Attractive Subsidies to Launch Solar Industry
Solar Power in India is growing rapidly despite the federal subsidy program, JNNSM not doing so well. This is mainly due to the State Government’s stepping in to fill the void. While Gujarat, has been the stand out state so far, in promoting the use of solar energy and installing almost 70% of the total solar power capacity in the country, other states are too trying to catch up. The latest state to wake up from the slumber and get into the act is Madhya Pradesh . The state has already awarded 297 MW worth of solar projects to solar developers like Welspun, Moser Baer and others. It has now come up with a number of new incentives to further promote the use of PV Power. Some of the incentives are:
a) Exemption from electricity fee
b) Banking of generated power which will allow the developers to store solar power in the grid and sell it during times of peak demand when the prices are high
c) Subsidy in the transportation charges over the grid for the electricity
d) Exemption for VAT and entry tax
The state is also looking to set up 4 solar energy parks in the state along the line of the Gujarat solar park. Each of these parks is expected to generate 200 MW of power. Note Tamil Nadu too has decided to set up solar power parks sparking a solar land rush in the state.
Read about how other states are doing in solar energy.
State Level Subsidies and Progress
Gujarat has been the biggest promoter of Solar Energy in India amongst all the other states. The State has already implemented a clear and forward looking Renewable Energy Policy with emphasis on Solar Energy. It has signed PPAs with a number of solar project developers under its State Solar Subsidy Scheme. While other states are looking mainly towards the federal subsidy scheme JNNSM, to push Solar Energy Generation, Gujarat is looking to push Solar Energy on its own. Gujarat now has reportedly acquired 3000 acres at Charnaka village in Patan District which it will give to solar project developers to install solar panels. In the First Phase of this projects, 80 Developers will install 1-45 MW Solar Plants to generate 500 MW capacity. The next phase will feature another 500 MW of capacity.
The Desert State of Rajasthan has seen an equal amount of interest by solar investors that Gujarat has. Though the Government has not spelled out the Solar Subsidy Policy clearly as of now, it has got hundreds of megawatts in initial proposals from Solar Developers. The Government there has given out large tracts of unused, desert land to solar developers in the western districts of Barmer, Jaisalmer which border Pakistan. The Renewable Energy Policy will probably be set out by the end of the year when these large projects can move forward to the next stage. Transparency and clarity in Policy, like Gujarat will help Rajasthan go a long way in promoting Solar Energy.
Rajasthan has set up Renewable Energy Corporation Limited (RREC) to promote Solar Power in the state. The state has signed around 1524 MW of Solar Project with 49 Developers. The Solar Policy Draft Proposal is mostly vague with a target of 10-12 GW in 10-12 years with around 500 MW in the next 2-3 years. There are little specifics with a proposal to invite bids for 100 MW of Solar Power divided equally between Solar Thermal and Solar PV. Besides the state has managed to migrate 66 MW of Solar Projects to the Federal JNNSM scheme.
India’s largest state in terms of population suffers from the worst power cuts in the country with cities like Kanpur, Meerut, Agra facing brownouts of 8-10 hours on a regular basis. Having a diesel generator or a lead acid storage device is a must for households in these states making it a prime demand source for solar energy. The state recently came out with a tender for 100 MW of solar installations at a electricity tariff of 4.74 rupees ($0.11) a kilowatt-hour. The EOI at the UPPCL website mentions a bundled/standalone rate for the solar power to be supplied. As it is evident no one can make money at this tariff from standalone it would mean bundling of solar with cheaper power sources. Again the EOI is vague and short on details with just 2 paragraphs.
India’s Uttar Pradesh state is seeking to buy 100 megawatts of power from solar plants to meet government-set clean energy targets. Uttar Pradesh Power Corp., the bulk electricity supplier to the northern state’s five distribution utilities, will pay a maximum of 4.74 rupees ($0.11) a kilowatt-hour, it said in a tender notice in today’s Economic Times. For the financial year starting today, state electricity distribution utilities are required to purchase 5 percent of their power from clean sources, 0.5 percent from solar and the remainder from wind, biomass and others.
The state with the largest installed electricity capacity in the country is lagging far behind in renewable energy generation. It has recently promoted Wind Energy through new incentives and seems set to promote Large Solar Power Plants above 5 MW.
With a view to encourage solar energy projects in Maharashtra, state government is coming up with a policy. “The government is framing the policy to promote solar power plants of 5 MW or more capacity in the state,” Non-Conventional Energy Minister Ganesh Naik informed the Legislative Council in a written reply last week.
India’s Capital has come out with a target of 20 MW in 3 years by giving a generous 37c/Kwh Feed in Tariff for residential owners in the capital. The state government has allowed residential owners to get a 19% IRR for putting up solar panels on their roof.
Madhya Pradesh Government today approved its new solar energy policy, under which, four solar energy parks each generating 200 MW of power will be set up in the state under public-private partnership. The Solar Energy Policy-2012 was approved by the state cabinet at its meeting chaired by the Chief Minister Shivraj Singh Chouhan, official sources said. Under the new policy, four solar energy parks of 200 MW each capacity will be established. Other features of the new policy are 10 year exemption in electricity fee and cess, four per cent subsidy by the state government in the wheeling charges, banking of generated power and exemption as per rules in VAT and entry tax, among others. Madhya Pradesh, which gets solar rays in abundance, has so far given clearance for setting up 297-MW capacity solar power projects in the state. Besides, country’s biggest solar power project, with a capacity to generate 130 MW power, is being set up in Neemuch district of the state.