technical manual for banks & fis on grid-connected rooftop solar

Prepared for

Ministry of New and Renewable Energy,

Government of India

Project Code 2014RT06

Technical Manual

for

Banks & FIs

on

Grid-Connected Rooftop Solar Power

Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

ii

© The Energy and Resources Institute 2015

Suggested format for citation

T E R I. 2015

Technical Manual for Banks & FIs on Grid -Connected Rooftop Solar Power

New Delhi: The Energy and Resources Institute.

[Project Report No. 2014RT06]

For more information

Project Monitoring Cell T E R I Tel. 2468 2100 or 2468 2111 Darbari Seth Block E-mail [email protected] IH C Complex, Lodhi Road Fax 2468 2144 or 2468 2145 New Delhi – 110 003 Web www.ter i in .org India Ind ia +91 • Delhi (0)11


iii

Contents

List of Figures ....................................................................................................................................... iv

List of Tables ......................................................................................................................................... v

How to use this manual ........................................................................................................................1

Context ....................................................................................................................................................2

Explaining grid-connected rooftop solar PV systems ......................................................................3

What is meant by a grid -connected rooftop solar PV system?.................................................3

What are the relevant quality stand ards and benchmarks? .....................................................6

What are the guidelines for designing a grid -connected rooftop solar PV system? ........... 10

What are the O&M aspects of a grid -connected rooftop solar PV system? .......................... 12

Business models ............................................................................................................................ 16

Central and State policies ................................................................................................................... 17

On-going schemes and programs...................................................................................................... 18

Financial and economic analysis ....................................................................................................... 19

What is the stand ard project life of a grid -connected rooftop solar PV system? ................. 19

What are the project lifecycle costs of a grid -connected rooftop solar PV system? ............ 19

What is the typical payback period for grid -connected rooftop solar PV projects? ............ 21

What are the risks involved in lend ing to a grid -connected rooftop solar PV project? ...... 22

Annexure 1: General project development process for grid-connected rooftop solar PV projects in India ............................................................................................................................ 26

Annexure 2: List of State Nodal Agencies (SNAs) .......................................................................... 28

Annexure 3: Frequently Asked Questions ....................................................................................... 29


iv

List of Figures

Figure 1: Break-up of the 100 GW solar power target set by the Government of Ind ia for 2022 .............. 2

Figure 2: Illustrative example of PV modules as part of a grid -connected rooftop solar PV system ....... 3

Figure 3: A ―string‖ solar PV inverter ............................................................................................................... 4

Figure 4: From left-to-right, a bid irectional (net) meter, an AC combiner box, and an LT panel in a

grid -connected rooftop solar PV system ................................................................................................. 5

Figure 5: General working schematic depicting energy flow in a grid -connected rooftop solar PV

system .......................................................................................................................................................... 5

Figure 6: Typical hourly solar generation under clear -sky conditions ....................................................... 14

Figure 7: Typical energy losses in a grid -connected rooftop solar PV system .......................................... 14

Figure 8: Typical annual energy generation trend over project life ............................................................ 15

Figure 9: Illustrative PVSYST rep ort for normalized energy generation for a PV system ...................... 16

v

List of Tables

Table 1: Quality stand ards and certifications for a grid -connected rooftop solar PV system ................... 6

Table 2: Commonly used software for PV system design ............................................................................ 12

Table 3: General assumptions for estimating generation from crystalline silicon PV modules ............. 15

Table 4: Key features of CAPEX and PPA-based business models............................................................. 16

Table 5: Direct and ind irect incentives offered by Government of Ind ia ................................................... 17

Table 6: Typical Capital Cost breakd own for a grid -connected rooftop solar PV system ....................... 19

Table 7: General assumptions used in financial analysis of grid -connected rooftop solar PV projects . 20

Table 8: Brief analysis of technology and project-related risks ................................................................... 25

1

How to use this manual

This manual has been prepared with the intent to sensitize banks and FIs to the relevant

technology and project-related aspects of grid -connected rooftop solar power projects in

order to provide guidance in the evaluation of project loan applications. The manual

d iscusses, among other topics, the d ifferent components of a grid -connected rooftop solar

power system and its working; the relevant quality standards and benchmarks for projects;

an overview of the fiscal and financial incentives for market growth; the typical energy

generation patterns and performance monitoring norms; recommended system design

guidelines; the prevailing business models; and the salient technology- and project-related

risks for lenders.

2

Figure 1: Break-up of the 100 GW solar power target set by the Government of India for 2022

Context

In January 2010, the Government of India launched the Jawaharlal Nehru Nat ional Solar

Mission (JNNSM) as part of its National Action Plan on Climate Change (NAPCC) and set

out a target to achieve 20 GW of grid -connected solar power by 2022. This target was revised

to 100 GW by 2022 in late 2014. Of this, 40 GW has been targeted through grid -connected

rooftop solar PV (full 100 GW break-up shown in Figure 1). The market potential of rooftop

solar power in India has been estimated at 124 GW in a recent study by TERI1. While 40 GW

is a highly ambitious target, it is attainable through concerted efforts on the part of the

d iverse stakeholder segments involved, viz. banks, system integrators, project developers,

state agencies, d istribution utilities, etc. However, a host of challenges exist in the way of

reaching unrestrained participation from these stakeholders, and it is essential to address

their individual and shared concerns in order to achieve the goal. Participation of the

banking sector is absolutely key to forward progress. To enable that, two actions are

essential: (i) the concerns of banks in lending to grid -connected rooftop solar PV projects

need to be addressed , and (ii) the banks must themselves be sensitized to the technology and

other project-related subjects. Issues expressed by banks particularly include lack of clarity

and understanding of the system as well as the associated risks. This manual is designed as

an informative guide for banks & FIs to impart a working knowledge of grid -connected

rooftop solar PV systems and the associated project risks, in order to aid the banks in the

evaluation of loan applications for such projects. This manual includes a general description

of the system, its components, its working, supporting policy framework, on -going

government schemes & programs, approaches to estimate the power generation and the

various cash flows, and associated risks.

1 “Reaching the sun with rooftop solar”, TERI, 2015

3

Explaining grid-connected rooftop solar PV systems

What is meant by a grid -connected rooftop solar PV system?

A solar photovoltaic (PV) system is a renewable energy power generation technology that

uses photovoltaic modules to generate electricity d irectly from solar rad iation, using a

phenomenon called the photovoltaic effect. The electricity generated can be stored , used

d irectly, or fed back into grid . Solar PV is a reliable and clean source of electricity that can

suit a wide range of power generation applications for residential, industrial, agricultural,

etc. consumers. Some common applications includ e solar generation for captive

consumption, power sale and savings in electricity costs (by reducing use of d iesel-generator

sets or drawal from distribution utility). The technology has seen significant success for

power generation in recent years across the world, such as USA, Germany, Japan, China, etc.

A grid -connected rooftop solar PV system refers to a solar PV system that is located on the

roof of a build ing and is connected to the local distribution grid . It is a form of d istributed

power generation. The general working of the system can be summarized below.

A grid -connected rooftop solar PV system includes d ifferent components that are selected

depending on the system type, site location and application. In the Indian context, system

components generally comprise of the following components: PV modules, mounting

structures, inverter and BOS (meters, junction box, cables, etc.). Batteries and tracking

mechanisms are usually not seen in grid -connected rooftop solar PV systems in India,

mostly because of the high costs of these components.

The major components of a solar PV system are:

PV Modules – The PV modules

are the devices that actually

convert solar energy to electricity.

PV modules are made from PV

cells, which are most commonly

manufactured using silicon; other

materials used include cadmium

telluride (CdTe), copper indium

gallium selenide/ sulfide (CIGS).

Generally, silicon-based solar cells

provide higher efficiency (15% -

20%) but are relatively costly to

manufacture, whereas thin film

cells are cheaper but less efficient (5% - 10%). Since d ifferent types of PV modules

have d ifferent characteristics (in terms of efficiency, cost, performance in low

irradiation levels, degradation rate), no single type is preferable for all projects. Good

quality PV modules generally have a useful life of 25 to 30 years, although the

performance steadily degrades by about 20% over life time. It is important to assess

the quality of PV modules for use in projects. There exist a number of quality

standards developed by international and national organisations for the testing and

certification of PV modules and their performance. These are described later in this

section. Figure 2 depicts multi-crystalline PV modules in a grid -connected rooftop

solar PV system.

Figure 2: I llustrative example of PV modules as

part of a grid-connected rooftop solar PV system


4

Inverter –The inverter converts the DC power

produced by the PV modules into AC power.

The AC power is then either injected into the

grid or consumed on-site. Inverters represent the

second-largest equipment cost in grid -connected

rooftop solar projects. For grid -connected

rooftop solar applications, inverters come in

standard sizes ranging from a few hundred

watts to a few hundred kilowatts, depending on

system size. These inverters are usually ―string‖

inverters, which have smaller capacities

(typically < 60 kW), as opposed to ―central‖

inverters, which have larger capacities (typically

> 300 kW) and are generally used in MW-scale

solar PV projects. There are many d ifferent types

of inverters in the market; selection of an inverter for a project depends on a number

of factors, including application (for instance, there are different inverters for PV

systems with and without battery storage), size, cost, function, usage, etc. Some

inverters also perform energy monitoring functions. In the absence of quality

indigenous inverters, the Indian market is dominated by foreign inverter

manufacturers. From the technology perspective, inverters have matured to a large

degree and opportunities of cost reduction through technology innovation are not

expected in the market. Top-of-the-line inverters offer efficiencies in the range of 95%

- 98%. Product standards for inverters are d iscussed later in this manual. Figure 3

presents a sample ―string‖ solar PV inverter.

Mounting structure – The mounting structure, or racking system, is the support

structure that holds the PV panels. PV modules are generally mounted on support

structures in order to more efficiently capture solar insolation, increase generation,

and have a stable structural support. Mounting structures can be either fixed or

tracking. Fixed tilt mounting systems are simpler, low -maintenance and cheaper than

tracking systems. Due to these reasons, fixed tilt mounting structures are the norm in

India. Mounting structure designs are highly specific to the site, and over time have

seen improvement in durability and reduction in costs . Cost reduction is mostly

achieved through designs that use less material (mostly steel). Mounting structures

for rooftop solar PV installations also require compliance with regulations or

guidelines associated with the structural aspects of the roof, such as load -bearing

capacity, wind loading, etc.

Balance of System – Balance of system (BoS) consist of cables, switchboards, junction

boxes, meters, etc. Electricity meters record the amount of electricity consumed

and/ or produced (in kWh and kVAh) by a customer within a premises. In addition

to the metering of the net energy consumption/ production of a grid -connected

rooftop solar PV system, most regulations in India on metering also stip ulate the

location of an energy meter for measuring the generation of the PV array. Figure 4

depicts a bid irectional (net) meter, an AC combiner box and an LT panel for a grid -

connected rooftop solar PV system.

Figure 3: A “string” solar PV

inverter

5

WHAT DOES GRID-CONNECTED ROOFTOP SOLAR PV OFFER?

Due to the nature of the technology, the electricity generated varies by day, season,

year and is also dependent on geographical location. Typically, a small 100 kWp

grid-connected rooftop solar PV system will:

Generate ~12,650 units of electricity in a month (average);

Consist of 400 – 600 PV panels occupying roughly 1000 m2 (~ 25 m x 40 m)

roof space. As thumb rule the area requirement for SPV system is 10 m2/ kW;

Generate 1,51,800 kWh in a year and at 8 Rs/ kWh grid electricity cost, the

solar energy can potentially offset Rs 12,14,400 annually in uti lity bills;

Payback in 4-10 years considering a 15% subsidy on initial cost. However, the

system will last for over 20 years;

The solar output can be supplied to the grid if the SPV system produces in

excess of electricity requirement or when the building is vacant, thereby

earning revenue.

A schematic of the general working of a net-

metered grid -connected rooftop solar PV

system is depicted in Figure 5. Grid-connected

rooftop solar PV systems are generally

characterized by:

Electricity generation in daytime

Low maintenance requirement

Simple installation

Easy scalability

Robustness

High upfront investment

Figure 4: From left-to-right, a bidirectional (net) meter, an AC combiner

box, and an LT panel in a grid-connected rooftop solar PV system

Figure 5: General working schematic

depicting energy flow in a grid-connected

rooftop solar PV system


6

What are the relevant quality standards and benchmarks?

Certification and standardization of PV system components is an on -going process in India.

It is also essential to the fast growth of the sector, since without product certification and

standardization, there will be a lack of confidence in the technology and consequently, a

higher risk perception among project debt financiers in the market. In recognition of this, the

Government of India has pushed the identification and use of product standards

(international standards, if Indian standards not available); with respect to the development

of indigenous standards, there is an on -going effort involving the Government of India, PTB

(Physikalisch-Technische Bundesanstalt Braunschweig und Berlin), TERI, CPRI (Central

Power Research Institute), QCI (Quality Council of India) and others. There exist a number

of standards, concerning product quality, safety, performance, durability, grid

interconnection, efficiency, harmonics, surge protection, power quality, etc. Since BIS

standards have not yet been developed for all PV system components, other certifications

are in use in the market when BIS certification is not available, such as those of IEC

(International Electrotechnical Commission). Table 1 lists the d ifferent standards and

product certifications for various PV system components (further standards applicable as

developed from time to time). It is recommended that the standards marked ―M andatory‖

be necessarily checked by the bank. One way to do this could be developing a checklist of

the standards and comparing the quality standards adhered to by the equipment planned

for purchase by the project developer / system integrator / system own er to the standards

recommended by MNRE before sanction of the loan. It might be advisable to ask loan

applicants to present manufacturer certificates of the adherence of the equipment.

Table 1: Quality standards and certifications for a grid-connected rooftop solar PV system

Mandatory Advisory

Solar PV Modules/Panels

IEC 61215/ IS 14286 Design Qualification and Type Approval

for Crystalline Silicon Terrestrial

Photovoltaic (PV) Modules

Yes -

IEC 61646/ IS 16077 Design Qualification and Type Approval

for Thin-Film Terrestrial Photovoltaic

(PV) Modules

Yes -

IEC 62108 Design Qualification and Type Approval

for Concentrator Photovoltaic (CPV)

Modules and Assemblies

Yes -

IEC 61701

(As applicable)

Salt Mist Corrosion Testing of

Photovoltaic (PV) Modules

Yes -

IEC 61853- Part 1/ IS

16170 : Part 1

Photovoltaic (PV) module performance

testing and energy rating –: Irrad iance

and temperature performance

measurements, and power rating

Yes

IEC 62716 Photovoltaic (PV) Modules – Ammonia

(NH3) Corrosion Testing

Yes (As per

site condition

like dairies,

toilets)

7

Mandatory Advisory

IEC 61730-1,2 Photovoltaic (PV) Module Safety

Qualification – Part 1: Requirements for

Construction, Part 2: Requirements for

Testing

Yes -

IEC 62804

(Draft Specifications)

Photovoltaic (PV) modules - Test methods

for the detection of potential-induced

degradation. IEC TS 62804-1: Part 1:

Crystalline silicon

Yes (PID-

resistant

modules –

system

voltage more

than 600 V

DC)

Yes (PID-

resistant

modules –

system

voltage less

than 600 V

DC))

IEC 62759-1 Photovoltaic (PV) modules –

Transportation testing, Part 1:

Transportation and shipp ing of mod ule

package units

Yes -

Solar PV String Inverters/PCUs

IEC 62109-1, IEC

62109-2

Safety of power converters for use in

photovoltaic power system s - Part 1:

General requ irements, and Safety of

power converters for use in photovoltaic

power systems - Part 2: Particular

requirements for inverters. Safety

compliance (Protection degree IP 65 for

outdoor mounting, IP 54 for indoor

mounting)

Yes -

IEC/ IS 61683

(For stand -alone

systems)

Photovoltaic Systems – Power

conditioners: Procedure for Measuring

Efficiency (10%, 25%, 50%, 75% & 90-

100% Loading Conditions)

Yes -

BS EN 50530

(Will become IEC

62891)

(For grid -interactive

systems)

Overall efficiency of grid -connected

photovoltaic inverters:

This European Standard provides a

procedure for the measurement of the

accuracy of the maximum power point

tracking (MPPT) of inverters, which are

used in grid -connected photovoltaic

systems. In that case the inverter

energizes a low voltage grid of stable AC

voltage and constant frequency. Both the

static and dynamic MPPT efficiency is

considered .

Yes -

IEC 62116/ UL 1741/

IEEE 1547

Utility-interconnected Photovoltaic

Inverters - Test Procedure of Island ing

Prevention Measures

Yes -


8

Mandatory Advisory

IEC 60255-27 Measuring relays and protection

equipment - Part 27: Prod uct safety

requirements

Yes -

IEC 60068-2 (1, 2, 14,

27, 30 & 64)

Environmental Testing of PV System –

Power Conditioners and Inverters

a) IEC 60068-2-1:

Environmental testing - Part 2-1: Tests -

Test A: Cold

b) IEC 60068-2-2:


Test B: Dry heat

c) IEC 60068-2-14:


Test N: Change of temperature

d ) IEC 60068-2-27:


Test Ea and gu idance: Shock

e) IEC 60068-2-30:


Test Db: Damp heat, cyclic (12 h + 12 h

cycle)

f) IEC 60068-2-64:


Test Fh: Vibration, broadband rand om

and guidance

Yes -

IEC 61000

(As applicable)

Electromagnetic Interference (EMI), and

Electromagnetic Compatibility (EMC)

testing of PV Inverters (as applicable)

Yes -

Fuses

IS/ IEC 60947 (Part 1, 2

& 3), EN 50521

General safety requ irements for

connectors, switches, circuit breakers

(AC/ DC):

a) Low-voltage Switchgear and Control-

gear, Part 1: General rules

b) Low-Voltage Switchgear and Control-

gear, Part 2: Circu it Breakers

c) Low-voltage switchgear and Control-

gear, Part 3: Switches, d isconnectors,

switch-d isconnectors and fuse-

combination units

d ) EN 50521: Connectors for photovoltaic

systems – Safety requirements and tests

Yes -

IEC 60269-6 Low-voltage fuses - Part 6:

Supplementary requirements for fuse-

links for the protection of solar

Yes -

9

Mandatory Advisory

photovoltaic energy systems

Surge Arrestors

IEC 61643-11:2011 / IS

15086-5 (SPD)

Low-voltage surge protection devices –

Part 11: Surge protective devices

connected to low -voltage power systems

– Requirements and test methods

Yes -

Cables

IEC 60227 / IS 694,

IEC 60502 / IS 1554

(Part 1 & 2)

General test and measuring method for

PVC (Polyvinyl chloride) insulated cables

(for working voltages up to and includ ing

1100 V, and UV resistant for outdoor

installation)

Yes -

BS EN 50618 Electric cables for photovoltaic systems

(BT(DE/ NOT)258), mainly for DC cables

Yes -

Earthing /Lightning

IEC 62561 Series

(Chemical earthing)

IEC 62561-1

Lightning protection system components

(LPSC) - Part 1: Requirements for

connection components

IEC 62561-2


(LPSC) - Part 2: Requirements for

conductors and earth electrodes

IEC 62561-7


(LPSC) - Part 7: Requirements for earthing

enhancing compound s

Yes -

Junct ion Boxes

IEC 60529

Junction boxes and solar panel terminal

boxes shall be of the thermo plastic type

with IP 65 protection for ou tdoor use, and

IP 54 protection for indoor use

Yes -

Energy Meter

IS 16444 or as specified

by the DISCOMs

a.c. Static d irect connected watt-hour

Smart Meter Class 1 and 2 — Specification

(with Import & Export/ Net energy

measurements)

Yes -

Solar PV Roof Mount ing St ructure

IS 2062 / IS 4759 Material for the structure mounting

Note: Equivalent standards may be used for d ifferent components of the systems. In case of

clarification, the following organizations/ agencies may be contacted:

Ministry of New and Renewable Energy (MNRE)


10

National Institute of Solar Energy (NISE)

The Energy and Resources Institute (TERI)

TUV Rheinland

UL

Technical Guidelines and Best Practices

Solar PV Roof Mounting Structure

Aluminum frames will be avoided for installations in coastal areas.

Solar Panels

Plants installed in high dust geographies like Rajasthan and Gujarat must have the

solar panels tested with relevant dust standards (Applicable stan dard would be IEC

60068-2-68).

Fuse:

The fuse shall have DIN rail mountable fuse holders and shall be housed in

thermoplastic IP 65 enclosures with transparent covers.

Cables:

For the DC cabling, XLPE or, XLPO insulated and sheathed , UV-stabilized single

core flexible copper cables shall be used; Multi-core cables shall not be used .

For the AC cabling, PVC or, XLPE insulated and PVC sheathed single or, multi-core

flexible copper cables shall be used; Outdoor AC cables shall have a UV-stabilized

outer sheath.

The total voltage drop on the cable segments from the solar PV modules to the solar

grid inverter shall not exceed 2.0%

The total voltage drop on the cable segments from the solar grid inverter to the

build ing d istribution board shall not exceed 2.0%

The DC cables from the SPV module array shall run through a UV-stabilized PVC

conduit pipe of adequate d iameter with a minimum wall thickness of 1.5mm.

Cables and wires used for the interconnection of solar PV modules shall be provided

with solar PV connectors (MC4) and couplers.

All cables and conduit pipes shall be clamped to the rooftop, walls and ceilings with

thermo-plastic clamps at intervals not exceeding 50 cm; the minimum DC cable size

shall be 4.0 mm2 copper; the minimum AC cable size shall be 4.0 mm 2 copper. In

three phase systems, the size of the neutral wire size shall be equal to the size of the

phase wires.

What are the guidelines for designing a grid -connected rooftop solar PV system?

The design of a PV plant aims at achieving the lowest possible levelized cost of electricity. It

comprises identification of load , sizing of system, and selection of suitable

technologies/ products. This in turn requires assessment of costs, power output, benefits /

d rawbacks of technology type, quality, spectral response, performance at low radiation

levels, nominal power tolerance levels, degradation rate and warranty terms.

11

Selection of inverter includes assessment of compatibility with module technology,

compliance with grid code and other applicable regulations, inverter-based layout,

reliability, system availability, serviceability, modularity, telemetry requirements, inverter

locations, quality and cost.

In designing the site layout, the following aspects are important:

Choosing row spacing to reduce inter-row shading and associated shading losses

Choosing the layout to minimise cable runs and associated electrical losses

Allowing sufficient d istance between rows to allow access for maintenance purposes

Choosing a tilt angle that optimises the annual energy yield according to the latitude

of the site and the annual d istribution of solar resource

Orientating the modules to face a direction that yields the maximum annua l revenue

from power production; as India is in the northern hemisphere, the modules will

usually be south-facing, although sometimes they are kept facing west in order to

sync generation with evening peak demand

The electrical design of a PV project can be split into the DC and AC systems. The DC

system comprises the following:

Array(s) of PV modules

DC cabling (module, string and main cable)

DC connectors (plugs and sockets)

Junction boxes/ combiners

Disconnects/ switches

Protection devices

Earthing

The AC system includes:

Inverter

AC cabling

Switchgear

Transformers (only for large size systems)

Substation (only for large size systems)

Earthing and surge protection

Automatic data acquisition and monitoring is an important component of any grid -

connected rooftop solar project. It allows comparison of actual generation with design

calculations during the system operation, and helps in identification and analysis of faults.

In the design phase, it is also important to give due consideration to the surrounding

structures, for particular use in shading analysis.

For system design, one of the most commonly used software in India is the PVSYST, which

has become the industry standard . Table 2 lists some of the various PV system design

software prevalent in the sector, both in India and abroad.


12

Table 2: Commonly used software for PV system design

Software Description

RETScreen

Developed by: Canad ian government, industry,

academia

Use: Evaluation of energy production, savings,

costs, emission reductions, financial viability, risk

HOMER

Developed by: Originally developed by NREL;

Now licensed to HOMER Energy

Use: Design of d istributed energy systems,

includ ing technical and economic feasibility

analysis

NREL Solar Advisor Model (SAM)

Developed by: NREL (National Renewable

Energy Laboratory)

Use: Estimation of energy production, peak and

annual system efficiency, LCOE, capital cost,

O&M costs

(used with TRNSYS)

SolarGIS – pvPlanner

Developed by: SolarGIS

Use: Site prospecting, prefeasibility and pre-

design assessment, yield assessment

PV F-Chart

Developed by: F-Chart Software

Use: Estimation of energy generation, efficiency,

load , economics, life cycle costs, equipment costs

PVSYST Developed by: PVSYST Photovoltaic Software

Use: Study, sizing, simulation and data analysis

SolarPro

Developed by: LaPlace Systems

Use: Estimation of power production, life cycle

analysis

With regard to PV system design, IEC has released a standard , the IEC 62548 ―PV arrays –

Design requirements‖, which does not have an equivalent BIS standard at present. This

standard sets the design requirements for PV arrays, also including DC array wiring,

electrical protection devices, switching and earthing provisions.

What are the O&M aspects of a grid -connected rooftop solar PV system?

Maintenance

Compared to most other power generating technologies, solar PV systems hav e very low

maintenance and servicing requirements. However, suitable maintenance of a PV plant is

essential to optimise energy yield and maximise the life of the system.

Scheduled maintenance typically includes:

Module cleaning (dust, bird dropping and other debris can cause 5-10% decrease in

power generation)

Checking module connection integrity

Checking junction / string combiner boxes

Thermographic detection of faults using Thermographic camera

Inverter servicing

13

Inspecting mechanical integrity of mounting structures

Vegetation control

Tightening cable connections that have loosened

Routine balance of plant servicing / inspection

Common unscheduled maintenance requirements include:

Replacing blown fuses

Repairing lightning damage

Repairing equipment damaged by intruders or during module cleaning

Rectifying supervisory control and data acquisition (SCADA) faults

Repairing mounting structure faults

Manufacturers and developers generally have set practices for PV system maintenance, with

many offering multi-year AMCs (Annual Maintenance Contracts); AMCs are mandatory for

developers and system integrators that are empanelled with MNRE as Channel Partners

under the Ministry’s grid -connected rooftop solar PV scheme. AMCs mandate that the

contractor shall carry out the required maintenance activity (including replacement of

equipment) inside the guarantee period of the AMC (usually 2-5 years), without any cost to

the customer.

A typical AMC for a grid -connected rooftop solar PV system would include:

Pre-decided maintenance schedule

Supply of spare parts as required

Replacement of defective modules, inverters, etc.

Maintenance of log sheets for operational detail

Complaint logging and its attending

Insurance (machine breakdown insurance, general insurance covering fire,

earthquake, etc.)

Performance monitoring

An important aspect of a complete grid -connected rooftop solar PV system is performance

monitoring. This is essential in the successful operation and maintenance of the system,

since it provides the relevant data for fault detection and performance analysis. At

minimum, the data includes the data logged in inverters, switches and meters. This is the

case in small-size PV systems.

In MW-scale PV systems, more sophisticated data acquisition systems (e.g. SCADA) are

required in order to procure and assimilate data from a number of monitoring devices,

including weather data measurements. In these systems, the system operator/ owner (as per

business model) should monitor the performance once a day, to ensure generation

adherence to design estimates, timely detection of faults and deliver optimal performance.

System operation and performance

The actual generation is very closely related to the instantaneous solar irrad iance on the

surface of the solar module, and follows a bell curve as solar rad iation increases and

decreases from morning to evening. An example of a generation curve for a day under clear -

sky conditions is shown in Figure 6.

Energy generation of a solar PV system can be estimated using the system size (kW p or

MWp), basic solar resource data, and system losses (Figure 7 depicts typical PV system

energy losses). In the preliminary project phase, generic estimations can be made using just


14

these parameters. For more accurate calculations, software products are available that use

location-specific weather data records, PV module configuration (angle, orientation, etc.),

efficiency, losses, array design, cell temperatures, inverter characteristics and so on. The

generic estimations are useful in preliminary project feasibility assessments, and are useful

since they provide quick and easy estimations. These estimations provide year -wise

generation data in the project life; they cannot be used for monthly/ daily/ hourly generation

estimates. However, these are d iscard ed for more accurate estimations using specialized

software products in the design phase of the project. These detailed estimations require a lot

more data for obtaining the desired generation estimates, but they provide very detailed

generation estimates as well, including month-wise, day-wise and hour-wise generation.

Energy generation calculation examples of both generic estimations and software -based

simulations are provided in this section for reference by lenders.

Generic estimation

Generic estimations use a small number of parameters to give a rough approximation of the

generation performance of a PV system. These can be made more realistic by incorporating

more parameters into the calculation. There are also d ifferent means of calculation, using

d ifferent input parameters. Generally, the following parameters are considered :

Figure 6: Typical hourly solar generation under clear-sky conditions

Figure 7: Typical energy losses in a grid-connected rooftop solar PV system

15

System size (in kWp or MWp)

Deration (%):

Deration refers to various factors in PV systems which cause power losses, including

inverter loss, slight manufacturing inconsistencies in modules, electrical

impedance/ resistance, temperature, dust and other environmental conditions, aging

and maintenance issues.

Peak sun hours (hours/ day):

Peak sun hours refers to the average hours of full solar rad iation (1000 W/ m 2)

received in a day at a location; this amounts to an equivalent of the amount of solar

rad iation actually received over the year

No. of effective sunshine days in year (days/ year):

This refers to the number of days in a year for a location that can be assumed to h ave

full solar radiation (1000 W/ m 2) for the peak sun hours duration

Module degradation rate (%):

PV modules suffer from degradation, due to a variety of reasons, over the product

life, which causes the generation capacity per module to decrease over time; this

decrease in generation is captured in an annual degradation rate, usually about 0.2-

0.5%

These estimates can also be used for project economic and financial analysis, such as

payback, NPV, etc. for the financial feasibility assessment of projects.

Table 3: General assumptions for estimating generation from crystalline silicon PV modules

Parameter Unit Value

System size kW 50

Degradation rate % 0.50%

Peak sun hours hrs/ day 5

No. of sunshine days in year days/ yr 300

Deration % 20%

Project life years 25

A short calculation using the above parameters is illustrated below (Table 3 & Figure 8):

Such methods of generic energy generation estimation are typically used in project pre -

feasibility assessments to evaluate the rough en ergy generation, revenue, payback, NPV, etc.

-

200

400

600

800

1,000

1,200

1,400

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Yea

rly

gen

erat

ion

(k

Wh

/yr)

Year

Energy generation (@ 0.75% degradation per-year)

Degra

datio

n

loss

Figure 8: Typical annual energy generation trend over project life


16

Figure 9: I llustrative PVSYST report for normalized energy generation for a PV system

Software-based generation estimation

There are a number of software products (listed in Table 2) available in the market that are

used for PV project planning and design. Nearly all of them include d etailed estimations of

energy generation over the life cycle of the system, including hourly, daily and monthly

generation, using large amounts of input data.

Figure 9 shows a typical PVSYST report showing the estimate of normalized energy

generation (in kWh/ kW/ day) of a PV system for every month of a year. Such energy

generation estimates are produced during the design phase of the project, after the initial

phases of feasibility assessment, site selection, etc. have been carried out.

Business models

There are primarily two business models for grid -connected rooftop solar PV projects:

CAPEX and PPA-based . Both business models have their merits and demerits; choice of

business model for a particular project depends upon a number of factors, such as roof

owner priorities, desirable operating conditions, profitability, etc. Table 4 lists some of the

key features of both business models.

Table 4: Key features of CAPEX and PPA-based business models

CAPEX PPA-based

Project owned by roof owner/ consumer Project owned by project developer/ supplier

Roof owner/ consumer responsible for O&M of

system after initial 1-2 year period

Roof owner/ consumer not responsible for O&M;

O&M is responsibility of project developer

Can’t be converted to OPEX model at a later date Can be converted into CAPEX at a pre-decided

date (option to buy back)

Power to be used for cap tive consumption;

surplus power can be sold to d istribution utility

Power can be sold to roof owner;

Power can be sold to d istr ibution utility;

Power can be sold to third party**

*project developer is usually a Renewable Energy Service Company (RESCO)

17

**some state regulations do not permit this mode of operation; should be checked at the time of project

conception/planning

Central and State policies

In late 2014, the Government of India expanded the initial 20 GW target to 100 GW of grid -

connected solar capacity by 2022; comprising 40 GW through grid -connected rooftop solar

and 60 GW through ground mounted installations. To achieve the planned ramp-up of solar

capacity from the existing 3 GW to 100 GW by 2022, many opportunities for investment

have been created through a variety of schemes launched by the Government. These

schemes include provisions to expedite the existing mechan ism of project development, by

reducing the amount of clearances required and provid ing land to developers on a plug -

and-play basis.

In 2011 by the amendment in the National Tariff Policy 2006, an increase in Solar Renewable

Purchase Obligation (Solar RPO) compliance has been prescribed from a minimum of 0.25%

in 2012 to 3% in 2022. Under the revised target, the solar RPO compliance has increased to

10.5% by 2022 for all state utilities and other obligated entities. The central government is

actively supporting the development of solar projects by developing attractive schemes for

developers and power consumers installing solar PV projects. The incentives offered by the

central government are segment specific and aim to attract investment by provid ing suitab le

policies. Various other direct and indirect incentives currently offered by the government to

promote solar energy are illustrated in Table 5.

Table 5: Direct and indirect incentives offered by Government of India

Policy Measure Beneficiary Brief Description

100% foreign

investment in equity

- 100% foreign investment as equity in solar power

projects is allowed , with an aim to attract foreign

investors and developers and build up solar power

generation capacity.

10-year tax holid ay System Owner /

Power Generator

Under Section 80-IA of the Income Tax Act, 1961 the

Central Government provides a 10-year tax holid ay,

in which the beneficiary has the freedom to choose a

10-year continuous period in the first fifteen years of

the project life to avail the tax benefit. The projects are

taxed using the Minimum Alternate Tax (MAT) rate,

which is significantly lower than the corporate tax

rate.

Income tax benefits

through accelerated

depreciation

System Owner /

Power Generator

Solar power generation projects have the option of

profiting from Accelerated Depreciation benefit by the

Central Government, as per Section 32 of the Income

Tax Act, 1961. Companies can use this to substantially

reduce tax burden in the first few years of the project ,

up to 100% of the project cost (80% accelerated

depreciation and 20% additional depreciation).

Concessional custom

duty on imports

Project Developer The Central Government has mandated concessions

and exemptions on specific materials imported for

manufacture of solar power generation products as

well as for use in solar power generation projects.


18

Policy Measure Beneficiary Brief Description

Central Financial

Assistance (CFA) as a

capital subsidy on

solar PV projects

System Owner /

Power Generator

(Residential /

Institutional /

Social consumer)

Both Central and State Governments frequently

provide subsid ies on capital costs of solar power

projects through various schemes and programmes.

In addition to the policy push by the Central Government, a number of State Governments

have also come out with p olicies and regulations concerning grid -connected rooftop solar

PV power. So far, 15 states have released relevant policies and 21 states have released

regulations on grid -connected rooftop solar PV power.

On-going schemes and programs

The Govt. of India has provided a range of measures for implementing rooftop solar PV

installations in the country for the successful implementation of the National Solar Mission.

1. Off-Grid & Decentralized Solar Applications:

In continuation of "Off-grid & Decentralized Solar Applications" during the 12th

Period under JNNSM, MNRE issued guidelines for implementation of " Grid

Connected rooftop and Small Solar power plants programme" in the year 2014. It is

being implemented by multiple agencies, comprising of SNAs, SECI, and other

government organizations such as PSUs/ State Departments/ Local

Governments/ Municipal Corporations/ NHB/ IREDA/ Metro Rail Corporations of

d ifferent States, etc. Under the programme, a grant of 30% of the project cost is

provided by MNRE as CFA. The schem e is for projects size in between 1kWp to 500

kWp.

2. Installation of Grid-connected Rooftop Solar PV power plants with aggregate 52

MW through Multi Government Agencies (MGAs) through National Clean Energy

Fund (NCEF):

The project size will range from 10 kW to 500 kW. For residential/ small office sector,

project size may also vary between 1 kW to 10 kW. The project will be implemented

by MNRE in Government/ commercial/ Institutional/ residential build ings through

Multi Governmental Agencies (MGAs). The MGAs w ould consist of Government

Institutions, Public Sector Undertaking (PSUs), DISCOMs, DMRC, Commercial

Banks, National Housing Bank, Railways, Army, Financing Institutions/ Financial

Integrators etc. Central Financial Assistance would total to Rs. 143.20 cror es (USD 23

million) for the 52 MW of aggregate capacity addition in various states across the

country.

3. Installation of Grid-connected Rooftop Solar PV Power plant with aggregate 54

MW capacity through State Nodal Agencies (SNAs) through National Clean

Energy Fund (NCEF):

The project size will range from 10 kW to 500 kW. For residential/ small office sector,

project size may also vary between 1 kW to 10 kW. The project will be implemented

by MNRE in Government/ commercial/ Institutional/ residential build ing s through

State Nodal Agencies (SNAs) in every state and Union Territories (UTs) under the

control of State Governments/ UT administration. Central Financial Assistance

would total to Rs. 149.85 crores (USD 24 million) for the 54 MW of aggregate capacity

addition in various states across the country.

19

4. Installation of Grid-connected Rooftop Solar PV Power plant with aggregate 73

MW capacity in Warehouses in various states across the country through National

Clean Energy Fund (NCEF):

The project size will range from 500 kW to 5 MW size. The projects will be

implemented in the warehouses owned by various organizations like Warehousing

Corporation of India, Food Corporation of India, State Government Organizations

and some private companies which have huge vacant roof space and vacant land in/

around the warehouses. SECI will be the nodal agency for MNRE for the

implementation of the scheme. Central Financial Assistance would total to Rs. 148.92

crores (USD 24.17 million) for the 73 MW of aggregate capacity addition in various

states across the country.

Financial and economic analysis

What is the standard project life of a grid -connected rooftop solar PV system?

PV modules generally have a product life of about 25 years, which is why solar PV projects

are also generally considered to have a 25-year project life. CERC, in its renewable energy

tariff determination orders, also assumes a 25-year useful life in the calculations for solar PV

projects.

What are the project lifecycle costs of a grid -connected rooftop solar PV system?

Solar PV systems have a high upfront cost and low operational costs, due to there being no

fuel requirement or usage. For grid -connected rooftop solar PV systems, operational costs

are very low, as there is no need for battery replacement. Generally, operational costs for

grid -connected rooftop solar PV systems include general up -keep and maintenance, inverter

replacement, and replacement of other BOS components (meters, junction box, cables, etc.).

Table 6: Typical Capital Cost breakdown for a grid-connected rooftop solar PV system

PV system component %age of Capital Cost

PV mod ules 45-55%

Inverter 20-30%

Mounting structure 15-20%

Other BOS (Junction box, cables, meters, etc.) 5-10%

Table 6 shows the general breakup of the capital cost for a small-medium sized grid -

connected rooftop solar PV project. The average capital cost for grid -connected rooftop solar

PV systems is ~ Rs. 80/ Wp. With increase in system size, economies of scale may allow cost

reduction, down to an average capital cost of Rs. 70-75/ Wp. Generally, annual operational

costs are assumed to be ~ 2% of the capital cost in most financial analyses.

Table 7 gives the general assumptions used for the financial analysis of a grid -connected

rooftop solar PV system.


20

Table 7: General assumptions used in financial analysis of grid-connected rooftop solar PV projects

Parameter Unit Value Comments

Installed capacity kW 1

Operating d ays days/ yr 365 Industry norm

Average Capacity Utilization Factor (CUF)

% 20.5% As per MNRE data on solar PV power plant energy generation for Phase-I of JNNSM (available on MNRE website)

Average Capital Cost Rs./ kW 80,000 CERC guidelines

Equity investment % 30%

Assumption;

Also assumed in CERC (Terms and conditions for tariff determination from Renewable Energy Sources) Regulations, 2012

Debt investment % 70% Assumption

O&M expenses % 2% Typical

Escalation in O&M expenses

% 5.72% As per CERC (Terms and conditions for tariff determination from Renewable Energy Sources) Regulations, 2012

Module output degradation rate per year

% 0.5% Typical;

May vary for d ifferent manufacturers

Interest on loan term % 12.3%

In CERC (Terms and cond itions for tariff determination from Renewable Energy Sources) Regulations, 2012, an interest rate of 12.3% is assumed

Loan tenure yrs 12 As per CERC (Terms and conditions for tariff determination from Renewable Energy Sources) Regulations, 2012

Moratorium yrs 0-0.5 0.5 years As per CERC (Terms and conditions for tariff determination from Renewable Energy Sources) Regulations, 2012

Insurance charges on cost

% 0.1% Assumption

Book depreciation rate limit

% 90% Of book value

Depreciation as per IT Act – WDV

% 15% As per Income Tax Act, 1961

Accelerated Depreciation rate – WDV

% 80% As per Income Tax Act, 1961 for Income Tax benefit

Income Tax (regular) % 33.99%

Minimum Alternate Tax (MAT)

% 20.01%

Tax Holid ay yrs 10 Acc. to Section 80-IA of Income Tax Act, 1961

Discount rate % 10.81

In the CERC (Terms and conditions for tariff determination from Renewable Energy Sources) Regulations, 2012, the d iscount rate equivalent to Post-Tax Weighted Average Cost of Capital is used for the purpose of levelized tariff determination

21

Major lifecycle costs in a grid -connected rooftop solar PV project generally comprise the

following:

1. Initial Capital Cost

o PV modules

o Inverter

o Mounting structure

o Other BOS (Junction box, cables, meters, etc.)

In large-sized projects, there might be a need for purchase of a transformer as

well, which can add to the cost.

o Site assessment and development cost

For small-medium sized projects, site assessment and development costs are

not significant, since the PV system only needs to be procured , placed and

fixed at the selected positions as per design. However, for large-sized

projects, sometimes site assessment and development can become a

significant cost component, such as in the case when roof extension or other

civil work is desired .

o Licensing

In some projects, there might be a need to procure licenses for start of

commercial operation that has a standard cost.

2. Scheduled replacement costs

o Inverter replacement

Solar inverters generally have a life of ~ 10 years; although some high quality

products may continue to function well for a few more years. After this

period , inverters need to be replaced .

3. O&M cost

Annual O&M costs are generally assumed to be ~ 2% of the initial capital cost, with

an escalation rate of ~ 5.72% as per CERC after the first year of operation.

What is the typical payback period for grid -connected rooftop solar PV projects?

A grid -connected rooftop solar PV system generally has a payback period of 6-8 years.

However, this is highly dependent on the business model of the project. Since there is not a

lot of variation in the cost structure of well-designed and implemented grid -connected

rooftop solar PV projects, the revenue model becomes very important in ascertaining the

project’s financial health. For instance, states in India have their own policies and

regulations for grid -connected rooftop solar PV projects, such as Feed -in Tariff (FiT) and Net

Metering. The FiT as well as the tariff structure can vary as decided by the State Electricity

Regulatory Commission (SERC), which can lead to big differences in the financial viability

of grid -connected rooftop solar PV projects in d ifferent states. Also, other business models

such as those based on Power Purchase Agreements (PPAs) or roof leasing can have widely

d ifferent mechanisms for determining the financial viability.

It may be noted that most grid -connected rooftop solar PV project financing in India relies

on the financial health of the balance sheet of the project developer as this reduces the risk

exposure of the lending institutions.


22

What are the risks involved in lending to a grid -connected rooftop solar PV project?

There are various risks involved in lending project debt to a grid -connected rooftop solar PV

project. These can vary depending upon the size of the project, state, etc. In this section,

these risks have been briefly explained and possible risk mitigation options explored .

Technology risks

Since the grid -connected rooftop solar PV industry and the solar PV power industry itself, is

relatively new and yet to mature, there is some risk in the selection of PV system

components. PV modules have a product life of 25 years, but the domestic industry itself

does not have a lot of experience with 25-years of operation of PV systems, including the

lifecycle performance of PV modules and other system components with respect to module

failu re, performance degradation, etc. This contributes to some uncertainty in the project’s

financial viability over the project life. Also, like in any industry, there are a number of low -

quality products available in the market, which may hold the attraction of initial cost

reduction opportunities. Use of such components adds to the technology risk in a project.

Technology risks can be mitigated to a large extent with a few measures early on in a project.

These can be:

Careful screening of project experience of developer/ promoter

Usage of high-quality system components from well-established manufacturers

Statement of generation guarantee by the project developer

It may be helpful to develop a list of preferred suppliers for reference in evaluation of loan

applications.

Solar resource data risk

Availability of good -quality solar resource data is essential to the estimation of energy

generation by the PV system. In India, solar resource data is not easily available. There have

been some efforts toward the develop ment of a nation-wide network of solar resource

measurement stations, with the establishment of 115 solar resource measurement stations

across the country, but site-specific solar resource data for rooftop solar projects is d ifficult

to get. Satellite-based solar resource data is available, but the accuracy of that data is not

very reliable, as per market experience. The only way to get reliable data is through on -site

measurement, although full-year data is d ifficult to obtain this way.

In the absence of site-specific reliable solar resource data, it is generally best to conduct

analyses of energy generation using data from different sources.

Power off-taker risk

Power off-taker risk in FiT- or Net Metering- based projects is one of the biggest concerns in

a number of states. This is caused by a number of reasons, such as:

Poor financial health of distribution utilities

Poor record of enforcement of regulations in some states

Delay in payments by distribution utilities

In projects based on PPAs also, the credibility of the power purchaser should be carefully

assessed before signing of the PPA. This includes risk associated with roof owners; the credit

profile of the roof owner should also be carefully assessed .

23

Poor financial health of d istribution utilities and poor enforcement of regulations put the

financial viability of the project at risk. Ideally, lenders can avoid this risk by focussing

lending operations in states with a proven track record of payment by distribution utilities.

In PPA-based projects, apart from an in-depth evaluation of the power purchaser’s

credibility, the specific terms and conditions of the contract are also very important.

Policy & regulatory uncertainty

The Indian solar PV market has seen a number of d ifferent policies and schemes so far.

Despite the major focus given to the solar PV power sector by the Government of India,

there has been a notable lack of consistency in policy. However, this policy uncertainty is not

as strongly present in the grid -connected rooftop solar PV segment, which has seen

comparatively greater policy stability and consistency, apart from the difficulty in

d isbursement of capital subsidy on project cost till late last year due to shortage of funds.

Currently, that issue stands resolved and the terms for d isbursal of subsidy have been

clarified by MNRE.

Developer/ Promoter risk

The grid-connected rooftop solar PV market in India is still in its nascent phase; so, there are

a large number of developers and promoters without sufficient experience. Thus, it is o f

utmost importance to do an in-depth evaluation of the technical and financial capability of

the developer and/ or promoter of the project. Ideally, a developer should have prior full

project development experience from start to finish for multiple project s as well as a team of

sufficient experienced manpower to carry out the tasks of the project. The experience of the

developer also matters in obtaining the requisite clearances and approvals for the project to

move forward , which can otherwise cause unnecessary delays in project development.

Theft and vandalism

Although not much observed in rooftop solar installations, maybe due to the limited

number of systems installed till date, theft and vandalism are causes for concern for lenders.

Currently, there is no standard facility in grid -connected rooftop solar PV installations that

guards against this risk.

Low credit profile of borrowers

The grid -connected rooftop solar PV technology is a decentralised and d istributed power

generation technology which targets individual consumers, whether commercial/

industrial/ residential/ institutional etc. By definition, the consumer base is characterized by

a large pool size with small investment sizes. In India, many of these consumers have little

experience with long-term financing, with a majority having working capital relationships.

This poses an issue in lending long-tenure project debt to these borrowers.

Also, it is found that a majority have insufficient free business cash flows with which to

service their debt schedule.

Lastly, inadequacy of KYC (Know Your Customer) details of the potential borrowers

increase the risk assessment of lenders.

Security coverage

Grid-connected rooftop solar PV systems by themselves have untested and possibly low

resale value in the market, which makes it d ifficult to use the PV system as security for the


24

project debt. There is also an uncertainty regarding continued availability of the roof space

over the 25-year project life with no security interest. In addition, potential borrowers may

have inadequate business assets for holding as collateral on the loan.

Table 8 illustrates some important characteristics of the risks described here.

25

Table 8: Brief analysis of technology and project-related risks

Risks Probability of

Occurrence Magnitude of

Impact Possible Mitigation Measures

1. Technology risk Low Low Procurement of equ ipment as per quality stand ards and specifications

notified by MNRE (Technical Due Diligence)

2. Solar resource data risk Low Low

Verification of performance projections with multip le solar resource

data sources, includ ing site-specific resource data, if available (Technical

Due Diligence)

3. Power off-taker risk Medium High Careful screening of power off-taker cred it history

4. Policy & regulatory uncertainty Low Low Low reliance on policy and regulatory incentives for project viability

5. Developer / Promoter risk Low Medium

Careful screening of project developer / promoter experience

Evaluation of proposed project (feasibility report, independent

consultant)

6. Theft and vand alism Low Low Debt servicing cond ition in terms of loan agreement in the event of

theft or vandalism

7. Low cred it profile of borrowers Medium Low Expand KYC database in commercial and industrial sectors

8. Security Coverage Low Medium Determining alternate means of security

26

Annexure 1: General project development process for grid-connected rooftop solar PV projects in India

The project development process for grid -connected rooftop solar PV projects in India does

not follow any established protocols/ procedures, since the market is yet to mature so not

enough project development has taken place, and there are a number of government

schemes/ programs and implementation models which have d ifferent modes of

implementation. However, there is a general set of stages that most project development

processes follow, which includes (i) Project Planning/ Preparation, (ii) System Design, (iii)

Implementation, and (iv) Operation & Maintenance.

This set of steps has been illustrated to show the common aspects of grid -connected rooftop

solar PV project development in India. It is to be noted that the project development process

described here is for the purpose of understanding only, and may differ from state -to-state.

28

Annexure 2: Web links of State Nodal Agencies (SNAs)

State / Union Territory Website

Andhra Pradesh http:/ / nedcap.gov.in/ Home.aspx

Andaman & Nicobar Islands

http:/ / electricity.and .nic.in/

Arunachal Pradesh http:/ / www.apeda.org.in/

Assam http:/ / www.assamrenewable.org/

Bihar http:/ / breda.in/ abour_us.html

Chhattisgarh http:/ / www.cred a.in/

Delhi http:/ / delhi.gov.in/ wps/ wcm/ connect/ doit_eerem/ EEREM/ Home/

Goa http:/ / ged a.goa.gov.in/

Gujarat http:/ / ged a.gu jarat.gov.in/

Haryana http:/ / hareda.gov.in/

Himachal Pradesh http:/ / himurja.nic.in/

Jammu & Kashmir http:/ / jaked a.nic.in/ http:/ / ladakhenergy.org/

Jharkhand http:/ / www.jreda.com/

Karnataka http:/ / kred linfo.in/

Kerala http:/ / anert.gov.in/

Lakshad weep Island s http:/ / www.lakpower.nic.in/

Madhya Pradesh http:/ / www.mpnred .com/ Home/ Index.aspx

Maharashtra http:/ / www.mahaurja.com/

Manipur http:/ / manireda.com/

Meghalaya http:/ / mnreda.gov.in/

Mizoram https:/ / zeda.mizoram.gov.in/

Nagaland http:/ / www.nrengl.nic.in/

Odisha http:/ / www.oredaodisha.com/

Punjab http:/ / peda.gov.in/ main/

Rajasthan http:/ / www.rrecl.com/ Index.aspx

Sikkim http:/ / sred a.gov.in/

Tamil Nadu http:/ / teda.in/

Telangana http:/ / tg.nedcap.gov.in/

Tripura http:/ / treda.nic.in/

Uttarakhand http:/ / ureda.uk.gov.in/

Uttar Pradesh http:/ / ned a.up.nic.in/

West Bengal http:/ / www.wbreda.org/

http://nedcap.gov.in/Home.aspx

http://electricity.and.nic.in/

http://www.apeda.org.in/

http://www.assamrenewable.org/

http://breda.in/abour_us.html

http://www.creda.in/

http://delhi.gov.in/wps/wcm/connect/doit_eerem/EEREM/Home/

http://geda.goa.gov.in/

http://geda.gujarat.gov.in/

http://hareda.gov.in/

http://himurja.nic.in/

http://jakeda.nic.in/

http://ladakhenergy.org/

http://www.jreda.com/

http://kredlinfo.in/

http://anert.gov.in/

http://www.lakpower.nic.in/

http://www.mpnred.com/Home/Index.aspx

http://www.mahaurja.com/

http://manireda.com/

http://mnreda.gov.in/

https://zeda.mizoram.gov.in/

http://www.nrengl.nic.in/

http://www.oredaodisha.com/

http://peda.gov.in/main/

http://www.rrecl.com/Index.aspx

http://sreda.gov.in/

http://teda.in/

http://tg.nedcap.gov.in/

http://treda.nic.in/

http://ureda.uk.gov.in/

http://neda.up.nic.in/

http://www.wbreda.org/

29

Annexure 3: Frequently Asked Questions

What is the rate of subsidy?

According to the latest notification by MNRE2, subsidy of 30% on Benchmark Capital Cost is

available for all consumers (except for Commercial & Industrial consumers), including the

following consumer categories:

Residential All types of build ings

Institutional Schools, health institutions including medical colleges & hospitals,

educational institutions (both private and public), R&D institutions, etc.

Government Both Central & State Governments buildings covering all Government

offices, Government PSUs, all build ings owned by Government d irectly or

by any Government-owned societies, companies, corporations or

organizations.

All Panchayati Raj build ings.

Government organizations owned systems anywhere including on private,

commercial and industrial organizations will also be eligible .

Social Sector Community centers, welfare homes, old age homes, orphanages, common

service centers, common workshops for artisans or craftsmen, facilities for

use of community, any establishment for common use, etc.

It is to be noted that the subsidy will be admissible for the above categories even if the

power connection is classified under industrial or commercial category.

Private, commercial and industrial buildings will not be covered under this subsidy unless

the solar PV system is owned by a Government organization.

What will be the process of subsidy; who will act as nodal agency for release of subsidy

and whether any MOU has to be signed between the Bank and the Nodal Agency?

MNRE’s information notice identifies the following nodal agencies for subsidy

d isbursement:

State Nodal Agencies (SNAs), State Departments, SECI (Solar Energy Corporation of India),

IREDA (Indian Renewable Energy Development Authority), empanelled Government

agencies, PSUs of Central and State Government etc. and participating Banks.

There are multiple mechanisms for subsidy d isbursement that are currently operational.

These are described below:

2 MNRE Information Notice No. 5/34/2013-14/RT (web source: http://mnre.gov.in/file-manager/UserFiles/CFA-Notice-Grid-Connected-Rooftop-19112015.pdf)


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Nodal Agency Beneficiary Remarks

Banks System owner

Banks are also eligible to act as Nodal Agency for subsid y d isbursement. This would require empanelment of banks with MNRE for this task; work is currently under way to facilitate this rou te. MNRE will transfer subsid y amount for a pre-determined capacity to the empanelled bank, which will d isburse the funds further. The method of subsid y d isbursement may be decided by the bank; the bank may write a letter to MNRE for further clarifications.

SECI System owner

In case of RESCO business model, SECI will transfer subsid y amount d irectly to roof owner/ electricity consumer, who will further transfer the amount to RESCO. In case of EPC/ CAPEX business model, SECI w ill transfer subsid y amount d irectly to the system owner, who is also the roof owner.

SNAs System owner

All eligible categories of subsidy beneficiaries can apply for subsidy at relevant SNA. The SNAs are provided with funds for subsidy d isbursement by MNRE on an annual basis.

As of now, there is no requirement for a MoU to be signed between the Bank and the Nodal

Agency.

What shall be the maximum loan limit for financing the rooftop PV equipment?

There is no maximum loan limit specified by MNRE for grid -connected rooftop solar PV

projects. Generally, project loan will constitute 70% of project CAPEX. The ―Grid Connected

Rooftop and Small Solar Power Plants Programme‖ under implementation by MNRE

specifies system sizes in the range of 1 kWp to 500 kWp on a single roof. Considering an

approximate cost of Rs. 75 / Wp for a 500 kWp project, the loan amount for 70% of project

CAPEX could be as much as Rs. 2.8 crore.

Aggregator projects: In projects where several roofs are aggregated to increase system size

(which gives opportunity to reduce per-Watt costs due to economy of scale), aggregate

project sizes can reach 1 MWp or more. For example, in the low -cost loan scheme recently

launched by IREDA3 for grid -connected rooftop solar PV projects, aggregator-based projects

of minimum 1 MWp size are eligible for loans covering 70-75% of project CAPEX. In the

same way as above, the loan amount for a 1 MWp project may be as much as Rs. 5.6 crore.

For residential projects, system size generally does not exceed 10 kWp. Cons idering an

approximate cost of Rs. 90 / Wp for a 10 kWp project, the loan amount for 70% of project

CAPEX could be as much as Rs.6.3 lakhs.

3 Web source: http://mnre.gov.in/file-manager/UserFiles/IREDA-Solar-PV-Loan-Scheme.pdf

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Whether the subsidy is upfront, if so, whether loan is to be released after receiving

subsidy from the nodal agency

Subsidy d isbursal is generally done in a phased manner. As stated in the scheme document

of the on-going ―Grid Connected and Small Solar Power Plants Programme‖ of MNRE4,

release of funds for subsidy d isbursement by financial institutions will follow the pattern

hereunder:

“Up to 30% of the eligible CFA and service charges [shall be disbursed] at the time of sanction of the

proposal in the project/programme mode…

… Balance 70% [of the eligible CFA and service charges shall be disbursed] after successful

commissioning of the projects after sample verification on submission of requisite claims.”

4 Web source: http://mnre.gov.in/file-manager/UserFiles/Scheme-Grid-Connected-Rooftop-&-small-solar-power-plants.pdf

Concerned divisions / project related brief note to be included here

technical manual for banks & fis on grid-connected rooftop solar

Documents