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Project Report on

“Comparative Study Of Solar Policies of Various States ,SPO, RRF

mechanism & Solar (PV) development path”

The Tata Power Trading Company Limited

Under the guidance of

Mr. KUNDAN KUMAR Manager, TPTCL

Submitted by

SUMIT KUMAR DUBEY

MBA (Power Management)

Roll No – 89

Sector-33, Faridabad – 121003, Haryana

(Under the Ministry of Power, Govt. of India)

August, 2013

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ACKNOWLEDGEMENT

Apart from efforts of the person doing the project, the success of any project depends largely

on the encouragements and guidelines of many others. I take this opportunity to express my

gratitude to the people who have been instrumental in the successful completion of the

project.

I thank to Mr Rajendran Nair, Head-Admin and Corporate Affairs for giving me the

opportunity to work on such an insightful project with such a renowned company. I would

like to extend my thanks to my guide Mr. Kundan Kumar, for showing me the right path

and approach towards the project.

Special thanks to Mr. Neeraj Srivastava and Mr. Avanish Verma for their benevolent

support. I would also like to thank all the staff members of TATA POWER TRADING

COMPANY LIMITED. Without their insights and helpful thoughts, I would not have

gained as much information as I have. Their help has sparked my interest even more.

I feel deep sense of gratitude towards Mr.S.K.Chaudhary, Principal Director, CAMPS, my

internal Project Guide Mrs. Karishma verma , Sr. Fellow , NPTI Mrs. Manju Mam,

Director, NPTI , Mrs. Indu Maheshwari, Dy. Director, NPTI for arranging my internship at

TPTCL and being a constant source of motivation and guidance throughout the course of my

internship.

I also extend my thanks to all the faculties and my batch mates in CAMPS (NPTI), for

their support and guidance throughout the course of internship.

I am grateful to my family who gave me the moral support in my times of difficulties.

Thank you all for being there for me always.

SUMIT KUMAR DUBEY

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DECLARATION

I, Sumit Kumar Dubey, Roll No 89 student of MBA (POWER MANAGEMENT) at

National Power Training Institute, Faridabad hereby declare that the Summer Training Report

entitled - “Comparative Study Of Solar Policies of Various States,SPO, RRF mechanism

& Solar (PV) development path” is an original work and the same has not been submitted to

any other Institute for the award of any other degree.

A Seminar presentation of the training report was made on 2nd

September and the suggestions

as approved by the faculty were duly incorporated.

Presentation In charge Signature of the Candidate

(Faculty)

Countersigned

Director/Principal of the Institute

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CERTIFICATE

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EXECUTIVE SUMMARY

Sun is the ultimate source of energy and mankind has been harnessing Sun‘s 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. Though fossil fuels are less

cheaper way to generate electricity but the cost paid as degradation of environment is huge

and at present moment the situation of our home planet has become very poor

environmentally. Nations have acknowledged this threat and are now investing in renewable

sources of energy to produce electricity. Major renewable sources are Hydro, Wind, Biomass

and Solar.

India is blessed with abundant solar energy and if harnessed efficiently, the country is

capable of producing trillion-kilowatts of electricity. Solar energy is extremely beneficial as it

is non-polluting and its generation can be decentralized. There is needto come together and

take initiatives to create technologies for a greater use of these sources to combat climate

change by reducing the emission of green house gases.

This report starts by referring the provisions and important statements in the Indian federal

legislative documents relating to solar technologies.

Comparative study of rules, regulations, policies and tariff components related to solar

technologies has been done of the states of India namely Gujarat, Orissa, Madhya-Pradesh,

Rajasthan, Haryana, Bihar, Karnataka , Manipur and Maharashtra .

Report further deals with Renewable Purchase Obligation (RPO). target set by the SERC

for the distribution utility in the State & Renewable Energy Certificate (REC) mechanism .

To enter into any field of interest with a new project it is very important to scrutinize and

analyse the options available, SWOT analysis of solar technologies in the footsteps of a

developer was carried out during the training and the same has been mentioned Report further

deals with the RRF mechanism and its implication to solar industry in India .

Pro‘s and Con‘s of state policies and regulations are mentioned from a developer‘s 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

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Study about the future growth of the solar (pv) in various states and solar radiation pattern for

the viability of solar project in the state. As solar radiation is important for the utilisation

factor of the plant .

Estimation of grid parity in India and its implication on solar power projects and various

methods that can be adopted by solar generators for the selling of their power. Report further

details the role of traders for the promotion of solar.

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LIST OF ABBREVIATIONS

AC ALTERNATING CURRENT

AD ACCELERATED DEPRECIATION

CAC CENTRAL ADVISORY COUNCIL

CASE COMMISSION FOR ADDITIONAL SOURCES OF ENERGY

CDM CLEAN DEVELOPMENT MECHANISM

CEA CENTRAL ELECTRICITY AUTHORITY

CSDL CENTRAL DEPOSITORY SERVICES LIMITED

CSP CONCENTRATED SOLAR POWER

CTU CENTRAL TRANSMISSION UNIT

CER CERTIFIED EMISSION REDUCTION

CUF CAPACITY UTILIZATION FACTOR

DC DIRECT CURRENT

DNA DESIGNATED NATIONAL AUTHORITY

DNES DEPARTMENT OF NON-CONVENTIONAL ENERGY SOURCES

DNI DIRECT NORMAL IRRADIANCE

DOE DESIGNATED OPERATIONAL ENTITY

EB EXECUTIVE BOARD

GENCOS GENERATING COMPANIES

GHG GREEN HOUSE GASES

HCA HOST COUNTRY APPROVAL

IPP INDEPENDENT POWER PRODUCER

IREDA INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY

IRL INDIABULLS REALTECH LIMITED

IEGC INDIAN ELECTRICITY GRID CODE

JI JOINT IMPLEMENTATION

JNNSM JWAHARLAL NEHRU NATIONAL SOLAR MISSION

Kwh KILLOWATT HOUR

MoEF MINISTRY OF ENVIRONMENT AND FOREST

MSEDCL MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD

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MNES MINISTRY OF NON-CONVENTIONAL ENERGY SOURCES

MNRE MINISTRY OF NEW AND RENEWABLE ENERGY

MoU MEMORANDUM OF UNDERSTANDING

MoP MINISTRY OF POWER

MVVNL MADHYANCHAL VIDYUT VITRAN NIGAM LTD.

MW MEGAWATT

MWh MEGAWATT HOUR

NBFC NON-BANKING FINANCIAL COMPANIES

NCDMA NATIONAL CLEAN DEVELOPEMENT AUTHORITY

NCR NATIONAL CAPITAL REGION

NSE NATIONAL STOCK EXCHANGE

NSM NATIONAL SOLAR MISSION

NRSE NEW AND RENEWABLE SOURCES OF ENERGY

NSDL NATIONAL SECURITIES DEPOSITORY LIMITED

NLDC NATIONAL LOAD DISPATCH CENTRE

NEP NATIONAL ELECTRICITY POLICY

NREL NATIONAL RENEWABLE ENERGY LABORATORY

NTP NATIONAL TARIFF POLICY

NTPC NATIONAL THERMAL POWER CORPORATION

NVVN NTPC VIDYUT NIGAM LIMITED

PCN PROJECT CONCEPT NOTE

PDD PROJECT DESIGN DOCUMET

PPA POWER PURCHASE AGREEMENT

PV PHOTOVOLTAIC

PEDA PUNJAB ENERGY DEVELOPMENT AGENCY

PPDL POENA POWER DEVELOPMENT LIMITED

PSPCL PUNJAB STATE POWER CORPORATION LIMITED

RLDC REGIONAL LOAD DISPATCH CENTRE

ROE RETURN ON EQUITY

RPO RENEWABLE PURCHASE OBLIGATION

REC RENEWABLE ENERGY CERTIFICATE

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SWOT STRENGTH, WEAKNESSES, OPPORTUNITIES & THREATS

SEB STATE ELECTRICTY BOARD

SEZ SPECIAL ECONOMIC ZONE

SPC STATE POWER COMMISSION

SLDC STATE LOAD DISPATCH CENTRE

UNFCCC UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE

CHANGE

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TABLE OF CONTENTS

ACKNOWLEDGEMENT ii

DECLARATION iii

CERTIFICATE iv

EXECUTIVE SUMMARY v

LIST OF ABBREVATIONS vii

CONTENTS x

CHAPTER-1

INTRODUCTION

1.1 SOLAR ENERGY 1

1.2 SOLAR TECHNOLOGIES 2

1.3 SOLAR POWER 3

1.4 OBJECTIVE & SCOPE 5

1.5 SIGNIFICANCE 6

1.6 ORGANISATION PROFILE 7

CHAPTER-2

LITERATURE SURVEY & SCENARIOS

2.1 LEGISLATION EVOLVEMENT 9

2.1.1 ELECTRICITY ACT 1910 9

2.1.2 ELECTRICITY SUPPLY ACT 1948 9

2.1.3 ELECTRICITY REGULATORY COMMISSIONS ACT 1998 9

2.1.4 ELECTRICITY ACT 2003 10

2.1.5 NATIONAL ELECTRICITY POLICY 2005 (NEP) 10

2.1.6 NATIONAL TARIFF POLICY 2006 (NTP) 10

2.1.7 NATIONAL ACTION PLAN ON CLIMATE CHANGE 11

2.1.8 INDIAN ELECTRICITY GRID CODE (IEGC) 13

2.1.9 TARIFF REGULATIONS 2009 15

2.1.10 TARIFF REGULATIONS FOR RENEWABLE ENERGY 2012 16

2.2 GOVERNING INSTITUTIONS 16

2.2.1 FUNCTIONS OF MNRE 18

2.2.2 FUNCTIONS OF GOVERNMENT 19

2.3 WORLD SCENARIO 20

2.3.1 FUTURE PROSPECTS 21

2.3.2 UNFCCC 22

2.4 INDIAN SCENARIO 23

2.5 FUTURE PROSPECTS 24

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CHAPTER-3

STATE SOLAR POLICY ANALYSIS

3.1 STATES 27

3.1.1 GUJARAT 28

3.1.2 KARNATAKA 31

3.1.3 MADHYA-PRADESH 34

3.1.4 RAJASTHAN 39

3.1.5 HARYANA 45

3.1.6 BIHAR 50

3.1.7 MIZORAM 56

3.1.8 CHHATTISHGARH 58

CHAPTER-4

SPO OF VARIOUS STATE, STUDY ABOUT REC, RRF & SWOT ANALYSIS

4.1 SPO OF STATES 62

4.2 REC 71

4.3 RRF MECHANISM 78

4.4 GRID PARITY 84

4.5 OTHER OPTION FOR SPO 86

4.6 FINDINGS & RECOMENDATION 87

BIBLIOGRAPHY 88

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CHAPTER-1

INTRODUCTION

Electricity is one of the basic requirements for economic development. Every sector of the

economy requires input of electricity. Since independence there has been a continuous

growth in electric energy requirement which till date has been majorly satisfied by coal and

will continue to remain the same in near future, but there has been a fast rise in technology

based on renewable sources of energy, mainly Hydro, solar and wind, and their share in total

energy mix has been increasing steadily. Hydro technology has matured over the period of

time but solar is relatively in nascent stage and require R&D for continuous evolution.

1.1 SOLAR ENERGY

Solar energy is the energy received in the form heat and radiations from sun. Mankind has

been harnessing solar energy since ancient times using ever-evolving technologies. The Earth

receives 174 petawatts (PW) of incoming solar radiation (isolation) at the upper atmosphere.

Approximately 30% is reflected back to space while the rest is absorbed by clouds, oceans

and land masses. The amount of solar energy reaching the surface of the planet is so vast that

in one year it is about twice as much as will ever be obtained from all of the Earth's on

renewable resources of coal, oil, natural gas, and mined uranium combined. Solar energy can

be harnessed in different levels around the world. Depending on a geographical location the

closer to the equator the more "potential" solar energy is available

Fig. 1.1 Average insolation showing land area (small black dots) required to replace the world primary energy supply with solar electricity. 18 TW is 568 Exajoule (EJ) per year. Insolation for most people is from 150 to 300 W/m2 or 3.5 to 7.0

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1.1.1 SOLAR TECHNOLOGIES

Solar technologies are broadly characterized as either passive or active depending on the way

they capture, convert and distribute sunlight. Active solar techniques use photovoltaic panels,

pumps, and fans to convert sunlight into useful outputs. Passive solar techniques include

selecting materials with favourable thermal properties, designing spaces that naturally

circulate air, and referencing the position of a building to the Sun. Active solar technologies

increase the supply of energy and are considered supply side technologies, while passive

solar technologies reduce the need for alternate resources and are generally considered

demand side technologies

SOLAR TECHNOLO

GY

SOLAR PV

CRYSTALLINE

THIN FILM

THERMAL

SOLAR CHIMNEY

CSP

STIRLING

Parabolic Trought

Solar tower

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1.1.2 SOLAR POWER Solar power is the conversion of sunlight into electricity, either directly using photovoltaics

(PV), or indirectly using concentrated solar power (CSP)

1.1.2.1 CONCENTRATED SOLAR POWER (CSP)

Concentrated Solar Power (CSP) systems use lenses or mirrors and tracking systems to focus

a large area of sunlight into a small beam. The concentrated heat is then used as a heat source

for a conventional power plant. A wide range of concentrating technologies exists and

themost developed are the parabolic trough, the concentrating linear Fresnel reflector, the

Stirling dish and the solar power tower. Various techniques are used to track the Sun and

focus light. In all of these systems a working fluid is heated by the concentrated sunlight, and

is then used for power generation or energy storage. A parabolic trough consists of a linear

parabolic reflector that concentrates light onto a receiver positioned along the reflector's focal

line. The receiver is a tube positioned right above the middle of the parabolic mirror and is

filled with a working fluid. The reflector is made to follow the Sun during the daylight hours

by tracking along a single axis. Parabolic trough systems provide the best land-use factor of

any solar technology. Commercial concentrated solar power plants were first developed in

the 1980s. The 354 MW SEGS (Solar Energy Generating Systems) CSP installation is the

largest solar power station in the world, located in the Mojave Desert of California

1.1.2.2 PHOTOVOLTAICS A solar cell, or photovoltaic cell (PV), is a device that converts light into electric current

using the photoelectric effect. The first solar cell was constructed by Charles Fritts in the

1880s. Solar cells produce direct current (DC) power, which fluctuates with the intensity of

the irradiated light. This usually requires conversion to certain desired voltages or alternating

current (AC), which requires the use of the inverters. Multiple solar cells are connected inside

the modules. Modules are wired together to form arrays, then tied to inverter, which produces

power with the desired voltage, and frequency/phase (when AC). Many residential systems

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are connected to the grid wherever available, especially in the developed countries with large

markets. In these grid-connected PV systems, use of energy storages are optional. In certain

applications such as satellites, lighthouses, or in developing countries, batteries or additional

power generators are often added as back-ups, which forms stand-alone power systems. The

214 MW Charanka Solar Park (Gujarat) in India is the world‗s largest photovoltaic power

station.

The evolution of solar technology to current stage is the result of research that started

in1800s.

Crystalline silicon

Polycrystalline silicon is also a key component of solar panel construction. Growth of the

photovoltaic solar industry was limited by the supply of the polysilicon material. For the first

time, in 2006, over half of the world's supply of polysilicon was being used for production of

renewable electricity solar power panels. Only twelve factories were known to produce solar

grade polysilicon in 2008. Modules are typically categorized as mono-crystalline or

polycrystalline modules. Mono-crystalline silicon was higher priced and more efficient than

multi-crystalline. This however changed and, in 2011, there was a large excess of production

capacity of polysilicon.

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Thin film modules

A thin-film solar cell (TFSC), also called a thin-film photovoltaic cell (TFPV), is a solar cell

that is made by depositing one or more thin layers (thin film) of photovoltaic material on a

substrate. The thickness range of such a layer is wide and varies from a few nanometres to

tens of micrometers.

1.2 OBJECTIVE & SCOPE

The objective of this project is to enhance power sector knowledge through industrial

exposure in solar sector by interpreting, analyzing and presenting:-

1. Historical development of legislative framework.

2. Policies of states including Gujarat, Orissa, Haryana, Bihar, Madhya Pradesh,

Rajasthan, Manipur and Delhi

3. Major Players (Developers and Suppliers).

4 Study about RPO ,REC & RRF

5. SWOT analysis of solar development mechanism

6. Providing recommendations.

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1.3 SIGNIFICANCE

The significance/usefulness of this project can be shown as:-

1. The report shall be useful in providing the necessary data for decision making in

solar domain.

2. It shall enhance the knowledge of reader by providing in-depth view of energy

and tariff policies.

3. The project shall provide a simple view of complex legislature thus making it easy

to understand.

4. It provides compiled information, thus reader doesn‗t have to refer many

documents.

5. It provides recommendations and findings which shall help making future plans

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1.4 ORGANISATIONAL PROFILE

Tata Power Trading Company Limited is a wholly owned subsidiary of The Tata

Power Company Limited. The Tata Power Company Limited is India's oldest and the

largest integrated private sector power utility with an installed generation capacity of

8500 MW as on 31st March 2013. The Company has emerged as a pioneer in the

Indian power sector, with a track record of performance, customer care and

sustained growth. Tata Power has a presence in all areas of power sector viz.

Generation (thermal, hydro, solar and wind), Transmission and Distribution.

Tata Power Trading is the first company in India to be awarded a power trading

license by Central Electricity Regulatory Commission on 9th June 2004. Tata Power

Trading was incorporated on 31st December 2003 and registered as a Limited

company on 16th February 2004. The Company has progressively upgraded from

Category 'A' license in 2004 to Category 'F' on 9th June 2005 and again to Category

'I' on 16th February 2009 which continues to entitle it to trade unlimited power. Tata

Power Trading has become a trailblazer in the power trading arena with a host of

innovative initiatives.

Tata Power Trading has been at the forefront in shaping India's vibrant power trading

market. With access to Technical, Managerial and Financial resources of its parent

company, it is uniquely equipped to provide an unmatched range of services,

customer care and complete payment security for its customer’s at the most

competitive rates. As an extremely well knit organization, it has domain expertise in

all the segments of Power Trading whether it be Marketing, Commercial or

Operations, supported ably by the Finance, Legal and Administrative functions.

In a short span of time after receiving the license, Tata Power Trading has catalyzed

the flow of electricity across the length and breadth of the country helping bridge the

demand and supply gap of the various utilities.

1.1 VISION To be the leading and the most admired power trading company in India.

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1.2 MISSION To serve our customer and partners through innovative and effective power trading solutions and

associated services; rendered with transparency, speed , reliability, safety and efficiency. To

create value for all the stakeholders through unique combination of talent, knowledge, skills and

technology.

1.3 CORE VALUES

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CHAPTER-2

LITERATURE SURVEY & SCENARIOS

2.1 LEGISLATION EVOLVEMENT

The legislature for electricity sector has been evolving from the 1800s providing important

guidelines for smooth and efficient functioning of power sector. The concept and need of

provisions for inclusion and enhancement of renewable energy was felt in the later stages. In

this section we take a look at different acts and see what they say about renewable including

solar energy.

2.1.1 ELECTRICITY ACT 1910

The electricity act 1910 was the first act which provided detailed definitions and also made

efforts for competition enhancement. It was also the first act which provided judicial

framework for the power sector and clearly defined theft and related penalties, but the act

does not talk about renewable energy as at that time the concept was not on ground and the

focus was on regulating the sector by solving the present problems and providing a clear

framework.

2.1.2 ELECTRICITY SUPPLY ACT 1948

The act was made on broad lines of Electrify (Supply) act 1926 of United Kingdom. Main

aim of act was to provide for the rationalization of the production and Supply of electricity,

and generally for taking measures Conducive to Electrical development. The formation of

EA and SEB‗s and stating their statutory powers was the main highlight of this act. This act

also doesn‗t talks about renewable as the efficient and usable technology was not present

2.1.3 ELECTRICITY REGULATORY COMMISSIONS ACT 1998

As the sector progressed, need was felt to divest regulatory powers from government and in

pursuance of this vision this act was formulated to provide for the establishment of a Central

Electricity Regulatory Commission and State Electricity Regulatory Commissions,

rationalization of electricity tariff, transparent policies regarding subsidies, promotion of

efficient and environmentally benign policies and connected matters. During this period the

installed capacity of solar PV in the world had surpassed the 700 MW mark but India was

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still not in the picture and also the act did not convey any guidelines for the non conventional

sources of electricity generation

2.1.4 ELECTRICITY ACT 2003 Electricity Act 2003 is considered the most transformational and dynamic act till date. The

main focus of act was on de-bundling of the electrical utilities, but it also included guidelines

for renewable energy.

Section 4

The National policy on stand-alone system shall include renewable sources.

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.

Section 86 (1) (e)

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 licensee‗s area shall be satisfied from renewable sources

specified by the commission.

2.1.5 NATIONAL ELECTRICITY POLICY 2005 (NEP)

National electricity policy was launched in accordance with section 3 of electricity act 2003

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

onconventional 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

2.1.6 NATIONAL TARIFF POLICY 2006 (NTP)

National electricity policy was launched in accordance with section 3 of electricity act 2003

in continuation with national electricity policy

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Section 6.4

The section states that in present stage the conventional and non-conventional technologies

cannot compete at similar tariff and hence the power shall be procured from nonconventional

sources at preferential tariff determined by the appropriate commission but it also states that

in long term the non-conventional technologies have to compete with other sources in terms

of full cost. It also states that appropriate commission will fix the minimum percentage of

power to be procured from non-conventional sources with reference to section 86 (1) of

electricity act 2003.

2.1.7 NATIONAL ACTION PLAN ON CLIMATE CHANGE

Keeping in view the depletion of environment and resources and need for conservation of

energy sources on 30th June 2008 prime minister Dr. Manmohan Singh released India‗s first

National Action Plan on Climate Change identifying eight core national missions

Section 4.1

As per this section a national solar mission was launched on 11th Jan. 2011 to significantly

increase the share of solar in total energy mix. The programme was launched in three phases

with following targets:-

1. To create an enabling policy framework for the deployment of 20,000 MW of solar power

by 2022.

2. To ramp up capacity of grid-connected solar power generation to 1000 MW within three

years by 2013, an additional 3000 MW by 2017 through the mandatory use of the renewable

purchase obligation by utilities backed with a preferential tariff. This capacity can be more

than doubled reaching 10,000 MW installed power by 2017 or more, based on the enhanced

and enabled international finance and technology transfer. The ambitious target for 2022 of

20,000 MW or more, will be dependent on the ‗learning‗ of the first two phases, which if

successful, could lead to conditions of grid-competitive solar power. The transition could be

appropriately up scaled, based on availability of international finance and technology.

3. To create favorable conditions for solar manufacturing capability, particularly solar

thermal for indigenous production and market leadership.

4. To promote programmes for off grid applications, reaching 1000 MW by 2017 and 2000

MW by 2022.

5. To achieve 15 million sq. meters solar thermal collector area by 2017 and 20 million by

2022.

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6. To deploy 20 million solar lighting systems for rural areas by 2022. The ultimate objective

of the Mission would be to develop a solar industry in India that is capable of delivering solar

energy competitively against fossil options from the Kilowatt range of distributed solar

thermal and solar PV to the gigawatt scale of base load priced and dispatchable CSP within

the next 20-25 years.

Section 3.1-Technical

This section defines different technologies used for solar generation as addressed earlier in

section 1.2 and also encourages research and technology collaborations, it also defines the

responsibilities of National solar mission as:-

1. Deployment of commercial and near commercial solar technologies in the country.

2. Establishing a solar research facility at an existing establishment to coordinate the

various researches, development and demonstration activities being carried out in India,

both in the public and private sector.

3. Realizing integrated private sector manufacturing capacity for solar material, equipment,

cells and modules.

4. Networking of Indian research efforts with international initiatives with a view to

promoting collaborative research and acquiring technology where necessary, and adapting the

technology acquired to Indian conditions.

5. Providing funding support for the activities foreseen under 1 to 4 through government

grants duly leveraged by funding available under global climate mechanisms, and earnings

from deployment of research sponsored by the Mission. Policy and Regulatory measures for

promotion of solar technologies would also be enhanced as common to all renewables based

technologies.

The section also addresses the targets and the technology gap between domestic and foreign

players and goes on to say that Indian approach should be in order to bridge this gap

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NTPC Vidyut Vyapar Nigam Ltd. (NVVN)

It was formed by NTPC Ltd, as its wholly owned subsidiary to tap the potential of power

trading in the country thereby promote optimum capacity utilization of generation and

transmission assets in the country and act as a catalyst in development of a vibrant electricity

market in India.

In order to facilitate grid connected solar power generation in the first phase,

a mechanism of "bundling" relatively expensive solar power with power from the unallocated

quota of the Government of India (Ministry of Power) generated at NTPC coal based stations,

which is relatively cheaper, has been proposed by the National Solar Mission. This "bundled

power" would be sold to the Distribution Utilities at the Central Electricity Regulatory

Commission (CERC) determined prices

NVVN is the designated Nodal Agency for procuring the solar power by entering into a

Power Purchase Agreement with Solar Power Generation Project Developers who will be

setting up Solar Projects before March 2013 and are connected to the grid at a voltage level

of 33 kV and above. For each MW of installed capacity of solar power for which a PPA is

signed by NVVN, the Ministry of Power (MoP) shall allocate to NVVN an equivalent

amount of MW capacity from the unallocated quota of NTPC coal based stations and NVVN

will supply this "bundled" power to the Distribution Utilities

2.1.8 INDIAN ELECTRICITY GRID CODE (IEGC)

IEGC provides standards, guidelines and rules to be followed by all utilities using and

connected to interstate transmission system (ISTS) to develop, maintain and operate the

power system, in the most secure, reliable, economic and efficient manner so that healthy

competition in the generation and supply of electricity can occur

IEGC 2006

IEGC 2006 does not provide for guidelines for renewable energy

IEGC 2010

IEGC 2010 includes the guidelines for the use of renewable described below

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Section 1.2

This section states that providing facilitation of the development of renewable energy sources

by specifying the technical and commercial aspects for integration of these resources into the

grid is one of the objectives of IEGC.

Section 1.4 (v) & 6.2

The interpretation of this section in view of renewable is that while formulating scheduling

and dispatch code it has been kept in mind that focus of Indian government is towards

enhancement of renewable.

Section 2.4.5

This section states that preparation of monthly renewable regulatory charge account based on

data provided by SLDC/RLDC of the State/Region by RPC Secretariat or any other person as

notified by the Commission from time to time is amongst the roles of RPC.

Section 3.4 (a)

In formulating perspective transmission plan the transmission requirement for evacuating

power from renewable energy sources shall also be taken care of.

Section 3.4 (b) (6)

The sections statement states that the CTU while planning scheme shall consider renewable

capacity addition plan issued by Ministry of New and Renewable Energy Sources (MNRES).

Section 5.7.1 (c)

This section talks about outage plans and states that the outage planning of run-of-the-river

hydro plant, wind and solar power plant and its associated evacuation network shall be

planned to extract maximum power from these renewable sources of energy.

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Section 6.5 (11)

This section states that while formulating scheduling and dispatch procedures for long term

access, medium term and short term open access it is to be considered that all renewable

energy power plants, except for biomass power plants and non-fossil fuel based cogeneration

plants whose tariff is determined by the CERC shall be treated as MUST RUN‗ power plants

and shall not be subjected to merit order dispatch principles.

Section 6.5 (13) (iii)

The Concerned RLDC and SLDC shall maintain the record of schedule from renewable

power generating stations based on type of renewable energy sources and also while

scheduling generating stations in a region, system operator shall aim at utilizing available

wind and solar energy fully.

Annexure-1 (7)

In case of solar generation no UI shall be payable/receivable by Generator. The host state

shall bear the UI charges for any deviation in actual generation from the schedule. However,

the net UI charges borne by the host State due to the solar generation, shall be shared among

all the States of the country in the ratio of their peak demands in the previous month based on

the data published by CEA , in the form of regulatory charge known as the Renewable

Regulatory Charge operated through the Renewable

Annexure-2 (9)

This section issues guidelines to NLDC to prepare, within one month of notification of these

regulations, a detailed procedure for implementation of the mechanism of Renewable

Regulatory Fund and submit the same for approval by the Commission.

2.1.9 TARIFF REGULATIONS 2009

Tariff regulations were launched for the rational determination of tariff throughout the

electricity sector but tariff determination of power from non-conventional sources of energy

was not in its scope

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Section 4

The Commission decided to come out with a separate regulation for determination of tariff

based on nonconventional energy sources

2.1.10 TARIFF REGULATIONS FOR RENEWABLE ENERGY 2012

Tariff regulations for renewables for a period of five years starting from 2012-13 were

released by CERC. The main objective of these regulations was to rationalize the tariff and to

bring the non-conventional sources at par with conventional sources. The tariff regulations

comprehensively defined terms and levellised tariff calculations criteria‗s with examples

Solar

Some important point given under the regulations for solar are:-

1. As per section 2 (1) (aa) the useful life of solar is 25 Yrs.

2. As per section 6 (b) tariff period for solar (PV and thermal) is 25 Yrs.

3. As per section 5 the benchmark capital cost of solar technologies (PV & Thermal) may

be reviewed annually by CERC.

4. As per section 9 the tariff shall be single part-tariff with five fixed components namely, a)

Return on equity b) Interest on loan capital c) Interest on working capital d) Depreciation

e) Operation and maintenance expenses.

5. As per section 11 (4) solar generating plants with capacity of 5 MW and above &

connected at the connection point of 33 KV level and above shall be subjected to

scheduling and dispatch code as specified under IEGC-2010, as amended from time to

time.

2.2 GOVERNING INSTITUTIONS

The Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the

Government of India for all matters relating to new and renewable energy. The broad aim of

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the Ministry is to develop and deploy new and renewable energy for supplementing the

nergy requirements of the country. The ministry has evolved in following steps:-

1. The sudden increase in the price of oil, uncertainties associated with its supply and the

adverse impact on the balance of payments position led to the establishment of the

Commission for Additional Sources of Energy (CASE) in the Department of Science &

Technology in March 1981. The Commission was charged with the responsibility of

formulating policies and their implementation, programmes for development of new and

renewable energy apart from coordinating and intensifying R&D in the sector.

2. In 1982, a new department, i.e., Department of Non-conventional Energy Sources

(DNES), that incorporated CASE, was created in the then Ministry of Energy.

3. A unique institutional innovation has been the setting up of the IREDA (Indian

Renewable Energy Development Agency) in 1987 to finance renewable energy projects.

The main objective of IREDA is to operate a revolving fund for promotion, development

and commercialization of New and Renewable Sources of Energy (NRSE) and to extend

financial support to Energy efficiency & conservation projects and schemes

4. In 1992, DNES became the Ministry of Non-conventional Energy Sources. MNES, in

1993 prepared policy guidelines for promotion of power generation from renewable energy

sources which included provisions such as accelerated depreciation, concessions regarding

the banking, wheeling and third party sale, among others. Power being a concurrent subject

between the central and the state governments in India; different states adopted the MNES

guidelines to varying degree.

5. In October 2006, the Ministry was re-christened as the Ministry of New and Renewable

Energy (MNRE). MNRE is the nodal Ministry of the Government of India for all matters

relating to new and renewable energy. MNRE is the administrative ministry entrusted with

the responsibility of policy making, planning, promotion and coordination of various

aspects of renewable energy.

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2.2.1 FUNCTIONS OF MNRE

Facilitate research, design, development, manufacture and deployment of new and renewable

energy systems/devices for transportation, portable and stationary applications in rural, urban,

industrial and commercial sectors through:

1. Technology Mapping and Benchmarking.

2. Identify Research, Design, Development and Manufacture thrust areas and facilitates the

same.

3. Lay down standards, specifications and performance parameters at par with

international levels and facilitate industry in attaining the same.

4. Align costs of new and renewable energy products and services with international levels

and facilitate industry in attaining the same.

5. Appropriate international level quality assurance accreditation and facilitate industry in

obtaining the same.

6. Provide sustained feed-back to manufacturers on performance parameters of new and

renewable energy products and services with the aim of effecting continuous up gradation

so as to attain international levels in the shortest possible time span.

7. Facilitate industry in becoming internationally competitive and a net foreign exchange

earner especially through (ii) to (v) above and related measures.

8. Resource Survey, Assessment, Mapping and Dissemination.

9. Identify areas in which new and renewable energy products and services need to be

deployed in keeping with the goal of national energy security and energy independence.

10. Deployment strategy for various indigenously developed and manufactured new and

renewable energy products and services.

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11. Provision of cost-competitive new and renewable energy supply options

2.2.2 FUNCTIONS OF GOVERNMENT

Central Government shall, from time to time, prepare the National Electricity Policy, policy

for stand-alone systems in rural areas and tariff policy, in consultation with the State

Governments and the Authority for development of the power system. The information flows

according to the organizational structure as stated below.

Fig. 2.1 Organizational Structure of Indian Electricity Sector

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2.3 WORLD SCENARIO

Coal and Oil have been major energy sources for a long time and in the recent time there

have been continuous fluctuations in their supply pertaining to many reasons, further there

has been a steep rise in the price of coal worldwide and consumption with countries like

Japan entering market as coal consumers, these situations have led the world to recognize the

vast potential and need of renewable sources including solar energy in the total energy mix

and the efforts in the field of renewable have increased a great deal which can be seen

through continuous rise in the installed capacity of Solar

Fig. 2.4 Primary Energy Consumption by Fuel

Oil Natural gas Coal Nuclear Hydro Renewables

0%

5%

10%

15%

20%

25%

30%

35%

40%

Energy consumption fuel

Energy consumption fuel

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2.3.1 FUTURE PROSPECTS

In this century, solar power has already become a small part of daily life. From solar heated

swimming pools to solar powered homes, some examples already exist to show the useful

application of the clean, safe, sustainable power of the sun. Yet many wonder if small

applications will be all solar power is capable of handling. Certainly, the difficulties of large

solar plants are many, although many experts continue to insist that the future of solar energy

is quite sunny. According to some experts, the sun is our best source of renewable, clean

energy. Some estimate that the sun can produce 10,000 times as much energy as the Earth

uses at the turn of the 21st century. The future of solar energy depends mostly on how it is

applied, rather than whether it would be enough energy to be a viable world power source.

The largest problem facing the future of solar energy is the space required to build solar

power plants. A solar plant is comprised of thousands of solar panels and requires a

consistently sunny area and a considerable amount of space. Currently, the one of the largest

solar power stations in the world covers more than 10 square miles (16.9 km squared) and

creates enough power to run about 200,000 homes. In addition to building more and larger

plants, the future of solar energy lies in the construction of new buildings and the retro-fitting

of many older ones. As long as the trend toward alternative energy supplies continues, some

experts predict that most, if not all, new buildings will have solar-energy panels installed on

roofs. Since these are also easily installed, many older buildings may receive upgrades to run

on solar power. Experts and environmentalists hope that green-energy building will be

encouraged by world government through generous tax incentives and exemptions for

alternative energy use. One encouraging factor about the future of solar energy is that many

of the world's greatest innovators are choosing to focus their considerable talent and funds on

improving alternative energy technology.

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Fig. 2.5 Solar Potential of Major Countries Although there are many reasons to believe that the future of solar energy is bright and

coming soon, the answer really lies in the hands of the world's citizens. In a world largely

governed by economics and politics, what ordinary citizens choose to buy and support will

dictate the trends of the future. By installing solar panels, donating to research organizations

involved in alternative energies, majoring in science or engineering, and voting for measures

that give money to alternative energy development, anyone can influence the future of solar

energy.

2.3.2 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE

CHANGE

In 1992, countries joined an international treaty, the United Nations Framework Convention

on Climate Change, to cooperatively consider what they could do to limit average global

temperature increases and the resulting climate change, and to cope with whatever impacts

were, by then, inevitable. By 1995, countries realized that emission reductions provisions in

the Convention were inadequate. They launched negotiations to strengthen the global

response to climate change, and, two years later, adopted the Kyoto Protocol. The Kyoto

Protocol legally binds developed countries to emission reduction targets. The Protocol‗s first

commitment period started in 2008 and ends in 2012. Till date there are total 195 parties

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2.3.2.1 KYOTO PROTOCOL

The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into

force on 16 February 2005. The detailed rules for the implementation of the Protocol were

adopted at COP 7 in Marrakesh in 2001, and are called the ―Marrakesh Accords.‖ In Kyoto

protocols three mechanisms namely emission trading, clean development mechanism (CDM)

and Joint implementation (JI) with targets for reduction in overall GHG emissions were

stated and accepted by the parties (nations).

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 für Technische Zusammenarbeit), UNDP

(United Nations development programme) and ADB (Asian Development Bank). CDM is

explained in detail in the later part of this report.

2.4 INDIAN SCENARIO

India is a tropical country, where sunshine is available for longer hours per day and in great

intensity. Solar energy, therefore, has great potential as future energy source. It also has the

advantage of permitting the decentralized distribution of energy, thereby empowering people

at the grassroots level. India is endowed with vast solar energy potential, about 5,000 trillion

kWh per year energy is incident over India‗s land area with most parts receiving 4-7 kWh per

sq. m per day. Solar is the most secure of all sources, since it is abundantly available

Theoretically, a small fraction of the total incident solar energy (if captured effectively) can

meet the entire country‗s power requirements. It is also clear that given the large proportion

of poor and energy un-served population in the country, every effort needs to be made to

exploit the relatively abundant sources of energy available to the country. To enhance and

implement solar technologies NSM (National Solar Mission) was launched. The installed

capacity of solar has reached a significant level and if the targets of JNNSM are met there

shall be a steep rise in the installed capacity.

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Date of Update: 9th March 2013

Sr. No. States Installed Capacity (MW)

1 Andhra Pradesh 23.15

2 Arunachal Pradesh 0.025

3 Chhattisgarh 4

4 Delhi 2.525

5 Goa & UT 1.685

6 Gujarat 824.09

7 Haryana 7.8

8 Jharkhand 16

9 Karnataka 14

10 Kerela 0.025

11 Madhya Pradesh 11.75

12 Maharashtra 34.5

13 Odisha 13

14 Punjab 9.325

15 Rajasthan 442.25

16 Tamil Nadu 17.055

17 Uttarakhand 5.05

18 Uttar Pradesh 12.375

19 West Bengal 2

Total 1440.605

Note : The data is compiled on the basis of information obtained from IREDA, NVVN, State

Agencies and Project Developers

Projects Capacity (MW)

Projects Under JNNSM 421.9

Projects under the State Policy 824.09

Projects Under RPSSGP/GBI Scheme 91.8

Projects Under REC Scheme 23.905

Other projects 78.91

Total 1440.605

2.4.1 FUTURE PROSPECTS

The solar technology is still in upcoming stage and Indian government is providing various

incentives monetary and non-monetary to enhance solar power generation, the government

has fixed certain percentage of total energy mix to be obtained by solar power or REC‗s

under RPO (Renewable Purchase Obligation) similarly a generating company can opt for

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manufacturing a solar plant according to preferential tariff determined by commission or can

go for REC plants which generate tradable certificates on the energy exchanges

REC

Renewable Energy Certificates (RECs) represent the attributes of electricity generated from

renewable energy sources. These attributes are unbundled from the physical electricity and

the two products—the attributes embodied in the certificates and the commodity electricity—

may be sold or traded separately. In other words, one REC represents that 1MWh of energy is

generated from renewable sources. RECs are expected to become the currency of renewable

energy markets because of their flexibility and the fact that they are not subject to the

geographic and physical limitations of commodity electricity. RECs can be used by the

obligated entities to demonstrate compliance with regulatory requirements, such as

Renewable Purchase Obligations

Other prospects

Based on below solar map the solar potential of different regions is calculated and

accordingly planning is done for setting up solar projects. The solar industry has immense

potential for a tropical country like India where around 45% of households, mainly rural

ones, do not have access to electricity, India is endowed with large solar potential estimated

to be 20-30 MW per square kilometer, with regions like Rajasthan or Ladakh having well

over 6 kWh incoming insolation/m2 daily in which some 15% can be converted to electricity

using efficient photovoltaic modules. Allocating just 1% of India‗s land area for solar could

provide for roughly 500000 MW of capacity. Roof top solar PVs have great potential in India

as almost every region of country gets sunlight also concepts like green building have been

accepted by the government and industry which generate huge markets for solar companies

Many states have started promoting solar based applications by giving incentives and tax

savings. States like Gujarat and Rajasthan have formulated transparent and progressive

regulatory framework in order to boost the solar industry. Besides, states like Delhi, Uttar

Pradesh, West Bengal, Maharashtra and Chandigarh are promoting solar energy in rural,

urban and semi urban areas.

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Fig. 2.8 Solar Resource Map of INDIA

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CHAPTER-3

STATE SOLAR POLICY ANALYSIS

States have issued polices for promoting solar energy, some have issued a separate policy for

solar while others have integrated the same in policy for new/renewable/non-conventional or

energy policy, some states have also issued orders. In this section following parameters of the

policy have been studied:-

1. Eligible Producer

2. Land Allotment

3. Operative period

4. Sale of power and tariff

5. Wheeling

6. Banking

7. Power evacuation & grid interfacing

8. Incentives and general

The states have issued guidelines/policy or orders keeping in view the requirement (present

and future) of state and to fulfil mandatory obligation. All policies have pros and cons which

are shown state wise in the next section from a developer‗s point of view:-

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3.1.1 GUJARAT

A state specific policy dedicated to solar was first envisioned by Gujarat in 2009. The outlines were

given under the policy titled “Solar Power Policy -2009”. The policy was the first solar specific policy

introduced in the country predating the National Solar Mission.

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:

o Only new plants and machinery will be eligible under this Policy. No fossil fuel shall be allowed for

Solar Thermal Project.

o 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 determined by GERC from time to time.

Electricity 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

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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:

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.

Reactive power charges:

As per GERC order.

Transmission infrastructure:

Transmission line from SPG switch yard to GETCO sub-station shall be laid by GETCO.SPG to inject

power at 66kV.

Sharing of CDM benefit:

SPG will pass 50% of CDM benefit to DISCOM with whom PPA is signed.

Forecasting & Scheduling:

SPG based generation shall not be covered under scheduling procedure for Intra-state ABT.

Nodal Agencies for facilitation and implementation of Solar Power Policy- 2009:

- Gujarat Energy Development Agency (GEDA)

- Gujarat Power Corporation Limited (GPCL)

The detailed policy document can be downloaded from the following link:

Gujarat Solar Policy 2009

PROs

The policy is very detailed and comprehensive and even describes the

financial and technical requirements of SPG

The tariff allotted is very lucrative.

Long Incentive period of 25 years attract investors.

Wheeling charges of 2% are comparatively lower than other states.

The incentive programme is very good and a large no. of benefits are provided

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CONs

There is capacity cap of minimum 5 MW for SPG.

Bank guarantee of 50 Lakhs /MW is on the higher side.

The policy limits no. of players by providing stringent qualifying criteria.

The policy doesn‗t talk about land allotment which is a major requirement for solar

projects.

Banking of power is not allowed.

The policy is not supportive to budding entrepreneurs.

Gujarat has a very detailed and in-depth policy. The policy favours the big players and there

is very little room for new players to enter. There is little assistance from government in

fulfilling land requirement which is compensated by providing many benefits. It can be seen

from the eligibility criteria and policy on whole that Gujarat government only wants serious

and big players to enter their power market. The policy has a moderate operative period of

five years

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3.1.2 KARNATAKA

Under the Karnataka Renewable Energy Policy, it is envisaged that the State will have a target for

achieving 126 MW of solar power up to 2013-14. The Govt. of Karnataka had released the Solar

Policy for FY11-FY16 on 1st July 2011 envisaging to set up a capacity of 200 MW of solar power in the

state for the RPO fulfilment of the ESCOMs. The policy came into force from 1st July 2011 and shall

remain in force up to 31st March 2016.

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 annual capacity approved will be as

follows:

- This does not include CPP and those put up for sale of power to third party.

- 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.

- Project allocation will be done through competitive bidding process with a maximum tariff being in

accordance with the KERC order.

Additional Capacity:

The state reserves a capacity of 50 MW from the central or state owned undertaking for setting up

solar projects in the state for providing solar power bundled with thermal power from outside the state

at the rates to be determined by the govt. subject to the approval of KERC. This is in addition to the

200 MW of capacity planned as mentioned above.

Wheeling & OA charges:

In addition to envisaged 200MW capacity, captive power plants and plants for sale to third party will

also be set up. In case of captive power plants and projects for sale of power to third party other than

ESCOMs, wheeling and open access charges have to be paid as determined by KERC/CERC

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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.

KREDL will be the nodal agency for facilitating and implementing this policy.

The detailed policy document can be downloaded from the following link:

Karnataka Solar Policy 2011-16

PROs

State government provides land if available.

Banking of power is allowed.

Solar grid connected projects above 1 MW are given additional incentives up-to Rs

12/kWh for solar PV & Rs. 10/kWh for solar thermal in addition to tariff by KERC

KREDL assists in availing CDM benefits.

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Karnataka govt. to reserve 50 MW capacity for solar plants to bundle it with thermal

projects outside state.

CONs

Land Owners to be equity partners of gross energy generated.

Wheeling charges on the higher side

.

For projects not under JNNSM the project capacity shall be 3 MW to 10

MW for PV and minimum for solar thermal be 5 MW

Karnataka solar policy encourages power through solar by providing various incentives.

Major thrust is on captive as 50% installed capacity is for captive use. The policy discourages

entrepreneurship in solar projects because of the high value of installed capacity for

projects (not under JNNSM).

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3.1.5 MADHYA-PRADESH

MADHYA PRADESH SOLAR POLICY 2012

Madhya Pradesh has come out with its 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:

There will be four categories of Solar Projects covered under the policy

- Category I: Projects selected as per the competitive bidding process for selling power to MP

discoms / MP Power Management Company. Maximum/minimum capacity will be as per RfS

document issued by GoMP from time to time. Only project capacities to be installed in the state of

Madhya Pradesh shall be eligible for incentives under this Policy. The total capacity under this

category will be as per the Renewable Purchase Obligation (RPO) targets specified by M.P. Electricity

Regulatory Commission (MPERC) from time to time or as decided by the GoMP.

- 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.

- Projects on Private Land: There is no maximum capacity cap on single project installed on private

land. For projects proposed to be set up on private land, any developer willing to establish solar

power project shall be eligible for incentive subject to registration with the GoMP. Performance

Guarantee to be provided will be as per the guidelines specified in the qualification/selection

document issued by GoMP

For projects proposed to be set up on government land, there shall be a set of qualification criteria

fixed by the GoMP. Every such applicant shall be evaluated against each of the qualification criteria

as specified in the invitation document. Upon eligibility, the available land shall be offered on the basis

of maximum free energy per Mega Watt offered by the qualified bidders. Only such selected projects

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shall be eligible for incentives under this Policy. Performance Guarantee to be provided will be as per

the guidelines specified in the qualification/selection document issued by GoMP

- 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 government Land: For projects proposed to be set up on government land, in addition

to CERC REC mechanism criteria, there shall be a set of qualification criteria fixed by the GoMP.

Every such applicant shall be evaluated against each of the qualification criteria as specified in the

invitation document. Upon eligibility, the available land shall be offered on the basis of maximum free

energy per Mega Watt offered by the qualified bidders. Only such selected projects shall be eligible

for incentives under this Policy. The Developer shall submit Performance Bank Guarantee at the rate

of Rs. 5.0 Lac/MW or part thereof to New & Renewable Energy Department (GoMP). 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

- 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.

Timelines:

Category I Projects: Solar projects under this category will be required to strictly adhere to the

timelines as specified in the qualification/bid document issued by the GoMP.

Category II & III Projects: The project must be commissioned within the timelines mentioned below:

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Decentralized and off-grid solar projects: The Govt. of MP will promote decentralized and off-grid solar applications, including hybrid systems as per guidelines issued by MNRE Performance Guarantee: o Category I project: It will be as per the guidelines specified in the qualification/selection document issued by GoMP. o 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 Contract Demand Reduction: The Industrial Consumers opting to buy power from Solar Power Project under category II and III shall be allowed corresponding pro-rata reduction in Contract Demand on a permanent basis but subject to the decision of MPERC in this regards. 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 Grid evacuation & evacuation facility

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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. Wheeling and transmission charges: The Developer shall be responsible for payment of all wheeling and transmission charges to the MPPTCL/respective Distribution Company in case of sale of power to Third Party Consumers/ Distribution Licensee/ Power Management Co. Ltd utilizing their network the payment shall be subject to the regulations of MPERC. Land: For setting up Solar Power Plant in Madhya Pradesh, maximum land use permission for government land, if available, to the Solar Power Producer shall be 3.0 Hectares per MW. In case the Developer purchases private land for the project, then they will be eligible for an exemption of 50% on stamp duty. In case of land owned by Revenue Department or any other State Government Department, the New & Renewable Energy Department shall take possession of the land and subsequently give permission for use of land to the concerned Developer (whose project has been accorded administrative approval)

Wheeling charges: The policy provides a grant of 4% (in terms of energy injected) by the state under wheeling charges to all solar power projects. 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. Others: Regarding other facilities/incentives such as Open Access, Reactive Power and Renewable Purchase Obligation, the provisions specified by MPERC shall be applicable The detailed policy document can be downloaded from the following link: Madhya Pradesh Solar Policy 2011

PROs

The state government provides land if

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available, and if not, provides half exemption from stamp duty.

Subsidy on wheeling

Banking allowed with 2% as banking 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.

CONs Developer to commission project in 15 months

A huge amount of registration fee is to be paid. (Rs. 50000 per MW max Rs.

500000) As can be seen above the Madhya-Pradesh policy has more pros than cons. The draft policy encourages entrepreneurship and also encourages existing players through various incentives. There is also focus on stand alone systems and many incentives are being offered to power producer, the policy is very pro-active and future oriented

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3.1.6 RAJASTHAN RAJASTHAN SOLAR POLICY 2011 The policy aims at developing Rajasthan as a global hub of solar power of 10,000-12,000 MW capacity in next 10-12 years to meet energy requirements of Rajasthan and India. To achieve grid parity in next 7-8 years, the State will encourage the Solar Power Developers to establish manufacturing plant of their technology in Rajasthan. This Policy document is aimed at giving a direction to the above stated ambition of the Rajasthan state. 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 RERC’s 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 enerating 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.

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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 government plans 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.

6. 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. The capacity allocation for manufacturing plant will be as follows:- Per annum production capacity of Manufacturing Plant

Capacity allocation for SPV based Solar Power Plant

More than 25 MW but less than 50 MW 10 MW

50 MW and above 20 MW

The selection of developers shall be through tariff based competitive bidding. The Solar Power Producer will be required to source SPV modules from their own manufacturing unit established in Rajasthan. 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. 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

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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 Mission’s R&D initiatives in Phase – 1 of Solar Mission. This will include : 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%) b. A 100 MW Parabolic trough technologies based solar thermal plant 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. e. Grid connected rooftops PV systems on selected Government buildings and installations, with net metering f. Solar based space cooling and refrigeration systems 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. The policy also, specifies minimum/maximum capacity to each Solar Power Producer for power projects sanctioned under various categories mentioned above. 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

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power projects established for sale of solar power to Discoms of Rajasthan State, no development charges will be leviable from the Solar Power Producers. 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. Land: Government Land: After registration of the project, RREC will recommend to the concerned District Collector for reservation of the land identified by the Solar Power Producer. The District Collector will set apart the land for the project for a period of three years after examining it’s suitability for allotment under Rajasthan Land Revenue (Allotment of Land for setting up of Power plant based on Renewable Energy Sources) Rules, 2007, as amended from time to time. The Revenue Department may extend the period of reservation on recommendation of RREC. After expiry of the period of reservation, the land will be released for use by other developers and for other purposes. The process of reservation of land will be completed by the concerned District Collector within the 30 days from the receipt of recommendation of RREC. After registration of land, the allotment of land to the Solar Power Projects will be done as per the provisions of Rajasthan Land Rules, 2007, as amended from time to time. The Government land required for Solar Power Plant shall be allotted to Solar Power Producer at concessional rate of 10% of the DLC rate (agriculture land). Private Land: Power Producers shall be allowed to purchase private land from the Khatedar for setting up of Solar Power Plants in excess of ceiling limit prescribed in the Ceiling Act, 1973. Conversion of private land to industrial use shall be required for setting up of Solar Power Plant/Solar manufacturing plant before start of work. The conversion charges shall be 10% of charges levied for Industrial purpose under the relevant rules. Land for Manufacturing unit: Land in RIICO industrial area, in solar parks and will be as per respective regulations. Receiving sub-station: o For 33kV and above grid connected solar plants , RVPN shall finalize the location of receiving Sub-station in consultation with RREC on which the electricity generated will be received at minimum 33 kV level o For 11kV grid connected solar plants, Discoms of Rajasthan shall finalize the location of receiving station for small solar power plant in consultation with RREC. o For LT connected solar plants, Discoms of Rajasthan shall allow interconnections of solar power plants connected to LT voltage level as per standard /norms fixed by Central Electricity Authority/ guidelines of MNRE/ relevant RERC order.

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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. Water Availability: Water Resource Department will allocate required quantity of water from IGNP canal/the nearest available source for development of Solar Thermal Power Plants subject to the availability of water for power generation. Electricity Duty: The energy consumed by the Power producers for own use will be exempted from payment of the electricity duty. Open Access charges and losses: As approved by RERC from time to time. 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 Reactive power charges: As per RERC order. Sharing of CDM benefit: Solar Power Producer will pass CDM benefit to DISCOM with whom PPA is signed as per appropriate commission’s order. Forecasting and scheduling: The Solar energy generated for sale will not be covered under scheduling procedure for Intra-State RREC to act as Nodal Agency for Single Window Clearance of Projects The detailed policy document and amendments (First & Second Amendment) can be downloaded from the following link: Rajasthan Solar Policy 2011 First Amendment to Rajasthan Solar Policy 2011 Second Amendment to Rajasthan Solar Policy 2011

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PROs Government to provide land at concessional rates Bank Guarantee deposit is comparatively low at Rs. 5 lakhs per MW. Surplus energy can be sold outside state. Banking is allowed.

CONs The policy has been amended many times in short period which provides a sense of

instability to the investor.

The policy doesn‗t provide guidelines for eligible producer.

A penalty of Rs. 5 lakhs per MW, if producer commences work on allotted land without

project approval.

The operative period is not given in the policy, hence new policy can be anticipated

anytime soon which adds to uncertainty.

Wheeling charges are very high. Rajasthan does not have a clear cut policy describing solar, some points are not addressed in the various amendments. The policy framework is investor friendly and also provides encouragement to new players. Rajasthan has high solar potential and the government must come up with a clear-cut and elaborate solar policy

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3.1.7 HARYANA Solar Energy The solar insolation level in the State is in the range of 5.5 KWH to 6.5 KWH per sq.mtr. of

area and the State has about 320 clear sunny days in a year. This offers a great potential for

using solar energy for various thermal and electrical energy applications in the State

NODAL AGENCY

Haryana Renewable Energy Development Agency (HAREDA) shall be the State Nodal

Agency for co-ordinating all activities relating to Renewable Energy Development including

generation of power using non-conventional energy sources. HAREDA shall be responsible

for laying down the procedure for inviting the proposals from Independent Power Producers

(IPPs), DPR preparation, evaluation of project proposals, project approvals and project

progress monitoring etc.

OPERATIVE PERIOD:

The scheme of promotional and fiscal incentives as contained herein will come into

operation with the date of its notification in the official gazette and will remain in force till a

new policy is notified

ELIGIBLE PRODUCERS:

Those who intend to generate electricity from Non-conventional Energy Sources such as

Solar, Wind-Electric Generators, Biomass Combustion, Cogeneration, Municipal and

Industrial Waste, Small Hydro (upto 25 MW) and New Technologies like Bio-oil, Fuel Cell

etc. There will be no restriction on generation capacity or supply of electricity to the grid.

There shall be no restriction on legal structure of entrepreneur in generation of power.

Companies, Cooperatives, partnerships, Local Self Governments, State Nodal Agency,

Boards & Corporations, Power utilities, Private developers, Public Private Partnership

Companies,Consortia, registered societies, NGOs, individuals etc. would all be eligible

producers provided they undertake to generate power from non-conventional energy

sources, and fulfil the laid down conditions

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GRID INTERFACING:

i) Interfacing, including transformers, C & R panels duly equipped with the requisite

protection schemes, marshalling kiosks, kiosk protection, metering, High Tension inter

connection points from the points of generation to HVPN, UHBVN, DHBVN and any other

licensee nearest Light/High Tension lines etc. as well as maintenance of Light Tension lines

will be as per the orders of the Haryana Electricity Regulatory Commission/Central

Electricity Regulatory Commission/ Appellate Tribunal for Electricity on Renewable Energy

Tariff & other issues, as modified from time to time ―

ii) Depending upon the generation capacity, if the sub-station capacity at 33/11 KV or

higher levels, is required to be augmented for 66 KV or higher capacity, transmission lines

are to be provided. This will be undertaken by the Licensee/ Utilities at the cost of power

producers.

iii) Two sets of separate meters will be installed on the H.T.side by the producer, as main

meters and check meters. In case of co-generation/ captive power generation two sets of

separate meters will be installed, one for export of power and other for import of power.

iv) Necessary current limiting devices will be installed in the generating equipment by the

producer. Capacitors of sufficient rating will also be provided in the equipment to ensure that

the power factor is always maintained above 0.8.

v) There shall be no restriction on the generation capacity of the project.”

WHEELING CHARGES:

Licensee/ Utilities will undertake to transmit on its grid the power generated by power

producers using non-conventional energy sources and make it available to the producer for

captive use or to a Third Party within the State as per approved tariff including surcharge,

additional surcharge, if any, notified by HERC from time to time. If H.T./ L.T. lines required to

be laid beyond Licensee/ Utilities lines for wheeling the power at any desired point, then the

cost of the same shall have to be borne by the promoter/ power producer. In case, the power

is to be sold to a third party, the name of such party shall be indicated by the power producer

at the time of making an application in the prescribed form of Licensee/ Utilities. However,

inrespect of third party sale, licensee/ utilities would have preference over the power

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generated by the power producers and third party sale would be allowed when the surplus

power is not being evacuated by the licensee/ utilities

PURCHASE PRICE:

(i) New Projects

Licensee/ Utilities will purchase electricity offered by the power producers in case of new

projects set up after the notification of the present policy at the rate to be decided by the

Haryana Electricity Regulatory Commission as per provisions in the New Electricity

Act,2003.

(ia) “HAREDA shall invite proposals from IPPs through competitive bidding routeand the

IPPs will be asked to offer their most competitive rate on which they want to sell power to the

State Power Utilities and the offered rate should not be more than the tariff decided by the

HERC from time to time.”

(ii) For old captive/co-generation projects which are having surplus power to offer for sale to

the power utilities, the tariff shall be negotiated tariff based on negotiation between the

power producers and the power utilities.

BANKING:

HVPNL/ DHBVN/ UHBVN/ licensee is to permit electricity generated by eligible producers to

be banked. The banking facility shall be allowed for a period of one year by the Licensee/

Utilities free of cost. However, withdrawal of banked power should be allowed only during

non-peak hours. If the banked energy is not utilized within a period of twelve months from

the date of power banked with theconcerned power utilities/ licensee, it will automatically

lapse and no charges shall be paid in lieu of such power

ELECTRICITY DUTY:

Non-conventional energy sources power generation and its sale to the Licensee/ Utilities or

third party or for its captive use shall be exempted from the electricity duty.

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13. WATER CHARGES:

Producer will be allowed to use the water for power generation through micro/ mini/ small

hydel plants. No royalty will be charged on the water used for power generation for non-

consumptive use.

14. LOCAL AREA DEVELOPMENT TAX:

Local Area Development Tax will be exempted on plant, machinery, equipment that has

been capitalized in view of the provisions of section 5(f) of Haryana Act No.13 of 2000.

TENURE OF POWER PURCHASE AGREEMENT:

The Power Purchase Agreement (PPA) to be signed between IPP and concerned power

utilities / licensee shall be valid for a minimum period of 20 years or more depending on the

plant’s life. After this period, this shall be renegotiated between power producer and

concerned power utilities/ licensee. However, power utilities shall have the first right to

refuse in case, it does not want to buy the power for period beyond 20 years

LAND FOR THE PROJECT

1 The State Govt. will acquire land if necessary at the cost of Independent Power

Producers (IPP) if a request to that effect is made. 2 Setting up of Renewable Energy

Power Projects in the State will be permitted by the Town & Country Planning

Department without levying of change of land use charges, External Development

Charges, Scrutiny Fee and Infrastructure Development Charges.

PROs

State government will provide assistance for procurement of land.

Banking of power for one year free

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No electrical duty.

LADT exempted.

Change of land use charges, external development charges, scrutiny fee and infrastructure

development charges exempted

CONs

The operative period is not given in the policy, hence new policy can be anticipated

anytime which creates uncertainty.

The plant capacity must be greater than 1 MW for grid interfacing.

Haryana policy for renewable is focused on improving solar potential of the state by

providing various incentives and land assistance. There is requirement of an investor friendly

and comprehensive solar policy as till date the state has abysmal installed capacity

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3.1.8 BIHAR

―Bihar Policy for promotion of New and Renewable Energy Sources 2011

Scope & Coverage

The policy will be applicable for the development of all forms of New and Renewable

Energy sources including biomass & Biogas based projects, cogeneration projects,

mini/micro/small hydro projects (up to 25MW) wind power projects, Solar projects,

municipal solid waste based projects and any other renewable resources based projects.

This policy will be applicable to all New and Renewable Energy projects. The policy shall be

applicable for any industry, institution Private Agency, partnership firm, consortia, Panchayat

Raj institutions, Urban Local bodies, co-operative or registered society desirous of installing

and generating electricity from New and Renewable Energy Sources

Land

1 .Government land in the industrial area, if available and identified by the developer, may be

leased in accordance with Government of Bihar policy for the allotment of land.

2 .The project developer may purchase private land directly from the owners, on their own

3 .Use of agricultural land may be allowed for non-agricultural purposes.

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Project approval:

1 . The project developer shall be required to submit the application to State investment

promotion Board (SIPB), Department of Industries, Government of Bihar along with a pre-

feasibility report, applicable processing fee & site details. The nodal agency for evaluation

and recommendation of the application for such projects shall be Bihar Renewable Energy

Development Agency ( BREDA), except for mini/micro/small hydro projects for which Bihar

State Hydro Electric Power Corporation (BSHPC) shall be the nodal agency.

2 The project developers, who have received the project approval from SIPB without

specifying the site/location of the proposed projects, shall be required to identify the

site/location and duly inform about the same to SIPB for approval within a period of one (1) month

from the date of notification of this policy

Grid interfacing and evacuation arrangement

1 T.he project developer shall necessarily offer to supply to Bihar State Electricity Board

(BSEB)/ Distribution Licensee a minimum of 25% of power generated from the respective

New and Renewable Energy project, except for captive projects, However, the acceptance

of such offer for supply of power shall be at the sole discretion of BSEB/Distribution

Licensee.

2 The sale of power from such generation project to the grid or using the greed for wheeling

of power the third parties will require the project developer to design and construct the

system at its own cost, such that interfacing with the State grid/BSEB grid is done as per the

latter‘s pecifications & requirements/Indian Electricity Grid Code/ Bihar Grid Code as

applicable and amended from time to time.

3 The capital cost of transmission system for evacuation of power to the nearest grid/ sub-

station including all metering & protective instruments shall be born by BSEB, which shall

be reimbursed to BSEB by the State Government, provided that the project developer offer to

supply BSEB/ Distribution Licensee at least 50%, subject to a minimum of 2 MW, of power

generated from New and Renewable Energy projects. Else the entire project cost of

transmission system for evacuation of power to the nearest grid/ sub-station including all

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metering & protective instruments shall be born by the project developer. Sale/wheeling of

Power

1 .Captive power project developer may sell the generated power to the State grid/BSEB after

the captive consumption, if the power available is more than 1 MW.

2 .The project developer may sell to third party/utilize generated power at the place of

generation or at any other place for the captive use, through BSEB network on payment of

applicable Open Access charges surcharges & additional surcharge and any other charges as

approved/notified by Bihar Electricity Regulatory commission (BERC) and as per BERC

(Terms & Conditions for Open Access) Regulation, 2006 as amended from time to time

provided that the third party must be an HT consumer procuring at least 1MW power. The

Project Developer shall execute an Open Access Agreement with the BSEB for availing

open access and wheeling of such power.

3 The sale of electricity by the New and Renewable Energy project shall be governed by the

Power Purchase Agreement (PPA) executed between Project Developer and BSEB, as

prescribed by BERC.

Project Monitoring

1 All New and Renewable Energy projects shall be required to adhere to the following

schedule which is applicable from the date of notification of this policy or the date of SIPB

approval whichever is later.

Activity milestones

Financial closure and placement of firm order for

purchase of plant and machinery for the project

and payment of requisite advance or opening

of irrevocable letter of credit with suppliers/contractors---------------8 months

Receiving of plant and machinery for the project at site------------ 18 months

Commissioning and commercial operation ------------------------------24 months

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* Zero date shall be the date of notification of this policy or the date of SIPB approval,

whichever a later.

Incentives/applicability

The incentives and there applicability to all New and Renewable Energy projects are as

under:-

1 All New and Renewable Energy projects will be entitles for benefits, available as notified

from time to time, under the policies of the Central/State government.

2 All New and Renewable Energy projects shall be entitled to avail the facilities available

under prevalent Industrial Incentive Policy, and such other policies of the Govt. of Bihar,

3 BREDA/BSHPC will provide necessary information and assistance regarding identification

and selection of feasible sites.

4 The electricity generated from the New and Renewable Energy projects shall be exempted

from electricity duty.

5 Entry tax on New and Renewable Energy sources devices and or equipment and or

machinery shall be exempted.

6 Loans as per guidelines and incentives or schemes of the Government of India and or

Government of Bihar, India Renewable Energy Development Agency (IREDA) and Ministry

of New and Renewable Energy Govt. of India (MNRE) will be offered/ available for proposal

of power generation through New and Renewable Energy Sources.

7 In case of power generation from mini/micro/small hydel schemes, project developer shall

be allowed to use canal water- fall or river water flow subsequent to the approval and

agreement with Water resources Department, Government of Bihar. However, the water will

be released based on irrigation demand.

8 The provision of section – 14 of Electricity Act 2003 for generation and distribution of

electricity in rural areas will be applicable of all New and Renewable Energy projects

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Renewable Energy Purchase Obligations

.1 BSEB/Distribution Licensee shall endeavor to procure and supply the power from New

and Renewable Energy Sources, more than the minimum quantum prescribed under the RPO

obligations by BERC, with the approval of Government, in line with tariff approved by

BERC. Due grid strengthening and up gradation in the transmission & distribution system

shall be undertaken by BSEB/Distribution Licensee to the extent of power procured by

BSEB/Distribution Licensee from respective New and Renewable Energy Project.

2 The project developer will be allowed to draw energy for their consumption during

maintenance/shut down period of the project, where BSEB/ Distribution Licensee is

procuring power from that generating station , at the rate/tariff as approved by BERC for such

New and RenewableEnergy project, However, if BSEB/Distribution Licensee is not

procuring power from that particular generation station, the drawl of energy for their

consumption during shut down/maintenance period shall be at the applicable UI rate (as

approved by CERC) plus 5% of maximum UI rate or the applicable rate/tariff as approved by

BERC for purchase of power from such New and Renewable Energy project, whichever is

higher.

PROs State government provides land and assists in land acquisition.

BREDA/BSHPC assists in identifying sites.

Electricity duty/entry tax exempted.

Loans to be provided as per govt. guidelines

For projects upto 5 MW are relatively easily approved

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CONs

Captive power less than 1 MW cannot be fed into state grid.

Banking not allowed.

If appropriate steps are not taken within six months of project approval then the project may

be terminated

Bihar government has put stress on solar projects upto 5 MW and has encouraged

entrepreneurship in the region. The policy addresses all major issues but needs to be more

comprehensive with respect to financial and technical aspects

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3.1.11 MIZORAM The State Nodal Agency

Zoram Energy Development Agency (ZEDA) is an autonomous body established by the

Government of Mizoram with its headquarters at Aizawl. ZEDA is registered as a society

under the Societies Registration (Extension to Mizoram) Act 1976 (Mizoram Act No. 3 of

1977), having a governing body headed by the Minister of Power of the State. It also has a

Managing Committee headed by the Secretary of Power and Electricity Department,

Government of Mizoram. The Agency became operational in 1999, exclusively to undertake

all programmes in the field of non-conventional and renewable energy (RE) sources. Apart

from this, ZEDA is also the Nodal Agency, which interacts with the Ministry of New and

Renewable Energy (MNRE), to implement the centrally funded and sponsored scheme, in the

field

ZEDA is fully committed to boost the use of non- conventional and RE sources through the

following steps:

● intensification of awareness campaigns by undertaking demonstration programmes all over

the state;

● utilisation of all promotional schemes offered by MNRE;

● installation and commissioning of solar power plants, wind hybrid power

projects etc. in the state;

● publication of brochures, booklets and pamphlets giving details of various RE schemes

and

devices available, for the benefit of the public;

● allocation of funds and holding of ‗popularisation/demonstration‘ campaigns for effective

implementation of RE programmes; and

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● collaboration with various governmental departments and non government organisations

for popularisation of RE systems and applications.

PROs

Land is provided by state government.

A relatively good rate for power purchase.

PPA for minimum ten yrs or less if developer agrees.

Genuine wheeling charges.

Banking of power allowed.

Electricity duty exempted.

Equipments exempted from state sales tax.

Settlement on monthly basis.

Reduction in contract demand to the extent of

30% of installed capacity.

CONs

Producers above 25 MW are not included.

Absence of operative period increases uncertainty

The state of Mizoram is aggressively pursuing solar goal by providing various incentives.

The policy is very genuine in case of providing benefits by state government but does not talk

about the financial aspects. A new solar policy must be issued

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3.1.1 CHHATTISGARH

CHHATTISGARH SOLAR POLICY 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).

The following type of solar projects will be encouraged:

- Grid Connected Solar Generation.

- Solar Parks.

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- Rooftop Solar Power Projects.

Incentives under Industrial Policy of Chhattisgarh:

The state has considered non-conventional sources of power generation as a priority industry

under the State Industrial Policy 2009-14 and therefore has extended all the incentives

including interest subsidy, fixed capital investment subsidy, exemption from electricity and

stamp duty, exemption/concession in land premium, project report subsidy and technical

patent subsidy. The state govt. will extend these facilities till March 2017 even after the end

of tenure of the Industrial Policy.

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.

Open Access Charges:

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.

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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.

Land:

Land acquisition and statutory clearances/approvals shall be obtained by the developer of the

solar power plant as per policy of the state. Govt. land will be made available depending on

the availability.

Timeline:

Developers shall be required to commission the project within 24 months from the allotment.

Nodal Agency shall carry out tasks related to:

- Bidding process of behalf of CSPDCL to fulfill Renewable Purchase Obligation (RPO).

- Identification of suitable locations and the creation of land bank.

- Facilitation of allotment of suitable land/space.

- Assistance in establishing Right of Way, water supply and connectivity through roads.

- Development of man power.

Single Window Clearance System by Nodal Agency.

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The detailed policy document can be downloaded from the following link:

Chhattisgarh Solar Policy 2012-2017

PROs

Government of Chhattisgarh fulfills the land requirement of project.

CSEB carries out the maintenance work of lines and equipment of power evacuation

system.

Electrical duty exempted for five and three Years for plant capacity below 10 MW and 10

MW or above respectively.

There is no restriction on generation capacity

CONs The policy directives are without operative period and hence there is uncertainty as new

policy can be drafted anytime.

CSEB purchases power at comparatively lower rate of Rs. 2.25 per unit.

Banking of power is not allowed The government of Chhattisgarh provides a favourable environment especially for

projects of small capacity (upto 10 MW) which enhances entrepreneurship in

electricity sector, fulfilling land requirement is one of the main constraints for a

private player which in this case has been taken care by the state govt. hence the

project execution shall be fast once CREDA approves the project. New players can

enter market from this state

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CHAPTER-4 SPO OF VARIOUS STATE, STUDY ABOUT REC ,RRF &

SWOT ANALYSIS SOLAR PURCHASE OBLIGATION: Among the various renewable energy resources, solar energy potential is the highest in the

country. In most parts of India, clear sunny weather is experienced 250 to 300 days a year.

The annual radiation varies from 1600 to 2200 kWh/m2, which is comparable with radiation

received in the tropical and sub-tropical regions. The equivalent energy potential is about

6,000 million GWh of energy per year.

The National Action Plan on Climate Change also points out: ―India is a tropical country,

where sunshine is available for longer hours per day and in great intensity. Solar energy,

therefore, has great potential as future energy source. It also has the advantage of permitting

the decentralized distribution of energy, thereby empowering people at the grassroots level‖.

With the objective to establish India as a global leader in solar energy, by creating the policy

conditions for its diffusion across the country as quickly as possible Government of India

launched National Solar Mission.

The National Tariff Policy was amended in January 2011 to prescribe solar-specific RPO be

increased from a minimum of 0.25 per cent in 2012 to 3 per cent by 2022. CERC and SERCs

have issued various regulations including solar RPOs, REC framework, tariff, grid

connectivity, forecasting etc. for promoting solar energy. Many States have come up with up

their own Solar Policy.

In view of the ongoing efforts of Central and State Governments and various agencies for

promoting solar energy, Ministry of New and Renewable Energy has undertaken an exercise

to track and analyze the issues in fulfillment of Solar Power Purchase Obligation and

implementation of Solar REC framework in India. This would help various stakeholders to

understand the challenges and opportunities in the development of solar power. It would also

include monitoring of Solar RPO Compliance; analyzing key issues related to the regulatory

framework for solar in various states of India.

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Analysis of solar RPO of the states under study in report:-

Gujarat

Favourable

The state has set a high Solar RPO target of 1% which is higher than Tariff policy targets.

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

The State Agency shall submit quarterly status to the Commission in respect of compliance of

renewable purchase obligation by the obligated entities in the format as stipulated by the

commission.

Neutral/off-putting

The RPO regulations are not applicable on captive as well as open access consumers.

As per the regulation the APPC of previous year would be applicable while determining the

cost of power but in reality GUVNL freezes the APPC for the complete life projects.

If the mentioned minimum quantum of power purchase from solar is not available in a

particular year, then in such cases, additional wind or other energy, over and above their

RPO, shall be utilized for fulfillment of the solar RPO.

RPO trajectory beyond 2012-13 is not provided.

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Karnataka

Favorable:

The State Agency shall submit quarterly status to the Commission in respect of compliance of

renewable purchase obligation by the obligated entities in the format as stipulated by the

Commission.

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

Neutral/off-putting

Solar RPO is applicable only on DISCOMS which is 0.25%.

There is no trajectory defined.

There is no separate solar RPO on Captive and Open Access consumers.

A distribution licensee may in case of non-availability of solar power generated in the State

of Karnataka procure from other renewable sources of energy or REC to the extent of

shortfall in its RPO in any year.

Captive users can sell their surplus power only to the distribution companies (ESCOMs) at a

price not exceeding the APPC

RECs accreditation can be achieved only to the generators selling the power to ESCOMS at

pooled cost of power purchase as approved by the Commission for the previous

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Rajasthan

Favourable:

At the end of each financial year, each obligated entity shall submit a detailed statement

regarding total electricity drawn / consumed and renewable energy /REC purchased and duly

certified by the auditors to the State agency on or before ensuing 30th September.

Solar RPO target (on DISCOMS only) of 0.75% in 2012-13 is higher than Tariff policy

target.

Each Distribution Licensee shall indicate, along with sufficient proof thereof, the estimated

quantum of purchase of renewable energy for the ensuing year in tariff/ARR petition in

accordance with Regulations notified by the Commission

The State Agency shall submit quarterly status to the Commission in respect of compliance of

renewable purchase obligation by the obligated entities in the format as stipulated by the

Commission and may suggest appropriate action to the Commission if required for

compliance of the renewable purchase obligation.

The State agency shall develop methodology for collection of information from renewable

energy generating company, obligated entities, SLDC etc. on regular basis, compile the

information to compute the RPO fulfillment by the obligated entities indicating separately the

direct purchase of renewable energy as well as purchase through REC mechanism. The

information shall be placed on a cumulative basis for each quarter by the State Agency on its

website.

Neutral/off-putting

As per, Rajasthan Electricity Regulatory Commission (Power Purchase & Procurement

Process of Distribution Licensee) (2nd Amendment) Regulations, 2011 solar RPO in

Rajasthan is applicable on DISCOMS only.

RPO targets are till 2013-14 only. A longer trajectory may be desirable

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There is separate RPO for bio-mass and that can be fulfilled by purchase of power from

biomass plant only and not by purchase of REC.

In case of genuine difficulty in complying with the renewable power purchase obligation

because of nonavailability of renewable energy and/or certificates, the obligated entity can

approach the Commission to carry forward the compliance requirement to the next year or

seek its waiver.

The shortfall in RPO obligation can be fulfilled by purchase of renewable energy and/or REC

up to 30th June of the next financial year.

Pooled Cost of Power Purchase‘ means the weighted average price at which the distribution

licensee has purchased the electricity including cost of self generation, if any, in the previous

year from all the energy suppliers, excluding short term power purchases and those based on

renewable energy.

Haryana

Favorable:

It is clearly mentioned that Non-fossil fuel based co-generation project shall qualify for

Renewable Energy source.

The State Agency shall submit quarterly status to the Commission in respect of compliance of

renewable purchase obligation by the obligated entities in the format as stipulated by the

Commission and may suggest appropriate action to the Commission

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

Neutral/off-putting

In case of genuine difficulty in complying with the renewable purchase obligation because

limited availability of renewable energy or non-availability of certificates, the obligated entity

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can approach the Commission for relaxation or carry forward of compliance requirement to

the next year. This provision of seeking relaxation is not desirable.

Bihar Favorable:

The Certificates purchased by the obligated entities from the power exchange in terms of the

regulation of the Central Commission shall be deposited by the obligated entities to the

Commission within a month of the purchase of the certificate.

The regulator has also defined a longer trajectory till 2021-22 for the solar RPO target with a

base of 0.25% in 2012-13 and an increase of 0.25% every year till 2019-20 and 0.5% in

2020-21 and 2021-22.

If the distribution licensee is unable to fulfill the obligation, the shortfall of the specified

quantum of that year would be added to the specified quantum for the next year. However,

credit for

excess purchase from renewable energy sources would not be adjusted in the ensuing year.

The State Agency shall submit quarterly status to the Commission in respect of compliance of

renewable purchase obligation by the obligated entities in the format as stipulated by the

Commission and may suggest appropriate action to the Commission if required for

compliance of the renewable purchase obligation.

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

Neutral/off-putting

If solar certificates are not available in a particular year, then in such cases, additional non-

solar certificate shall be purchased for fulfillment of the Renewable Purchase Obligation

(RPO).

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JERC( Mizoram) Favorable:

The regulator has defined a Solar RPO target of 0.25% for 2012-13 in line with the Tariff

Policy.

The State Agency shall devise appropriate protocol for collection of information from

various sources such as renewable energy generating companies, obligated entities, SLDC,

etc., on a regular basis and compile such information to compute the compliance of RPO

target by such Obligated Entities.

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

Neutral/off-putting

There is no long term trajectory of RPO targets.

Chhattisgarh Favorable:

The state has set a target of 0.5% for Solar RPO (by 2012-13)which is higher than that

stipulated in the Tariff Policy.

Average Pooled Power Cost` definition is in line with the CERC REC Regulation, 2010

The State Agency shall develop suitable protocol for collection of information from various

sources such as renewable energy generating companies, obligated entities, SLDC, chief

electrical inspector etc., on regular basis and compile such information to compute the

compliance of RPO target by such Obligated Entities.

In the event of non compliance of the RPO by distribution licensees by any of the modalities,

from non-solar renewable energy plants or solar power plants in the State, the distribution

licensee whose purchase of renewable energy is maximum during the year shall be

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compensated by other distribution licensees so that percentage of renewable energy

consumption by all the distribution licensees functioning in the State become equal.

Neutral/off-putting

The state has set a very short trajectory for RPO targets i.e. till 2012-13.

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SPO of various states and gap (2012-13)

State Projected Demand* (MU)

Solar RPO Target (2012-13)

Solar RPO Target (2012-13)

Capacity required for meeting Solar RPO

Total Capacity Tied Up as on 09.03.2013*

Installed capacity as on 09.03.2013

Gap to be fulfilled in 2012-13

2012-13 % (MU) (MW) (MW) MW (MW)

Andhra Pradesh 98,956

0.25% 247.39

148.6

77.7 23.35

70.94

Arunachal Pradesh 631

0.10% 0.63

0.4

0.025 0.03

0.35

Assam 6,810

0.15% 10.21

6.1

5 -

1.14

Bihar 15,272

0.75% 114.54

68.8

0 -

68.82

Chhattisgarh 21,174

0.50% 105.87

63.6

29 4.00

34.61

Delhi 28,598

0.15% 42.90

25.8

2.525 2.53

JERC (Goa & UT) 12,860

0.40% 51.44

30.9

1.685 1.69

29.22

Gujarat 79,919

1.00% 799.19

480.2

968.5 824.09

-488.33

Haryana 40,167

0.75% 301.25

181.0

8.8 7.80

172.20

Himachal Pradesh 8,647

0.25% 21.62

13.0

0 -

12.99

Jammu and Kashmir

14,573

0.25% 36.43

21.9

0 -

21.89

Jharkhand 6,696

1.00% 66.96

40.2

36 16.00

4.23

Karnataka 65,152

0.25% 162.88

97.9

159 14.00

-61.14

Kerala 21,060

0.25% 52.65

31.6

0.025 0.03

31.61

Madhya Pradesh 53,358

0.60% 320.15

192.3

211.75 11.75

-19.40

Maharashtra 1,50,987

0.25% 377.47

226.8

75.5 34.50

151.29

Manipur 608

0.25% 1.52

0.9

0 -

0.91

Mizoram 418

0.25% 1.04

0.6

0 -

0.63

Meghalaya 2,154

0.40% 8.62

5.2

0 -

5.18

Nagaland 596

0.25% 1.49

0.9

0 -

0.90

Orissa 24,284

0.15% 36.43

21.9

78 13.00

-56.11

Punjab 48,089

0.07% 33.66

20.2

51.825 9.33

-31.60

Rajasthan 55,057

0.75% 412.93

248.1

331.15 442.25

-83.05

Sikkim 436

0.00% -

-

0 -

0.00

Tamil Nadu 91,441

0.05% 45.72

27.5

20.105 17.06

7.36

Tripura 1,010

0.10% 1.01

0.6

0 -

0.61

Uttarakhand 11,541

0.05% 5.77

3.5

5.05 5.05

-1.58

Uttar Pradesh 85,902

1.00% 859.02

516.1

93.375 12.38

422.74

West Bengal 41,896

0.00% -

-

52.05 2.00

-52.05

Total 2,474.6

2,207.07

1,440.81

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RENEWABLE ENERGY CIRTIFICATES: India has been richly endowed with renewable resources. Since the cost of electricity

generated from such resources is expensive, large scale development of renewable resources

did not take place. Concern about climate change and concerted action to reduce green house

gas emissions are powerful drivers for renewable energy. Lately, in view of growing

awareness about green environment, development of renewable energy has been promoted by

fiscal policies of Government of India. These include tax incentives and purchase of

electricity generated through renewable energy sources. Enactment of the Electricity Act

2003 (the Act) has lent further support to renewable energy by stipulating purchase of a

percentage of the power procurement by distribution utilities from renewable energy sources.

The renewable purchase obligation as well as preferential tariff for procurement of such

power has been specified by various State Electricity Regulatory Commissions (SERCs).

Renewable energy sources are not spread evenly across the state boundaries and the very high

cost of generation from RE sources discourages local distribution licensees from purchasing

electricity generated from RE sources. Renewable Energy Certificate seeks to address the

mismatch between availability of RE sources and the requirement of the obligated entities to

meet their renewable purchase obligation by purchasing green attributes of renewable energy

remotely located in the form of Renewable Energy Certificate (REC). This paper discusses

regulatory developments including Indian Electricity Grid Code-2010 (IEGC) for promotion

of renewable energy in India and in particular the nationally tradable renewable energy

credits in the form of Renewable Energy Certificates (REC) for achieving the targets set by

respective SERCs for renewable purchase obligations. This would help to minimize cost of

power procurement, and lead to efficient resource utilisation across the country and provide

incentive for investment in appropriate technologies. The paper highlights salient features,

advantages and implementation of REC mechanism in India.

Government of India has come out with Acts, Policies and regulations to support renewable.

The major contributors are as under

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A. Electricity Act 2003

The enactment of the Electricity Act 2003 (The Act) has accelerated the process of reform in

the Indian power sector. The Act has enabled competition in the Indian power sector in bulk

as well as retail electricity supply, in phases. To meet the challenges in the emerging

competitive environment, the Act promotes electricity generation from renewable energy

sources through following enabling provisions:

(i) The SERCs to specify, for purchase of electricity from such sources, a percentage of the

total consumption of electricity in the area of a distribution licensee (Sec.86 (1) (e)).

(ii) The SERCs to promote co-generation and generation of electricity through renewable

sources of energy by providing suitable measures for connectivity with the grid and sale of

electricity to any persons (Sec. 86(1) (e)).

(iii) The terms and conditions for the determination of tariff to be prescribed by the SERCs to

promote co-generation and generation of electricity from renewable sources of energy (Sec.

61(h))

.(iv) The National Electricity Policy (NEP) to be formulated by the central government, in

consultation with the state governments for development of the power system based on

optimal utilisation of resources including renewable sources of energy (Sec. 3(1)).

(v) The Central Government to prepare a national policy, in consultation with the state

governments, permitting stand alone systems (including those based on renewable sources of

energy and other non-conventional sources of energy) for rural areas (Section 4)

B. National Electricity Policy 2005

The National Electricity Policy 2005 stipulates that progressively the share of electricity from

non-conventional sources would need to be increased; such purchase by distribution

companies shall be through competitive bidding process; considering the fact that it will take

some time before non-conventional technologies compete, in terms of cost, with conventional

sources, the commission may determine an appropriate deferential in prices to promote these

technologies.

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C. Tariff Policy 2006

The Tariff Policy announced in January 2006 has the following provisions:

Pursuant to provisions of section 86 (1) (e) of the Act, the Appropriate Commission shall fix

a minimum percentage for purchase of energy from such sources taking into account

availability of such resources in the region and its impact on retail tariffs. Such percentages

for purchase of energy should be made applicable for the tariffs to be determined by the

SERCs latest by April 01, 2006.

The National Action Plan of Climate Change (NAPCC) has set the target of 5% renewable

energy purchase for FY 2009-10 which will increase by 1% for next 10 years. The NAPCC

further recommends strong regulatory measures to fulfil these targets. For the development of

Non-conventional energy sources, efforts need to be made to reduce the capital cost of such

projects. Cost of energy can also be reduced by promoting competition within such

projects. At the same time, adequate promotional measures would also have to be

taken for development of technologies.

SALIENT FEATURES OF REC FRAMEWORK

• Renewable Energy Certificate (REC) mechanism is a market based instrument to

promote renewable energy and facilitate renewable purchase obligations (RPO)

• REC mechanism is aimed at addressing the mismatch between availability of RE resources

in state and the requirement of the obligated entities to meet the renewable purchase

obligation (RPO).

• Cost of electricity generation from renewable energy sources is classified as cost of

electricity generation equivalent to conventional energy sources and the cost for

environmental attributes.

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• RE generators will have two options:

i) Either to sell the renewable energy at preferential tariff or

ii) To sell electricity generation and environmental attributes associated with RE generations

separately.

•The environmental attributes can be exchanged in the form of Renewable Energy

Certificates (REC).

• There shall be two categories of certificates, viz., solar certificates issued to eligible entities

for generation of electricity based on solar as renewable energy source, and non-solar

certificates issued to eligible entities for generation of electricity based on renewable energy

sources other than solar

cost of electricity generation by

renewable sources

cost equvalent of conventional source

cost of enviromental component

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• REC will be issued to the RE generators for 1 MWh of electricity injected into the grid from

renewable energy sources.

• The Certificate once issued shall remain valid for three hundred and sixty five days from the

date of issuance of such certificate.

• REC would be issued to RE generators only.

• REC could be purchased by the obligated entities to meet their RPO under section 86 (1) (e)

of the Act. Purchase of REC would be deemed as purchase of RE for RPO compliance.

• Grid connected RE Technologies approved by MNRE would be eligible under this scheme.

• RE generations with existing Power Purchase Agreement on preferential tariff are not

eligible for REC mechanism.

• SERC to recognize REC as valid instrument for RPO compliance.

• SERC would define open access consumers, captive consumers as obligated entities along

with distribution companies.

solar generator

sale on preferencial

tariff

obligated entity

sale without preferencial

tariff

electricity component

distribution company /third

party sale

REC component

obligated entity

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• SERC to designate State agency for accreditation for RPO compliance and REC mechanism

at State level.

• CERC has designated National Load dispatch Centre (NLDC) as Central Agency for

registration, repository, and other functions for implementation of REC framework at

national level.

• Only accredited project can register for REC at Central Agency.

• Central Agency would issue REC to RE generators for specified quantity of electricity

injected into the grid.

• REC would be exchanged only in the CERC approved power exchanges.

• Central Agency will extinguish the RECs sold in Power Exchanges in its records as per

information provided by the Power Exchanges. The certificates will be extinguished by the

Central Agency in the First-in-First-out‗order

• Price of electricity component of RE generation would be equivalent to the weighted

average power purchase cost of the discoms including short term power purchase but

excluding renewable power purchase.

• REC would be exchanged within the forbearance price and floor price. This forbearance and

floor price would be determined by CERC in consultation with Central agency and FOR

(Forum of Regulators) from time to time.

• In case of default, SERC may direct obligated entity to deposit into a separate fund to

purchase the shortfall of REC at forbearance price.

• However, in case of genuine difficulty in complying with the renewable purchase obligation

because of non-availability of certificates, the obligated entity can approach the Commission

for carrying forward of compliance requirement to the next year.

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Obligated entities

The entities mandated to purchase a defined quantum of renewable energy of their overall

consumption are Obligated entities. Obligated entities may either purchase renewable

energy or can purchase RECs to meet their Renewable purchase Obligation (RPO) set

under Renewable Purchase Obligation of their respective States. Following entities are

generally obligated in the State:

a. Distribution Licensees

b. Captive Consumers

c. Open Access users

Eligible entities are those renewable generators who meet following criteria

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RENEWABLE REGULATORY FUND :-

RRF mechanism is issued in compliance with Regulation 6.1(d)read with Clause 9 of

Complimentary Commercial Mechanism (Annexure-1) of Central Electricity Regulatory

Commission (Indian Electricity Grid Code) Regulations, 2010 (hereinafter termed as ‗ the

IEGC 2010‘).

Applicability:

The Solar generating plants with capacity of 5 MW and above connected at connection point

of 33 KV level and above and who have not signed any PPA with states/UTs or others [for

which declaration has to be submitted to SLDC/Control Centre by the applicant, which in

turn would submit the same to RPC, RLDC and NLDC] as on the date of coming into force of

IEGC,2010 with effect from 3.5.2010

Eligible solar generating plants may be on an individual developer basis or a group of

developers, with collective capacity as mentioned above connected at connection point of 33

KV level and above. If the collective capacity is through a group of developers, they shall

sign an agreement which shall clearly specify the nodal developer who shall be responsible

for coordinating on behalf of all the developers on issues like SCADA, metering, scheduling,

UI charges, Renewable Regulatory Fund, with concerned SLDC/RLDC etc.

This procedure shall not be applicable to plants selling power through collective transactions

as no revisions in schedules are envisaged in the same and buyers and sellers are anonymous

General Conditions

1. The scheduling jurisdiction and procedure, metering, energy accounting and accounting of

Unscheduled Interchange (UI) charges would be as per the relevant Regulations of the

Central Commission, as amended from time to time.

2. Wind Farm/Solar Energy Generators, which are intra-State entities, shall furnish

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the details of Contracts along with contracted price to the concerned RPC and RLDC through

the respective SLDC. Wind Farm/Solar Energy Generator, which are regional entities, shall

furnish the details of Contracts along with contracted price through the respective RLDC to

the concerned RPC.

3. Special Energy Meters shall be installed by the Central Transmission Utility for and at the

cost of the regional entities and by the State Transmission Utility for and at the cost of the

intra-State entities.

.4. Special Energy Meters installed shall be capable of time-differentiated measurements for

time block wise active energy and voltage differentiated measurement of reactive energy.

5. Wind/Solar Generator shall provide Data Acquisition System Facility for transfer of

information to concerned SLDC.

.6. The concerned SLDC/RLDC will be responsible for checking that there is no gaming

(gaming is an intentional mis-declaration of a parameter related to commercial mechanism in

vogue, in order to make an undue commercial gain).

Renewable Regulatory Fund

1 A Fund shall be opened by the National Load Despatch Centre (NLDC) on a national level

known by the ―Renewable Regulatory Fund (RRF) on the lines of UI Pool Account at the

Regional level. All payments on account of Renewable Regulatory charges, as described in

Para 5.2, levied under the Regulations, and interest, if any, received for late payment shall be

credited to the RRF.

2 The RRF shall be maintained and operated by the National Load Despatch Centre in

accordance with provisions of the Regulations

Scheduling and settlement of accounts in case of Solar Generators

1. The schedule of solar generation shall be given by the generator based on availability of

the generator, weather forecasting, solar isolation, season and normal solar generation curve

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and shall be vetted by the RLDC in which the generator is located and incorporated in the

inter-state schedule. If RLDC is of the opinion that the schedule is not realistic, it may ask the

solar generator to modify the schedule.

2. In case of solar generation no UI shall be payable/receivable by Generator.

3 In the case of intra-State sale of solar energy, the host State would pay the solar generator

at the contracted rate for actual generation.

4 In the case of inter-State sale of solar energy, the purchasing State would pay the solar

generator at the contracted rate for actual generation. The implication of UI charges due to

the deviation for purchasing State and host State would be settled through the RRF.

Settlement of accounts in case of Solar Generators

1 In case of sale of power to two or more States, the deviation of actual generation from the

schedule would be dealt with in proportion to the shares of the States in the generation of

the Solar Generators.

2 In addition to the settlement of accounts for Solar generator the host State would

also receive compensation from the RRF for total or part difference between the total

scheduled generation and total actual generation of solar and wind generation collectively in

the State as a whole @ additional UI rate, to the extent subjected to it, if any, on account of

net solar farm under-generation below the frequency specified in the CERC (Unscheduled

Interchange and related matters) Regulation, 2009 for the State as a whole. This would be as

certified by the RPC, in whose region the host State is located

3 The Host State would also receive from the RRF, the difference between the UI rate and

the cap UI rate for under-drawal beyond the percentage/MW prescribed in the UI

Regulations, to the extent of under-drawal subjected to it, if any, on account of net over-

generation by solar and wind farms in the State as a whole. This would be as certified by the

RPC, in whose Region the host State is located.

4 The net leftover amounts in the RRF, whether positive or negative, would be shared among

all the States/UTs of the country/DVC in the ratio of their peak demands met in the previous

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month based on the data published by CEA in the form of regulatory charge (whether

positive or negative), known as the Renewable Regulatory Charge, operated through the

Renewable Regulatory Fund, on a monthly basis

Mechanism details through various case

SOLAR GENERATORS – Intra-State

Case – 1

Generation Schedule -100 MW

Actual Generation – 120 MW

Step - 1 : Host State pays to Solar Generator at contracted rate as per actual (i.e.120 MW).

Step 2 : The Host State receives from the RRF, the difference between the UI rate and the cap

rate for under-drawal beyond the percentage prescribed in theUI Regulations, to the extent of

under-drawal subjected to it, if any, on account of net over-generation by solar and wind

farms in the State as a whole. This would be as certified by the RPC, in whose Region the

host State is located.

SOLAR GENERATORS – Intra-State

Case – 2

Generation Schedule -100 MW

Actual Generation – 80 MW

Step - 1 : State pays to Solar generator at contracted rate as per actual generation (i.e. 80

MW).

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Step - 2 : The State receives from RRF for total or part difference between the total schedule

and total actual generation of solar and wind generation collectively in the state as a whole @

additional UI rate, to the extent subjected to it, if any, on account of net solar and wind farm

under-generation for the State as a whole. This would be as certified by the RPC, in whose

Region the host State islocated.

SOLAR GENERATORS – Inter-State

Case – 1

Generation Schedule -100 MW

Actual Generation – 120 MW

Step - 1 : Purchasing State pays to Solar Generator at contracted rate as per actual

generation(i.e. 120 MW).

Step - 2 : Purchasing State receives from RRF for the difference (i.e. 20 MW) @ UI rate of its

Region.

Step - 3 : Host State pays to the RRF for difference between the scheduled generation and the

actual generation (i.e. 20 MW) @ UI rate of its Region.

Step 4 : The Host State also receives from the RRF, the difference between

the UI rate and the cap UI rate for under-drawal beyond the percentage prescribed in

the UI Regulations, to the extent of under-drawal subjected to it, if any, on account of

net over-generation by solar and wind farms in the State as a whole. This would be as

certified by the RPC, in whose Region the host State is located.

Case - 2

Generation Schedule -100 MW

Actual Generation – 80 MW

Step - 1 : Purchasing State pays to Solar generator at contracted rate as per actual generation

(i.e. 80 MW).

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Step - 2 : Purchasing State pays to RRF for difference (i.e. 20 MW) @ UI rate of its

Region.

Step - 3 : Host State receives from RRF for the difference (i.e. 20 MW) @ UI rate of its Region. Step - 4 : The Host State also receives from RRF for total or part difference between the

total schedule and total actual generation of solar and wind generation collectively in

the state as a whole @ additional UI rate, to the extent subjected to it, if any, on account

of net solar and wind farm under-generation for the State as a whole. This would be as

certified by the RPC, in whose Region the host State is located.

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GRID PARITY Grid parity (or socket parity) occurs when an alternative energy source can generate

lectricity at a levelized cost (LCoE) that is less than or equal to the price of purchasing power

from the electricity grid.

The term is most commonly used when discussing renewable energy

sources, notably solar power and wind power. Reaching grid parity is considered to be the

point at which an energy source becomes a contender for widespread development

without subsidies or government support. It is widely believed that a wholesale shift in

generation to these forms of energy will take place when they reach grid parity.

Grid parity is most commonly used in the

field of solar power, and most specifically when referring to solar photovoltaic (PV). As PV

systems do not use fuel and are largely maintenance-free, the levelized cost of electricity is

dominated almost entirely by the capital cost of the system. If one makes the not-unrealistic

assumption that the discount rate will be similar to the inflation rate of grid power, then one

can calculate the levelized cost simply by dividing the original capital cost by the total

amount of electricity produced over the system's lifetime.

The Indian solar market has seen significant growth with the installed solar PV capacity

rising from under 20 MW to more than 1000 MW within the last two years. In fact, the tariffs

discovered in the highly competitive bidding in the recent rounds of auction under Jawaharlal

Nehru National Solar Mission (JNNSM) and State level programs are already comparable to

the marginal power tariffs applicable for industrial and commercial power consumers in some

states in India.

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The above graph shows the temptative achievement of grid parity

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OTHER SPO OPTIONS

Delhi a case study

STATE Delhi

YEAR 2013-14 2014-15

Power rquired (MU) 24373 26810

SOLAR RPO(%) 0.25 0.3

APPC (per unit ) 4.27 4.48

SOLAR PRICE PV (per unit ) 8.75 5.75

SOLAR REQUIRED (MU)(SPO)

60.93

80.43

Av.COST OF REC (PER UNIT ) 9.3 9.3

TOTAL COST OF SOLAR OBLIGATED

POWER(@SOLAR PV COST )

53,31,59,375.00

46,24,72,500.00

COST OF OBLIGATED POWER @APPC

26,01,81,775.00

36,03,26,400.00

No.OF REC REQUIRED TO MEET SOLAR RPO

60.93

80.43

COST OF REC TO MEET RPO

56,66,72,250.00

74,79,99,000.00

TOTAL COST OF SOLAR OBLIGATED

POWER(REC+ GRID )

82,68,54,025.00

1,10,83,25,400.00

Diff. OF COST (SOLAR -CONVENTIONAL -RPO )

29,36,94,650.00

64,58,52,900.00

EFFECT ON APPC ( SOLAR PURCHASED AT

solar prefrencial tariff)

COST OF POWER (without rec ) 1,04,34,56,87,600.00 1,20,21,09,46,100.00

COST OF POWER (with rec ) 1,04,63,93,82,250.00 1,20,85,67,99,000.00

PER UNIT COST (WITHOUT REC) 4.2812 4.48381

PER UNIT COST (WITH REC) 4.29325 4.5079

DIFF BETWEEN (APPC& PER UNIT COST

WITHOUT REC )

0.0112 0.00381

DIFF BETWEEN (APPC& PER UNIT COST WITH

REC )

0.02325 0.0279

SURPLUS COST (WITHOUT REC )

29,36,94,650.00

64,58,52,900.00

The above table signifies that the obligated entity should go with direct purchase of solar

rather purchase of REC .

Delhi can develop its own solar potential by PPA with solar developer or by purchasing solar

through open access from nearby states with surplus capacity

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FINDINGS AND RECOMENDATION

From the above study there are certain key findings that i have come across and those are

mentioned below:-

1. Solar market has still a lot of untouched market which can be developed by the solar

developers

2. Various states are supporting solar power through incentive and waiving off taxes this is a

good sign for solar developers

3. With respect to the obligated entity it advisable for them to get into PPA with solar

generators in order to meet their SPO

4. As soon as the grid parity is attain there can be certain changes in the solar market such as

gov. Incentive ,more competitors installation cost can go high

5. Government can promote solar for both roof top as well as standalone (rural area ) to

promote solar and meet SPO

6. Goverment with surplus generation should promote open access or interstate transmission

of solar by waiving of transmission charges

7. Obligate entity can float tender for direct buying of solar in order to meet their SPO

8. States with high land cost or installation cost can go for inter state purchase

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1. www.bp.com 25. www.decc.gov.uk

2. www.unfccc.int 26. www.bmu.de

3. www.cdmindia 27. www.gov.il

4. www.wikipedia.org 28. www.minetur.gob.es

5. www.cea.nic.in 29. www.energyselfreliantstates.org

6. www.cercind.gov.in 30. State Policies

7. www.moneycontrol.com 31. Federal Policies

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