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V I B R A N T V A R A N A S I

TRANSFORMATION THROUGH SOLAR ROOFTOP

2017

Centre for Environment and Energy Development (CEED) would like to acknowledge the contribution of several people involved in the making of the report ‘Vibrant Varanasi: Transformation Through Solar Rooftop’

A C K N O W L E D G E M E N T S

AuthorsAbhishek Pratap Puneet Kamboj

Edited BySurabhi Shikha

ConceptCentre for Environment and Energy Development (CEED)

PhotographsImage support by Siddhant Mohan

DesignNamrata Kumar

For further enquiries, please contactAbhishek Pratap Director - Programmes, CEED abhishek@ceedindia.org

Copyright to CEEDAnalysis and errors are sole responsibility of publisher

FOREWORD 1

PREFACE 3

EXECUTIVE SUMMARY 5

1. INTRODUCTION 7

1.1. Solar Expansion in India 7

1.2. Dawn of Clean Energy Era 7

1.3. Air Pollution 9

1.4. State wise solar rooftop Target 14

1.5. Recent Reforms in Indian Power Sector 15

2. POWER SCENARIO OF UTTAR PRADESH 17

2.1 Key Development in the Power Sector 17

2.2 Restructuring of the Power Sector 18

2.3 Power Losses 18

2.4 Debt Restructuring 18

2.5 Setting of New Power Plants 19

2.6 Current Policy and Regulatory Support for Renewables in Urban Area 19

2.6.1 Rooftop Solar PV Grid Interactive Systems Gross / Net Metering Regulations, 2015 19

2.6.2 UP Solar Photovoltaic Power Plants Policy, 2014 19

3. VARANASI : INTRODUCTION TO THE CITY 21

3.1 Solar as Solution for Varanasi’s Energy Problem 25

4.1 Available Solar Resources in Varanasi 26

4.2 Solar Potential as per Grid Infrastructure 27

4. ECONOMIC VIABILITY OF SOLAR IN VARANASI 28

4.1. Cost of T&D Losses 28

4.2 Viability of Solar 28

4.3 Viability of Solar Rooftop PV in Consumer Groups of Varanasi in 2016 29

4.3.1 Solar Rooftop PV Viability for Residential Consumers 30

4.3.2 Solar Rooftop PV Viability for Commercial Consumers 30

4.3.3 Solar Rooftop PV Viability for Industrial Consumers 31

4.3.4 Solar Rooftop PV Viability for Government and Public Institutions 32

5. SOLAR ROOFTOP ROADMAP FOR VARANASI 33

T A B L E O F C O N T E N T S

6. BUSINESS MODEL FOR SOLAR ROOFTOP INSTALLATION 35

6.1 Traditional Sales Model 35

6.2 Renewable Energy Service Company (RESCO) Model 35

6.3 Local Micro Utility Model 36

6.4 Community Ownership Model 36

7. FISCAL SUPPORT FOR SOLAR ROOFTOP INSTALLATION 38

7.1 Capital Subsidy Model 38

7.2 Generation Based Incentives 38

7.3 Low-Cost Long-term financing 39

8. REQUIRED SUPPORT FROM THE GOVERNMENT 41

8.1 New Solar policy for Uttar Pradesh 41

8.2 Standardisation 41

8.3 Smart solar city plan 41

8.4 Financing framework 41

8.5 Incentive Structure 42

8.6 Open Access 42

8.7 Bundling of Governments projects on public and semi-public institutions 42

8.8 Mandatory provision of solar rooftop for new commercial and industrial buildings 42

8.9 Group purchasing incentive for high-rise buildings 43

8.10 Creation of roof-bank 43

8.11 Guideline for Grid connectivity 43

8.12 Metering Guideline 43

8.13 Forecasting 43

9. ANNEXURE 45

9.1 Methodology for Calculating the Solar Rooftop Potential for Varanasi 45

9.2 Computation of solar suitable rooftop area for various categories 45

9.2.1 Residential Buildings 45

9.2.2 Commercial Buildings 46

9.2.3 Industrial Buildings 46

9.2.4 Public and Semi-public Buildings 46

9.2.5 Government Buildings 47

9.2.6 Transport Buildings 47

9.3 Existing Tariff Rates of UPPCL for 2016-17 47

9.4 Power Quality Issues 48

9.4.1 Concerns with Rooftop PV Power Quality 48

9.4.2 Most Common Power Quality Problems And Possible Mitigation 48

Figure 1 Installed generation capacity in India as of June, 2016 7

Figure 2 State wise installed capacity of solar rooftop 8

Figure 3 PM Mass Concentration in Varanasi 10

Figure 4 PM10 Concentration in Varanasi (Location: Sigra) 11

Figure 5 SOx Concentration in Varanasi (Location: Sigra) 11

Figure 6 NOx Concentration in Varanasi (Location: Sigra) 11

Figure 7 PM Mass Concentration in Varanasi in the Month of August 2016 12

Figure 8 State-wise Solar rooftop target for 40 GW grid-connected solar rooftop projects 14

Figure 9 Electricity demand and Supply projection of UP from 2013-14 to 2021-22 17

Figure 10 Region Wise % Power Losses of Uttar Pradesh for FY 2014-15 18

Figure 11 Annual irradiation data for Varanasi 24

Figure 12 Varanasi’s Geographic Potential of Solar Rooftop 24

Figure 13 Map of Varanasi 25

Figure 14 Deriving Varanasi Solar Suitable Rooftop Area 26

Figure 15 Different Category Wise Solar Rooftop Potential of Varanasi (MW) 26

Figure 16 Solar power capacity added vs the peak demand of Varanasi 27

Figure 17 APPC, Average Tariff and T&D per unit of energy sold of PuVVNL 28

Figure 18 Solar grid parity for PuVVNL 29

Figure 19 Viability of Solar Rooftop PV for Residential Consumers 30

Figure 20 Viability of Solar Rooftop PV for Commercial Consumers 31

Figure 21 Viability of Solar Rooftop PV for Industrial Consumers 31

Figure 22 Viability of Solar Rooftop PV for Government and Public Institutions 32

Figure 23 Roadmap for Varanasi 33

Figure 24 Annual Expenditure under Proposed Capital Subsidy Scheme for Varanasi 39

Figure 25 Annual Expenditure under Proposed GBI Scheme for Varanasi 39

L I S T O F F I G U R E S

L I S T O F T A B L E S

Table 1 State-wise share of 100 GW solar target as per 8% RPO 13

Table 2 Installed Generation Capacity as on March 2016 in MW 17

Table 3 Viability of Solar Rooftop PV in Varanasi in 2016 29

Table 4 Category wise geographical solar rooftop potential of Varanasi 45

Table 5 Grid Tariff Rates of UPPCL from FY10 to FY17 47

1

The narrative of the energy sector in India seems to have shifted in the past few years. The Indian power sector is undergoing a significant change that has redefined the industry out-look. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power For All’ has accelerated capacity addition in the country. The competitive intensity is increasing on both the market and supply sides in respect to fuel, logistics, finances, and manpower. The Government of India has ambitious targets and has shifted the spotlight to renewable sources of energy in order to meet the power deficits in the country.

“Vibrant Varanasi: Transformation through Solar Rooftop” is an exhaustive analysis of the solar rooftop potential in Varanasi. Varanasi is one of the hundred smart cities that the Government of India aims to develop in a sustainable fashion. The city also holds immense significance owing to its revered stature of being the Spiritual Capital of India. Varanasi maintains a thriving tourism industry and welcomes millions of tourists every year from all across the world. One of the oldest continually inhabited cities in the world, Varanasi’s cultural growth has put it on the map globally. In the years to come, Varanasi will see a rapid growth, as per the state and central government

F O R E W O R D

plans. This will require energy supplements to support the growth and development in the city. Currently the city is suffering with power crises with long power outages. Varanasi falls under the most populated state in India, Uttar Pradesh that has a peak power deficit of 2485 MW. Uttar Pradesh is reeling under a massive power shortfall of over 14% which is the second highest in the country. The power demand in the the state is only going to increase in the next few years and going by the current situation, the state may suffer immensely if corroborative actions are not taken immediately. The state needs an intervention from an inefficient centralised energy system to a diversified decentralised energy delivery system.

Coal and fossil fuels have predominantly usurped the energy field, and energy requirements till date have largely been dependent on them. However, these resources are rapidly depleting and becoming extremely expensive by the day. Christiana Figueres, the United Nations Climate Chief elaborates at the historic Paris climate change agreement that the world urgently needs to shift away from a fossil-fuel driven economy. India faces the formidable challenges of meeting its energy needs and providing adequate energy of desired quality in various forms in a sustainable manner and at competitive prices. Increasing population, economic activity and rising income levels have been incessantly pushing the demand for more energy needs that cannot sustain on fossil fuels solely. The need for renewable energy therefore, is not just created at the micro-level, but works at a much larger scale on macro-level. Climate change and alarming rates of rising pollution levels are problems to which we can no more turn a blind eye. Climate change is real and we must take immediate actions to salvage the situation as efficiently as possible. Renewable energy not only provides quality energy in terms of mega and giga watts, it is a critical source of energy access in the developing countries.

Energy insecurity carries a massive social and economic cost. Limited energy capacity will mean limited growth. Therefore, decentralised energy is a rapidly deployable and efficient way to meet energy demands, whilst improving energy security and sustainability at the same time. Decentralised energy systems will not only take a major load off the centralised grid, it will also provide desired quality energy to the consumers. Such a system is especially most suitable for growing cities as decentralised systems do not hold any bars on the limitations of

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Girish Chandra TripathiVice-Chancellor, Banaras Hindu University

installations and can always be expanded as per the growing demands. Varanasi is blessed with good solar irradiation value which can be harnessed into excellent solar rooftop power without added land acquisition to setup solar panels.

Varanasi is one of the most ancient and revered cities in India. So far the city has been a guiding light for the spiritual souls across the world. The solar rooftop revolution will set an example that while being the spiritual capital of India, Varanasi is also going leaps and bounds on

imbibing modern sustainable technology. With this energy revolution, Varanasi will not only have a rich cultural past to revere, but also a shining sustainable future to reckon.

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“Vibrant Varanasi - Transformation through Solar Rooftop” is an in-depth analysis of the potential for rooftop solar in Varanasi. As the name suggests, solar energy has quite literally been transforming the energy sector in the world, and especially in India. The current government is massively paving way for solar energy particularly solar rooftop and had ambitious plans to achieve one of the world’s largest solar expansion. Solar energy has been the front-runner in the changing the narrative of the India’s power deficiency story and is considered to be a game-changer in the future to come. It is with this vision, CEED decided to conduct an exhaustive study on the solar rooftop potential for Varanasi.

Varanasi is not just the Spiritual Capital of India, but is also a very important city, culturally, politically and industrially. The city is consistently growing with millions of floating population of migrant workers and tourists from across the globe. While Varanasi is not a heavily industrialised city, it’s forever bustling tourist population demands a massive energy requirement. Being one of the hundred smart cities, Varanasi’s growth and development will proliferate in the commerce and services sector including transport, hospitality, trade, health, education, etc. Access and efficiency of electricity would be a key factor to sustain

P R E F A C E

this growth. Uttar Pradesh is reeling under a massive power shortage of close to 15%. PuVVNL, the DISCOM that supplies power in Varanasi, has T&D losses of a staggering 42%. It is imperative for Varanasi to adopt a comprehensive plan to cater and meet its growing power demands.

After an exhaustive research, our analysis reports that total economically viable solar rooftop potential for Varanasi is calculated to be 676 MW. However, with a peak power demand of 820 MW, installation of such a high capacity of distributed solar power may create issues with grid balancing and grid stability. For this analysis’ sake, we capped solar rooftop potential of Varanasi at 20% of its peak power demand. However, with improvements in grid infrastructure and rise in power demand, this potential can be increased by 2025. Therefore, this report for Varanasi proposes a solar rooftop potential of 300 MW by 2025.

The UP government has already initiated the pathway to providing electricity to all its masses by embracing the “Power For All” scheme in the state. While the government is making efforts to mitigate the power crisis in the state, going decentralised is not only the most viable option, but perhaps remains the only option, since the fossil fuels are depleting at a rapid pace.

It’s a climacteric moment for Varanasi at this time and age to strike a balance in its energy delivery system and validate the fact that the decentralised approach has ensured and delivered the aspirations of the people in urban and rural sector, while the centralised system seems to be failing. The state government should make efforts to diversify its energy mix in Varanasi by adopting rooftop solar on government, commercial and residential buildings. It is imperative to dilute the energy deficiency in a city like Varanasi that is thronged by global population at all times, which only increases by each passing year. Varanasi represents the country at a global level and it must be one of the prime cities that stands as an example and move towards inclusive and sustainable development.

Ramapati KumarChief Executive Officer, Centre for Environment and Energy Development

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Dusk sets upon Varanasi

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Uttar Pradesh (UP) is the biggest state of India with a population of over 200 million. The state’s population is bigger that that of Germany, France and United Kingdom combined. UP has the second largest power demand in the country after Maharashtra at 16,988 MW. This demand is expected to grow by 5-6% in the next six years up to 2022. The per-capita power consumption in the state was 449.98 units in 2014-15, which is less than that half of the national average of 957 units. This shows that the state is still far away from providing round-the-clock power to its population.

Uttar Pradesh is largely dependent on the central sector and import from other states to meet its electricity demand (73%). The state government has added only a meager 1000 MW of thermal power capacity in the last five years. The state has its own generating capacity of 6472 MW with 91% thermal power capacity of which only a minor share is derived from renewable energy technologies. The share of the central government in power generation is 29% while the share of private sector stands at 36 %, the rest belongs to state government.

Uttar Pradesh is expected to have a power capacity requirement of 32,335 MW by 2020-21. Currently, the state has 18631.54 MW of inbuilt capacity, which implies that the state has a capacity deficit of 13,703.46 MW. Uttar Pradesh is expected to add 9900 MW of new capacity and 2000 MW of capacity through upgradation

of old coal-based power plants by the end of the 12th Five-Year Plan.

Uttar Pradesh Power Corporation Ltd (UPPCL) is responsible for planning and managing the power sector by controlling the transmission, distribution and supply of electricity in Uttar Pradesh. The average distribution loss of UPPCL is 25.06%, which is higher than the national average of 22%. UPPCL holds a collection efficiency of 87.78%. UPPCL has six subsidiaries, which include five distribution companies (DISCOMs) and a transmission company. Each distribution company is headquartered in the state’s major cities and handles the power demand accordingly. The Purvanchal Vidyut Vitaran Nigam Limited (PuVVNL) is headquartered in Varanasi and takes charge of the power demand of the city along with districts of eastern UP. However, at a staggering 42%, Varanasi suffers the highest T&D losses among all the five DISCOMs in the state.

Owing to the fact that Varanasi is one of the major cities in Uttar Pradesh and in the country, the power demand of the city is going to grow manifolds in the coming years. The Spiritual Capital of India, Varanasi is the holiest city in India for Hindus and Jains. The city is a significant tourist hub renowned globally and receives millions of visitors from all across the world. For a city that already has such a large population of its own and that also hosts a colossal number of people every year, the power

Ghats on the Ganga in Varanasi

E X E C U T I V E S U M M A R Y

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demand is likewise magnanimous. Moreover, Varanasi is also politically significant; given it is the home constituency of the Honourable Prime Minister of India, Mr Narendra Modi. The city is one among the hundred smart cities and both the central and the state government have stupendous development plans chalked out for the years to come. All of this development will require a considerable power demand, however, the current power scenario in Varanasi will not be able to meet this demand. Thus, it is imperative for Varanasi to adopt a comprehensive plan to cater to its growing power demand and make this ancient city truly a smart city. If the city follows its current power trajectory, the situation is likely to worsen with increasingly frequent power outages, stifling the economic growth.

Varanasi receives an average irradiation value of 5.3 kWh/m2/day, which is considered a good value for solar power production. In fact, this value is much better than other cities in the world with a significant solar capacity like San Francisco and Berlin. This report calculates that the total viable rooftop area that can be used to generate solar energy in Varanasi is 8.01 sq. km with an economically viable potential of 675 MW of solar rooftop capacity addition. The peak power demand of Varanasi in the year 2016-17 is 820 MW which is expected to grow at 8% CGAR to reach over 1500 MW by 2024-25. Varanasi can accommodate 177 MW of solar power in the existing grid in the year 2017-18 as per the grid-ceiling factor which can be increased upto 300 MW by 2025. However, this increase solar power addition requires improvements in grid infrastructure. Therefore, we propose a solar roadmap of 300 MW solar power through the rooftop approach for Varanasi in this report.

Transmission and Distribution (T&D) losses in PuVVNL is very high. All these losses are due to poor distribution infrastructure, power pilferage and inefficient collection of metered power, which led the PuVVNL towards a huge

financial loss. If the landed cost of power purchase, retail power tariff and cost of solar power generation were to be analysed, it becomes quite evident that a grid parity for solar power in the region of PuVVNL supply area is already achieved except for residential consumers. for residential consumers, this will be achieved by 2019. The cost of solar power has gone down by 55% since 2011-12 and a further reduction in the prices is expected by March 2018. If the government continues to supply electricity through conventional sources, it will make huge financial losses. The gap between the cost at which power is purchased and the tariff at which power is sold, will only grow further, adding a huge financial burden on DISCOMs.

This report suggests a phase-wise installation of solar panels on the rooftops, starting with government and public institution buildings for the first couple of years where the grid parity has been reached already. The initial phase will also benefit from adopting net-metering policies and other tools and techniques. Thereafter, the second phase of the project can cover commercial and industrial consumers, followed by residential consumers that have the largest share of solar rooftop potential. This report emphasises on and suggests multiple business models that can be utilised for solar rooftop installation. Different fiscal support models have also been suggested for incentivising early deployment of solar in Varanasi, along with the amount of financial savings the government can make through such fiscal models.

Over time, this solar rooftop revolution will make the city more independent and resilient. Moving away from fossil-fuel dependency towards decentralised power will not only liberate the city in terms of power management but will also propel the holy city of Varanasi towards building clean and energy efficient infrastructure to meet its power demand.

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I N T R O D U C T I O N

1.1 SOL A R E XPANSION IN INDIA

The era of solar expansion arrived in India, albeit at a much later stage. Since the change of government at the national level three years ago, there is massive push on renewable energy, particularly on solar and we can proudly say that the world is witnessing the largest solar expansion programme in India in the recent past. During the ‘REInvest 2015’, Prime Minister Shri Narendra Modi established high expectations of clean energy in the country1. The previous target of 20,000 MW of installed

1 Ministry of New and Renewable Energy, Government of India’s Press statement on year-end review on Renewable energy http://pib.nic.in/newsite/PrintRelease.aspx?relid=133220 2 India’s Official Intended Nationally Determined Contributions (INDCs) submitted to UNFCCC http://www4.unfccc.int/submissions/INDC/Published%20Documents/India/1/INDIA%20INDC%20TO%20UNFCCC.pdf 3 Powering Ahead with Renewables: Leaders and Laggards http://www.greenpeace.org/india/Global/india/report/2013/powering-ahead-with-renewables.pdf Monthly report of June, 2016, Central Electricity Authority http://www.cea.nic.in/reports/monthly/installedcapacity/2016/installed_capacity-06.pdf4 CEA Monthly report June 2016 http://www.cea.nic.in/reports/monthly/installedcapacity/2016/installed_capacity-06.pdf 5 http://www.bridgetoindia.com/wp-content/uploads/2015/11/BRIDGE-TO-INDIA_India-Solar-Rooftop-Map-2016.pdf

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Fig ure 1: Installed generation capacity in India as of June, 20163

solar power under National Solar Mission is revised and increased by five times to 100,000 MW by 2022. In addition to this, wind energy target is revised to 60 GW and small hydro and biomass target is set for 15 GW by 2022, cumulatively making a national target of 175 GW for renewable energy.

India also pledged to have 40% of non-fossil fuel energy by 2030 as one of its three Climate Pledge (INDC target), which is now part of the Paris Agreement2.

The current capacity of renewable energy is a little over 14% of India’s total installed capacity, which includes Wind, Solar, Bio-power and Small Hydro Power (SHP). Since 2012, renewable energy generation capacity has increased by 75% to 42849.38 MW. This voluminous change in the renewable energy sector has developed in the last two years. Among the renewable technologies, solar power has been the frontrunner, since the focus of energy supply and growth of related infrastructure has moved considerably from coal to solar in the last couple of years.

In the last five years since 2011-12, installed capacity of solar energy has increased by 15 times, reaching upto 6762.85 MW in June, 20164.

Solar rooftop projects are considered game-changers in addressing the energy crisis in urban areas and to help

in meeting peak-time deficit. In the last few years in India, there has been a silent revolution happening in rooftop solar power generation with the launch of net metering regulations. According to Bridge to India assessment till October 2015, 520 MW of rooftop solar installation in India from virtually nothing in 2012-13with Tamil Nadu leading with maximum installed capacity of 76 MW followed by Maharashtra and Gujarat with 52 MW and 44 MW of installed capacity respectively5.

1. 2 DAWN OF A CLE AN ENERGY ER A

As gavel hit by French foreign minister on cold breezy night of 12th December 2015 at 21st Conference of Parties (COP 21) in Paris, 195 countries endorse for first time ever a global agreement to fight against climate change - the biggest environmental crisis of today and with that, a

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Fig ure 2: State wise installation capacity of solar rooftop 6

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new dawn of clean energy expansion, be it distributed or large-scale, just begins. The global deal at Paris, which is now known as the ‘Paris Agreement’ is not just culmination of two decade long hard-fought diplomatic negotiation among countries-developed and developing, but also a flashpoint of decades of mobilization of impacted communities, activists, clean energy entrepreneurs, business tycoons, celebrities, actors, lawyers, journalists, politicians, common people and whosoever affected and worried about climate change under one single issue. Stories of climate change impact caused by fossil fuels and growing viable solution to mitigate crisis through renewable energies force even the most harden climate skeptics to accept the reality that era of fossil fuel is over and new dawn of clean but sustainable energy is just now begin.

The long term goal under the Paris Agreement is to keep the increase in global average temperature to well below 2°C and to aim toward limiting the increase to 1.5°C, since this would significantly reduce risks and the impacts of climate change. This significant and ambitious long-term goal means practically ending an era of fossil fuel expansion. Coal demand is already under terminal

decline worldwide after a dramatic change of energy policy in China. But most importantly, demand for solar and wind enewable energy has gone up, with falling prices worldwide, giving real hope to people all over.

Year 2015 is considered a year of climate momentum because not only the landmark Paris Agreement was secured but global energy investment trends also put renewable energy far ahead of fossil fuel. $265.8 billion was invested in renewable energy capacity in 2015 compared to $130 billion in coal and gas combined. Decline in fossil fuel energy infrastructure significantly led to preventing CO2 emissions of up to1.5 giga tones in 2015 alone.

In this effort of embarking on a clean, sustainable energy future, developing countries far outweighed developed countries in terms of renewable energy investment; breaking the notion that fossil fuel is in huge demand in developing countries. Developing countries including China, India and Brazil committed a total of $156 billion in investement (up by19% compared to 2014) while developed countries invested $130 billion (down by 8%). A large contribution in this turnaround was China, who

6States like Jammu & Kashmir, Arunachal Pradesh, Mizoram, Nagaland, Manipur, Tripura, Sikkim and Meghalaya with no rooftop installed projects are not plotted here

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lifted its investment by 17% to $102.9 billion, or 36% of the world total. India also raised its commitment by 22% to 10.6 billion. Along with China and India, Brazil, South Africa, Mexico and Chile are other developing countries in list of top 10 countries with highest renewable energy investment in 2015.

Price of renewable energy, particularly solar PV, continue to fall drastically. The global average levelised cost of solar PV is $0.12 cent per KWh down by 14% from 2014. However, many projects have been initiated on much below the tariff. The record-breaker so far has been a 200MW plant in Dubai being built by ACWA Power International who was awarded a contract in January 2015 at just $0.06 cent per MWh.

Even though 2015 produced a record for overall investment, the sky is far from entirely blue. The global emission trend remains worrying, as energy-related emissions are not forecast to peak until the late 2020s, at the earliest.

1.3 AIR P OLLUTION: PUBLIC H E ALTH AT RISK IN OUR CITIES

In recent years, the soaring levels of air pollution has begun to threaten public health, especially in the rapidly growing metropolitan cities of India. Development stimulates urbanization, but the aspiration to develop and urbanize

has led to a multitude of problems, including air pollution, whose consequences are just beginning to unfold. Anthropogenic sources are largely held responsible for majority of air pollution in cities where particulate matter (PM) contribute as the most polluting agent. The alarming increase in PM concentration not only affects health in terms of severe visibility degradation, but adversely impacts the environment by disturbing the radiation balance of the planet, leading to global climate change. Several epidemiological and toxicological studies have associated PM concentration with high mortality and morbidity rate, which is mostly caused due to respiratory and cardiovascular disease.

The emission of pollutants into air has been increasing due to rapidly growing cities, increasing vehicular population, congestion, unprecedented energy consumption and lack of strict implementation of environmental regulations.

Varanasi’s environmental issues are typical of low-income countries and suffer from varied degrees of air, water and land pollution. The city’s air quality is very poor due to emissions from badly maintained automobiles and many heavy transport vehicles. Furthermore, small industries, domestic heating and large-scale constructions contribute to Varanasi’s air pollution. Varanasi faces many problems due to unstable power supply. The lack of electricity makes it impossible to run water treatment plants properly, causing even more environmental burdens for the city.

Vehicular congestion on the streets of Varanasi

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Fig ure 3: Air Quality Index in Varanasi

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While Delhi created a lot of buzz by being crowned the most polluted city in the world, there were thirteen other cities in India that made it to the top twenty most polluted cities. Immediate action was taken by the government and citizens to curb the pollution level of Delhi and by

January 2016, it lost the notorious label of being the most polluted. However, two other cities in India had “severe” AQI values; Varanasi being one of them with a maximum AQI of 487 on the 10th of January 20167.

Uncovered construction activities and vehicular congestion add gravely to PM concentration in Varanasi

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Fig ure 7: PM Mass Concentration in Varanasi in the Month of August 2016

Varanasi is the oldest ‘living city’ on this planet. The city is inhabited by a huge number of people with ever-growing commercial activities. Being an important tourist destination and the spiritual capital of India, Varanasi gets enormous footfall of visitors all round the year.

Located at an elevation of 80.71 metres (264.8 ft), Varanasi resides in the eastern part of the Uttar Pradesh, along the left crescent-shaped bank of the Ganges, averaging between 15 metres (50 ft) and 21 metres (70 ft) above the river. The city experiences a humid subtropical climate with large variations between summer and winter temperatures. While the temperature ranges between 22 and 46 °C in the summers, the winters in Varanasi see very large diurnal variations, with warm days and downright cold nights. The city predominantly witnesses easterly winds, adding to the humidity in the area.

Varanasi witnessed tremendous rise in the registration rate of vehicles at 9.35% per annum from the year 1985 to 2002. Gasoline driven vehicles and diesel-powered automobiles were estimated to contribute 84.2% and 15.8% of pollution respectively to the air environment of Varanasi in the given time estimate8. Clearly the rise in vehicular population has only accelerated from there.

CEED conducted a study on the air quality of Varanasi in the month of August 2016. The air quality was monitored in real time data through an online portal. These

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monitoring devices automatically measure and record hourly data of the ambient air quality including PM10, PM2.5 and meteorological parameters; temperature and wind speed for the entire day. The air quality monitoring devices were installed by Centre for Environment and Energy Development (CEED) in collaboration with India Spend. Data was computed and further analyzed using varied statistical tools and techniques. Going by the Central Pollution Control Board (CPCB) standardized protocol, the average concentration of particulate matter in ambient air for each day was computed. The stipulated concentration was then paralleled with the WHO standards that are accepted internationally.

In the study conducted at the four locations of Varanasi, the reported monthly average concentration of particulate matter PM2.5 and PM10 were 48.9 μg/m3 and 56.8 μg/m3 respectively.

Coal-fired power generation comes with significant costs to the environment and human health, since its combustion releases toxic emissions of SOx, NOx and particulate matter. The environmental cost increases especially in the Indian context because Indian coal (Gondwana coal) has a high ash content and low calorific value, which tends to increase the emission of pollutants in atmosphere.

The coal dependency of Varanasi contributes to a significant level of pollutants in atmosphere. By just

8Communication Support for Sustainable Development. Eds. Dipak De and Basavaprabhu Jirli, GangaKaveri Publishing House, Jangamawadi Math, Varanasi - 221001

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Table 1: State-wise share of 100 GW solar target as per 8% RPO

S. No. States 2015 - 2016

1 Andhra Pradesh 9834

2 Bihar 2493

3 Chhattisgarh 1783

4 Delhi 2762

5 Gujarat 8020

6 Haryana 4142

7 Himachal Pradesh 776

8 Jammu & Kashmir 1155

9 Jharkhand 1995

10 Karnataka 5697

11 Kerala 1870

12 Madhya Pradesh 5675

13 Maharashtra 11926

14 Orissa 2377

15 Punjab 4772

16 Rajasthan 5762

17 Tamil Nadu 8884

18 Uttarakhand 900

19 Uttar Pradhesh 10697

20 West Bengal 5336

21 Arunachal Pradesh 39

22 Assam 663

23 Manipur 105

24 Meghalaya 161

25 Mizoram 72

26 Nagaland 61

27 Sikkim 36

28 Tripura 105

29 Chandigarh 153

30 Goa 358

31 Dadra & Nagar Haveli 449

32 Daman &Diu 199

33 Puducherry 246

34 Andaman & Nicobar 27

35 Lakshadweep 4

Total 99533

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Figu re 8: State-wise Solar rooftop target for 40 GW grid-connected solar rooftop projects

regulating the dependency on these coal-fuelled power plants and replacing them with solar powered plants, the amount air pollution can by controlled to a large extent.

If only 20% of Varanasi’s power demand is met through solar energy in the year 2016-2017, an approximate 47613 kg of CO2 and 0.35 kg of N2O can be reduced in the year 2016-2017. This value is an estimate of emission of pollutants, which needs to correlate with the actual derivation to conclude a proper emission framework of the pollutants. The actual derivation requires quantification of thermal efficiency of combustion chamber, grade of coal used etc which is beyond the scope of this study.

The calculation is based on the procedure described in 2006 IPCC guidelines for National Greenhouse Gas Inventories.

1.4 STATE WISE SOLAR ROOF TOP TA RGET

In June 2015, the Ministry of New and Renewable Energy (MNRE) revised the national target under Jawaharlal Nehru National Solar Mission and increased it by five times to 100 GW by the year 2022. The principle reasons for such an ambitious solar target are

the perpetually receding solar prices in India and globally; and to position India dominantly in the climate negotiation circuit where the country’s rising GHG emission is a major point of discussion. There has been a steep reduction in the solar price with the CERC benchmark due to which the capital cost in solar PV has come down by more than 25% in the last two years9, with the recent successful biding in Rajasthan closing at Rs. 4.34/ unit10.

To facilitate the deployment of 100 GW of solar power (which further sub-divides into two broad category of 40 GW rooftop PV and 60 GW ground-mounted PV), the Renewable Purchase Obligation (RPO) and Solar RPO was revised in January 2016. Taking into consideration a huge solar potential, steep falling in prices with expected grid parity by 2018 and a climate pledge to reduce growing carbon emissions, the Ministry of Power in consultation with MNRE, set a uniform RPO and solar RPO of 17% and 8% respectively for all states and Union Territories by 2022. The actual figure for installed capacity of renewable energy and solar power will be based on electricity supply and consumption in the concerned state. However, it is clear that India is moving towards a uniform RPO target regime all across the state11.

The 100 GW solar power target is divided among all states and union territories as explained in Table 1. Maharashtra

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9http://www.bridgetoindia.com/blog/cerc-benchmark-solar-pv-capital-costs-fall-by-more-than-25-in-2-years/ 10http://www.business-standard.com/article/opinion/vandana-gombar-solar-trends-for-2016-116012101101_1.html

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has the highest share of the target with 11.92 GW, followed by Uttar Pradesh (10.69 GW) and Tamil Nadu (8.88 GW)*12.These states are expected to be high energy consuming state by 2022 and therefore, they have the highest share of solar targets as compared to the uniform 8% solar RPO prescribed to all the states.

Taking into consideration the land availability constraint and high potential of the solar rooftop program in urban areas due to abundance of roof space in India’s metros, Tier 1 and Tier 2 cities, MNRE has further divided the state-wise solar target to facilitate 40 GW solar rooftop deployment by 2022. Figure 8 gives clarity about which of the states have larger stakes in meeting the 40 GW solar rooftop target.

1. 5 RECENT REFORMS IN THE IN DIA N P OWER SECTOR

1. 5.1. UDAY 12

To help state-owned power distribution companies (DISCOMs) to tide over their long-term financial losses and initiate new fiscal reforms in the power sector, the Government of India announced a new scheme; Ujwal DISCOM Assurance Yojna (UDAY) on 5th November 2015.

From the fiscal point of view, the current scenario of electricity distribution is the weakest factor in the power supply chain. As of March 2015, the country’s DISCOMs had an accumulated loss of approximately 3.8 trillion ($64 billion) and an outstanding debt of 4.3 trillion ($72 billion). Defaults on bank loans by the financially stressed DISCOMs have had major repercussions on the banking sector due to the steep increase in the non-performing assets (NPA) of the banks, affecting the economy at large. It also decreased the DISCOMs’ ability to raise funds and carry out local grid reforms, deploy new metering solutions etc to reduce distribution losses.

UDAY is considered to be a path-breaking reform to ensure affordable and accessible round-the-clock power for all in India. UDAY assures the rise of efficient DISCOMs through permanent resolutions of past as well as potential future issues of the sector. It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives: 1. Improving operational efficiencies 2. Reduction of cost of power 3. Reduction in the interest cost of DISCOMs, 4. Enforcing financial discipline on DISCOMs through

alignment with State finances.

11RPO number was announced via letter from MNRE dated 30th June, 2015. Letter from MNRE attached in Annexure.12Andhra pradesh’s target will reduce once target is redistributed between Andhra Pradesh and Telangana12http://powermin.nic.in/upload/pdf/Uday_Ujjawal_Scheme_for_Operational_and_financial_Turnaround_of_power_distribution_companies.pdf

• “States shall take over 75% of DISCOM debt as on 30 September 2015 over two years - 50% of DISCOM debt shall be taken over in 2015-16 and 25% in 2016-17.”

• “Government of India will not include the debt taken over by the States as per the above scheme in the calculation of fiscal deficit of respective States in the financial years 2015-16 and 2016-17.”

• “States will issue non-SLR including SDL bonds in the market or directly to the respective banks / Financial Institutions (FIs) holding the DISCOM debt to the appropriate extent.”

• “DISCOM debt not taken over by the State shall be converted by the Banks / FIs into loans or bonds with interest rate not more than the bank’s base rate plus 0.1%. Alternately, this debt may be fully or partly issued by the DISCOM as State guaranteed DISCOM bonds at the prevailing market rates which shall be equal to or less than bank base rate plus 0.1%.”

• “States shall take over the future losses of DISCOMs in a graded manner.”• “State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April,

2012, within a period to be decided in consultation with Ministry of Power.”• “States accepting UDAY and performing as per operational milestones will be given additional/priority

funding through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY),Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.”

• “Such States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization, low cost power from NTPC and other Central Public Sector Undertakings (CPSUs).”

• “States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.”• “UDAY is optional for all States. However, States are encouraged to take the benefit at the earliest as benefits

are dependent on the performance.”

Salient Features of UDAY

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1. 5. 2 AMENDME NTS IN THE NATIONA L TARIFF P OLICY 13

In January 2016, the government of India amended the National Tariff Policy of 2005. Among the several reforms, special focus was on renewable energy expansion. National Tariff Policy 2016 strengthens the role of regulators

in fixing power tariffs and makes a strong pitch for the development of clean energy.

The main addition in the objective of the policy is the promotion of renewable energy generation, to create healthy competition, efficiency in operations and improvement in power supply.

13http://powermin.nic.in/upload/pdf/Tariff_Policy-Resolution_Dated_28012016.pdf

Salient Features of National Tariff Policy 2016

• The ambiguity on applicability of RPO on co-generation has been removed. The NTP 2016 says: “Provided that cogeneration from sources other than renewable sources shall not be excluded from the applicability of RPOs.”

• Solar RPO will increase to 8% by 2022. This is a substantial increase as current solar RPO is below 1% in most states.

• Solar RPO will not apply to power sourced from hydro power plants. The policy document states – “8% of total consumption of electricity, excluding hydro power, shall be from solar energy by March 2022”.

• This policy includes the provisions of Renewable Generation Obligation (RGO). As per the policy: “The renewable energy produced by each generator may be bundled with its thermal generation for the purpose of sale. In case an obligated entity procures this renewable power, then the SERCs will consider the obligated entity to have met the Renewable Purchase Obligation (RPO) to the extent of power bought from such renewable energy generating stations. ”

• Long term RPO to be declared by ministry of power in consultation with MNRE.• Provision for allowing vintage multiplier (to take care of cost changes for RE projects) and technology

multiplier (to encourage specific technologies) has been incorporated.• Competitive bidding to be the norm for RE procurement (maximum 35% of installed capacity can be sourced

from determined/preferential tariff). Policy says:• “States shall endeavour to procure power from renewable energy sources through competitive bidding to keep

the tariff low.”• Inter-State transmission charges and losses for renewable power (solar/wind) have been exempted.• Change in the methodology of calculation of cross-subsidy is suggested to make it less arbitrary.

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Table 2 :Installed Generation Capacity as on March 2016 in MW

2 .1 KEY DEVELOPMENTS IN THE P OWER S ECTOR

Uttar Pradesh, the most-populace state in India, is witnessing a prolonged power crises since the last two decades with a rising gap in demand and supply of electricity. In December 2016, the state had a peak power deficit of 1682 MW, which is 9.8 % of the total power demand, which is significantly higher, compared to national average of 1.6 %. Only Jammu & Kashmir has a higher peak power deficit than Uttar Pradesh which speaks volumes about the power crisis in India’s biggest state14. Further, as Figure 9 illustrates, the peak power deficit is expected to remain the same or increase slightly in the next six years as demand will continue to grow. Therefore, it is important that the state adopts some different strategies to enhance its electricity generation.

At 16,988 MW, Uttar Pradesh has the second largest power demand in the country after Maharashtra and is expected to grow with by 5-6% in the next six years15. The per-capita power consumption in the state was 449.98 units in 2014-15, which is significantly lower than the national average of 957 units16. Currently, the state is largely dependent on the central sector and import from other states to meet its electricity demand. The state government has added only a meagre 1000 MW of thermal power capacity in the last five years17.The state has its own generating capacity of 6472 MW with 91% thermal power capacity and a minor renewable energy share. The share of the central government in power generation remains at 29%18 while the share of private sector stands at 36%.

14Executive Summary report of January, 2016, Central Electricity Authority http://www.cea.nic.in/reports/monthly/executivesummary/2016/exe_summary-12.pdf 15Load Generation Balance Report, CEA , 201616http://uppcl.org/uppcllink/documents/19072016043211STATISTICS%20AT%20A%20GLANCE%202014-15%20(14-07-2016)%2016%20MB.pdf 17http://uppcl.org/uppcllink/documents/19072016043211STATISTICS%20AT%20A%20GLANCE%202014-15%20(14-07-2016)%2016%20MB.pdf18Executive Summary Report, March 2016, CEA

Source: Load Generation Balance Report, CEA , 2016

Figu re 9: Electricity demand and supply projection of UP from 2013-14 to 2021-22

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Private 5686 0 5686 0 0 1033.50 6719.50

Central 2909.95 549.97 15069.92 335.72 1644.20 0 5439.84

Total 14, 518 549.97 15069.92 335.72 2169.30 1059.60 18631.54

Source: Executive Summary Report, March 2016, CEA

P O W E R S C E N A R I O O F U T T A R P R A D E S H2

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2 . 2 RESTRUCTURING OF THE P OW ER S ECTOR

The Uttar Pradesh State Electricity Board (UPSEB) was restructured into two entities in January 2000. Uttar Pradesh Power Corporation Ltd (UPPCL) was made responsible for planning and managing the power sector through its transmission, distribution and supply of electricity. Power generation in the state is managed by Uttar Pradesh Rajya Vidyut Nigam Ltd (UPRVNL) and Uttar Pradesh Jal Vidyut Nigam Ltd (UPJVNL).

UPPCL has six subsidiaries, which include five distribution companies (DISCOMs) and one transmission company. The five distribution companies are: Dakshinanchal Vidyut Vitaran Nigam Limited (DVVNL) headquartered in Agra, Pashchimanchal Vidyut Vitaran Nigam Limited (PVVNL) headquartered in Meerut, Purvanchal Vidyut Vitaran Nigam Limited (PUVVNL) headquartered in Varanasi, Madhyanchal Vidyut Vitaran Nigam Limited (MVVNL) headquartered in Lucknow and Kanpur Electricity Supply Company (KESCO). The transmission company is Uttar Pradesh Power Transmission Limited (UPPTCL).

2 . 3. P OW ER LOSSES

The average distribution loss of UPPCL is 25.06% which is higher than the national average of 22%19. The average collection efficiency of UPPCL is 87.78%. The UPPCL is divided among five distribution regions (DVVNL, MVVNL, PVVNL, PuVVNL and KESCO)20. Among all

these regions PuVVNL has the highest AT&C, amounting to 42.04% of the power and has minimum collection efficiency of 76.25%.

2 . 4 DEBT RESTRUCTURING

Uttar Pradesh is one of the 15 states which joined the popular Ujjawal Discom Assurance Yojana (UDAY) to address the financial crisis that its five distribution companies have been facing for many years. UPPCL had a total revenue loss of INR 17,678 crores ($2525 million) in the year 2013-14 which is highest among all the states22. The debt is a result of systematic under-recovery of costs due to artificially low power prices and high transmission and distribution losses. Other factors include pilferage of power at a large scale and inferior quality of transformers and other equipment. As per the debt restructuring plan under the UDAY scheme, the state government will take over 75% of the current debt for two financial years - 2015-16 and 2016-17, and cover 50% of future losses in a graded manner. The state government will provide flexibility in managing the interest payment on the debt taken over within their available fiscal space in the initial few years. In return, the four initiatives that DISCOMs need to carry out to achieve a break-even in the next 3-4 years are:1. Improving operational efficiencies of DISCOMs2. Reduction of cost of power3. Reduction in interest cost of DISCOMs 4. Enforcing financial discipline on DISCOMs through

alignment with State finances23.

19Press Release dated 20th September 2015, Ministry of Power 20 Uttar Pradesh Power Corporation Limited | http://uppcl.org/pages/en/navbar/about-uppcl/en-introduction21As per the Tripartite MoU between the Ministry of Power, Govt. of Uttar Pradesh and UP Power Corporation Ltd.22http://www.pfcindia.com/writereaddata/userfiles/file/Operations/state_performance/Report%20on%20the%20Performance%20of%20State%20Power%20Utilities%202011-12%20to%202013-14.pdf 23http://pib.nic.in/newsite/PrintRelease.aspx?relid=130261

Figure 10: Region wise percentage of power loss of Uttar Pradesh for financial year 2014-1521

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2 . 5 S ET TING UP OF NEW P OW ER PL ANTS

Uttar Pradesh is expected to have a power capacity requirement of 32,335 MW by 2020-21. Currently, the state has 18631.54 MW of inbuilt capacity comprising state, central and private ownership, which implies that the state has a capacity deficit of 13,703.46 MW. Uttar Pradesh is expected to add 9900 MW of new capacity and 2000 MW of capacity by upgradation of old coal-based power plants by the end of the12th Five-year plan24.

2 . 6 CURRENT P OLICY AND REGUL ATORY SUPP ORT FOR RENEWA BLES IN URBAN ARE A S

2.6.1 ROOF TOP SOL AR P V GRID INTERACTIVE S YSTE MS GROSS / N ET METERING REGUL ATIONS , 2015

These regulations came into force in 2015 to encourage consumers to install rooftop solar PV systems under a net metering or gross metering arrangement25. As per the regulation document “these regulations shall apply to the Distribution Licensees, the eligible consumers of the Distribution Licensees and third party owners of gross metering arrangement of rooftop solar PV system in the State of Uttar Pradesh.” The minimum capacity of a single rooftop solar PV plant under these regulations is 1 kW and the maximum capacity is 1 MW. The eligible consumer can either opt for net metering or gross metering arrangement but in case of third party owner only gross metering can be availed with in the capacity as per these regulations. The salient points under these regulations are:• “The maximum peak capacity of the grid connected

rooftop solar PV system to be installed by any eligible consumer shall not exceed 100% of the sanctioned connected load /contract demand of the consumer.”

• “The capacity to be allowed in the area fed from the distribution transformer or any other transformer from which power is fed to the eligible consumer shall not exceed 15% or any other percentage as may be fixed by the Commission of the rated capacity of such transformer(s).”

• Under gross metering arrangement: “The Solar Injection Compensation to be paid by the Distribution Licensee to the eligible consumer or third party owner as the case may be shall be determined on the basis of tariff for new Solar Grid connected PV projects approved by the Commission vide the UPERC

24http://www.uprvunl.org/pdf/corporate_plan/Corporate%20Plan%202012-2017.pdf25Detailed Rooftop Solar PV Grid Interactive Systems Gross / Net Metering Regulations, 2015 http://mnre.gov.in/file-manager/Compendium/Final/UP%203.PDF26Detailed rooftop solar PV policy http://upneda.org.in/sites/all/themes/upneda/pdf/SOLAR-PV-RT-POLICY-Eng.pdf

(Captive and Renewable Energy Generating Plants) Regulations, 2014 as amended from time or as per determined by the Commission.”

• Under net metering arrangement: “The end of each settlement period, any electricity credits, which remain unadjusted, shall be paid at a rate of 0.50/kWh by the Distribution Licensee or as notified by the Commission from time to time.”

• “In rooftop solar PV system under gross metering scheme/net metering scheme, whether self-owned or third party owned and installed on eligible consumer premises shall be exempted from wheeling and cross subsidy surcharge.”

• “In case of gross metering scheme and net metering scheme the quantum of electricity generation by eligible consumer, who is not defined as Obligated entity, from the rooftop solar PV system shall qualify towards compliance of Renewable Purchase Obligation (RPO) for the Distribution Licensee in whose area of supply the eligible consumer is located.”

• “The consumer shall be free to sell power under REC mechanism as per the provisions of Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010 and subsequent amendments thereof and UPERC (Promotion of Green Energy through Renewable Purchase Obligation) Regulations, 2010.”

2.6.2 UT TAR PR ADESH ROOF TOP SOLAR PHOTOVOLTAIC P OWER PLANT P OLICY, 2014

This policy came into effect in 2014 with an operative period till March, 201726. The nodal agency of this policy is Uttar Pradesh New & Renewable Energy Development Agency (UPNEDA). The main objective of this policy is to contribute to the solar capacity of the state for energy security. The implementation plan is to encourage installation of grid connected solar photovoltaic power plants for captive or self-consumption on net metering or gross metering mechanism. This policy mainly targets government/public institutions and private institutions. The target set in this policy was to achieve 20 MW of grid connected solar PV rooftop systems by the end of operative period. The salient features of the policy are:• “The Government of Uttar Pradesh shall promote

deployment of rooftop solar photovoltaic plants for captive/self-consumption on the offices of the

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government organisations/State government owned or aided institutions.”

• “All the aforementioned institutions shall implement grid connected rooftop solar photovoltaic power plant and generate & consume some percentage of their annual electricity consumption from such a plant.”

• “The rooftop solar photovoltaic power plant shall be implemented utilizing at least 25% of the available plinth area.”

• “Funds from the Government of Uttar Pradesh, may be made available for implementation of Grid connected Rooftop Solar Photovoltaic Power Plant.”

• “The Government of Uttar Pradesh shall encourage private institutions to implement rooftop solar photovoltaic power plants, of suitable capacity, on the

roof of their premises/area, generate & consume the electricity for their self-consumption.”

Other than these pointers, the state nodal agency will facilitate the eligible entity in availing the financial assistance provided by GoI or GoUP, empanelment of the system, identification of suitable sites and all other application related procedures. As per the policy, an empowered committee will monitor and resolve the issues arising out of the policy under the chairmanship of Chief Secretary of the State.

Despite this initiative, there hasn’t been much improvement in the state’s solar capacity since the policy is in the last year of its operative period.

Rooftop space available on residential buildings in Varanasi

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Also known as Benaras or Kashi, Varanasi is one of the oldest living cities in the world. The famous novelist, Mark Twain, enthralled with the spirit of the city once wrote that “Benaras is older than history, older than tradition, older even than legend and looks twice as old as all of them put together.”

Varanasi is the the Spiritual Capital of India, the holiest of the seven sacred cities in Hinduism and Jainism, and has also played a significant role in the development of Buddhism. Tulsidas wrote his epic poem on Rama’s life, Ram Charit Manas in Varanasi. Several other major figures of the Bhakti movement were born in Varanasi, including Kabir and Ravidas. Guru Nanak Dev visited Varanasi for Shivratri in 1507, a trip that played a large role in the founding of Sikhism. Varanasi has been a cultural centre for the Hindus (especially North Indians) for thousands of years. Hindus believe that death in the city will bring salvation, making it a major centre for pilgrimage. Millions of devotees throng to this holy city every year. The cultural significance of the city has also made placed it on the global map with a huge footfall of international tourists.

One often imagines Varanasi in a sepia-tinted frame, drowned in the hues of the rising and setting sun, effervescent with the earthy smoke of the aarti and continuous chants reverberating through the ghats. However, the city has more to offer than spiritual and cultural enigmas. Varanasi is an important industrial centre, famous for its muslin and silk fabrics, perfumes, ivory work, and sculpture. Silk weaving is a dominant industry in Varanasi with over 51% of its manufacturing

population involved in this industry. Tourism is Varanasi’s second most important industry. Another 15% of its manufacturing population are involved with the metal industry.

While Varanasi holds a significant position culturally and industrially, it also holds an important political significance. The city is the home constituency of the Prime Minister of India, Mr. Narendra Modi. Even the smallest activity in the city is worthy of primetime coverage in the media. On his recent India visit, former US President, Barack Obama expressed his wishes to develop an IT hub in Varanasi. Varanasi is also listed among the hundred smart cities, owing to which, both the central and state government have undertaken several projects for the rapid development of the city. The cleaning of the river Ganges is one of the significant projects that the PM initiated himself.

Located at an elevation of 80.71 metres (264.8 ft), Varanasi resides in the Eastern part of the Uttar Pradesh, along the left crescent-shaped bank of the Ganges, averaging between 15 metres (50 ft) and 21 metres (70 ft) above the river. The city experiences a humid subtropical climate with large variations between summer and winter temperatures. While the temperature ranges between 22 and 46°C in the summers, the winters in Varanasi see very large diurnal variations, with warm days and downright cold nights. The city predominantly witnesses easterly winds, adding to the humidity in the area. As per the census data of 2011, Varanasi urban agglomeration had a population of 3,676,841 of which male and female were 1,921,857 and 1,754,984 respectively, and a sex ratio of 913 females per 1000 males.

V A R A N A S I : I N T R O D U C T I O N T O T H E C I T Y3

Varanasi ghats at dawn

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An aerial view of Varanasi

Preparation of Ganga aarti at Dasaswamedh Ghat Weaving on a Jacquard loom in Varanasi

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Vehicular traffic adds to the pollution levels in Varanasi

Varanasi is the home constituency of the Prime Minister of India, Mr. Narendra Modi

A panaromic view of Varanasi

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Fig ure 11: Annual irradiation data for Varanasi

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Fig ure 12: Varanasi’s Geographic Potential of Solar Rooftop

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Varanasi is a growing city with over a million resident population and huge number of floating population in the form of tourists and migrant workers. As a hot spot for tourism with millions of global and domestic travellers flocking into the city, the footfall of people has been incessantly increasing each year. Naturally, the city’s energy requirements have also been growing proportionately. At present, the power demand in Varanasi is 820 MW which is expected to be 1048 MW by FY 2021-22 with a 5% CAGR. Uttar Pradesh is reeling under a massive power shortage of over 14%27, which is the second highest after Jammu & Kashmir. As such even Varanasi is under severe power crisis. Although two years ago, the state government committed to provide round-the-clock power supply to the city, there are several areas in the city that suffer long power outages even now.

Furthermore, Varanasi suffers the highest T&D losses among all the five DISCOMs in the state. PuVVNL, the DISCOM that supplies power in Varanasi, has T&D losses of a staggering 42%.

However, fossil fuel is not the answer to the deteriorating

power situation in Varanasi and the rest of Uttar Pradesh, despite the availability of coal as the environmental and social costs are too high. Varanasi is already suffering from poor air quality due to rising air pollution in the city28. The coal-based power plants in Shakti Nagar and Singrauli are considered to be major sources of SPM that is the chief air polluting factor in Varanasi. Renewables in general and solar in particular, do not have such side-effects. They are much more efficient in terms of installation time and the cost of power is much more reliable and predictable. Solar in particular can be installed in and around the load centers and large capacities can be planned in a short duration of time without affecting the air or water quality of the the concerned region. A major advantage of solar is also that it requires less amount of water for maintenance compared to coal power plants.

Our analysis suggests that power demand in Varanasi, in the long term would follow the trajectory of big cities like Delhi. While Varanasi is not a heavily industrialised city, it is a globally renowned tourist destination and also the constituency of the Prime Minister. As per the plans of the central and state government, the city’s power demand will substantially grow in the next 4-5 years. While the major chunk of growth in demand in power will be driven by the tourism sector and the expansion of the city; rise in

27Executive Summary report of January, 2016, Central Electricity Authority http://www.cea.nic.in/reports/monthly/executivesummary/2016/exe_summary-01.pdf28http://english.pradesh18.com/news/uttar-pradesh/muzaffarpur-varanasi-most-polluted-indian-cities-cpcb-report-872326.html

29MNRE Solar radiation data30Master Plan 2031 for Varanasi22http://pib.nic.in/newsite/PrintRelease.aspx?relid=130261

3.1 SOL AR A S A SOLUTION FOR VARA NA SI’ S ENERGY PROBLEM

Fig u re 13 : Map of Varanasi

DLW

BHU

RAMANAGAR

TO BHADHOI

TO AL L AHABAD TO KOLKATA

NH 56

NH 29

MUGHAL SARAI

CANTONMENT ARE A

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population, growing income and city’s industrialisation will also be significant factors. Being one of the hundred smart cities, Varanasi’s growth and development will proliferate in the commerce and services sector including transport, hospitality, trade, health, education, etc. Access and efficiency of electricity would be a key factor to sustain this growth.

Thus, it is imperative for Varanasi to adopt a comprehensive plan to cater and meet its growing power demand and make this ancient city, a truly smart city. If the city follows its current trajectory, the power situation is likely to worsen with increasingly frequent power outages, stifling the economic growth.

3. 2 AVAIL ABLE SOLAR RESOURCES IN VARA NA SI

Solar irradiation is the amount of radiant solar energy

Fig ure 14: Varanasi’s Geographic Potential of Solar Rooftop

Total area under Nagar Nigam Varanasi96.24 km2

Area taken into consideration69.42 km2

Total qualified raw roof area21.75 km2

Total solar suitable rooftop area8.01 km2

Total solar power capacity that can be installed676 MW

Resident ia l I ndus t r ial

Tra nspor t

C ommercial

Publ ic a nd semi -public

Gover nment66%

8%

17%

5%

4%

1.15%

Fig ure 15: Installed generation capacity in India as of June, 20163

31http://dev.bridgetoindia.com/wp-content/uploads/2015/01/BRIDGE-TO-INDIA_GREENPEACE_Rooftop-Revolution_2014-2.pdf

available per unit area and is usually expressed in terms of kilowatt-hours per square meter per day (kWh/m2/day). This irradiance varies throughout the year depending on the seasons. It also varies throughout the day, depending on the position of the sun in the sky, and the weather.

The average irradiation value for Varanasi is 5.3 kWh/m2/day29, which is considered a good value for solar power production. This value is much better than other cities in the world with a significant solar installed capacity.

The total land area under Varanasi Municipal Corporation (VMC)30 is around 96.24 km2. For this analysis, we take into consideration the land area under VMC to be 69.42 sq km excluding the recreational, heritage and mixed use areas. The total built up area / raw rooftop space that is available in Varanasi for solar power generation is 21.75 sq km. However, the raw rooftop space only includes built-up structures that can accommodate the size and weight of the solar installations as not all of this area is necessarily

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32Calculated by taking 75% of connected load assuming 5% CAGR33According to the NREL study ‘Interconnecting PV on New York City’s Secondary Network Distribution System’, PV penetration levels of 20-30% are considered safe for radial distribution grids. For more details about challenges of PV penetration and suggested solutions see the report ‘Connecting the Sun’, November 2012 by the European PV Industry Association accessed at http://1.usa.gov/1pSEASm , http://bit.ly/1o8b1bP

suitable for solar power generation. The suitable solar rooftop space is calculated to be around 8.01 sq km, which is the unobstructed and shadow-free rooftop space receiving optimal sunlight for solar power generations. This solar suitable area can generate 676 MW of solar power.

Residential buildings cover 2/3rd of solar rooftop potential in Varanasi which is significantly lower than Patna31. This is followed by public and semi-public buildings which attributes to 17% of the potential. Government buildings, industrial installations and commercial establishments contribute to 6%, 5% and 4% of the total potential respectively. The transport sector, including the areas under airports, railway stations, bus depots and bridges, accounts for less than1% of the potential. The methodology for computation of solar potential is explained in the annex chapter “Methodology for calculating the solar rooftop potential in Patna”.

3. 3 SOL A R P OTENTIAL A S PER GRID INF RA STRUCTURE

The total economically viable solar rooftop potential for Varanasi is calculated to be 676 MW. However, with a peak power demand of 820 MW32, installation of such a high capacity of distributed solar power may create issues with grid balancing and grid stability. Connecting

a large amount of intermittent power with grid requires improvement in the local distribution grid infrastructure.

Based on estimates of grid-ceiling factors from New York and Germany33, we have assumed that the grid can accommodate 20% of the distributed solar power. By taking this grid-ceiling factor, solar power can be connected to the grid without major overhauling in the existing grid infrastructure.

For this analysis’ sake, we capped solar rooftop potential of Varanasi at 20% of its peak power demand. Peak power demand of Varanasi in the year 2016-17 is 820 MW which is expected to grow at 8% CGAR to reach over 1500 MW by 2024-25. Therefore, as shown in figure 15, Varanasi can accommodate 177 MW of solar power in the existing grid in the year 2017-18. However, with improvements in grid infrastructure and rise in power demand, this potential can be increased to 304 MW by 2025. Therefore, this report for Varanasi proposes a solar rooftop potential of 300 MW by 2025.

The grid-ceiling factor can change with improvements in grid balancing infrastructure. With efficient and improved grid balancing equipment, this factor can be further improved. In simple terms, to increase the grid-connected solar power capacity, parallel investments are required in grid infrastructure. However, to avoid any complexity, we are assuming that there would be no massive investment in the grid infrastructure.

40

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Fig ure 16: Solar power capacity added vs the peak demand of Varanasi

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Yea r ly S olarC apaci t yAddi t ion (MW)

Pea k Demand (M W )

28

The electricity generated from solar rooftop PV can play a significant role in reducing the peak load demand during daytime. But this is possible only if the rooftop PV system is economically viable. However, before analyzing this, we need to understand the cost of power procurement as well as the cost of transmission and distribution losses.

4.1 COST OF T&D LOSSES

The number of power consumers in Uttar Pradesh has increased by 4.5% annually from 2001-02 to 2013-14, while the sale of power has increased by 7.7%34. Although, there has been a significant increase in the demand and supply of power in the state, the price hasn’t been increased proportionately. PuVVNL made losses worth Rs 2,807 crores solely in 2015-16 due to mismatched retail tariff and actual cost of supply. In the last five years, this loss has accumulated to Rs. 9,937 crores (since 2011-12)35.

Transmission and Distribution (T&D) losses in PuVVNL is very high. In the years 2014-15 and 2015-16, T&D losses

were 28% and 27% respectively. Thus, one-fourth of the electricity procured by PuVVNL is lost before it reaches its consumers36. PuVVNL has cumulatively lost Rs. 9,349 crores in the last five years37. All these losses are due to poor distribution infrastructure, power pilferage and inefficient collection of metered power, which led the PuVVNL towards a huge financial loss. Due to poor financial conditions, no investment has been done towards improving grid infrastructures to reduce T&D losses, due to which the condition in PuVVNL is worsening by the day.

PuVVNL had a purchasing power (APPC) at the average price of Rs. 4.34/ kWh in 2015-16. By adding transmission charges and T&D losses, the landed cost of power purchase for PuVVNL stands at Rs. 5.68/kWh. However, the electricity is being sold at an average tariff of Rs. 4.32/kWh. Therefore, PuVVNL is making a loss of Rs.1.36 for every unit of electricity it sells to its consumers due to transmission and distribution loss38. It is expected that the trend will continue, although there is marginal improvement in net loss per unit through T&D (Figure1). In 2021-22, this cumulative loss would be Rs.26,759.8 crores, even if the tariff were to increase by 5-6% in the next five years.

Fig ure 17: APPC, Average Tariff and T&D per unit of energy sold of PuVVNL

APP C (`/ kWh)

Average Ta r if f (`/ kWh)

Loss `/ kWhp er uni t sold

20

11-1

2

3.013.95 4.15 4. 30 4. 34 4. 56 4.79 5.03 5.29 5. 56

5.84

6.155.80

5. 475.16

4.06 4.20 4. 32 4. 584.86

3.71

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4. 2 VIABIL IT Y OF SOLAR If the landed cost of power purchase, retail power tariff and cost of solar power generation were to be analysed, it beocmes quite evident that a grid parity for39 solar power in the region of PuVVNL supply power can be reached by March-2018. The cost of solar power has gone down by

55% since 2011-12 and a further reduction in the prices is expected by March 2018.

If the government continues to supply electricity through conventional sources, it will make huge financial losses. The gap between the cost at which power is purchased and the tariff at which power is sold, will only grow further, adding

34Table number 5.2 and 5.4 of Statistics at Glance 2013-14, UPPCL35CEED analysis36As per 2014-15 and 2015-16 tariff order of UPPCL37CEED analysis38CEED analysis 39CEED analysis

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huge financial burden on DISCOMs. Large scale adoption of solar energy will enable massive savings post March

Table 3 : Viability of Solar Rooftop PV in Varanasi in 201641

Residential Commercial Industrial Govt. & Public Institution

Geographical Potential

MW 432.32 23.34 23.34 35.84 172.5

Input Parameters 2016

Typical System Size 2 kW – 5 kW 5 kW – 25 Kw 25 kW – 75 kW 25 kW – 100 kW 75 kW – 500 kW

Assumed System Size 5 kW 10 kW 25 kW 50 kW 100 kW

System Cost (₹/Wp) 75 52.5 52.5 52.5 52.5

Total System Cost (lakh) 3.75 5.25 13.13 26.25 52.5

CUF 16.82% 16.82% 16.82% 16.82% 16.82%

O&M Expenses (/year/System)

1.5% 1.5% 1.5% 1.5% 1.5%

Equity : Debt 30 : 70 30 : 70 30 : 70 30 : 70 30 : 70

Interest Rate 12.76% 12.76% 12.76% 12.76% 12.76%

Viability Analysis 2016 - 2017

Levelized Cost (₹/kWh) 8.75 6.36 6.36 6.36 6.36

Levelized Cost (₹/kWh) with 30% Subsidy

6.36 NA42 NA NA 4.70

Average Grid Tariff (₹/kWh) 5.3 7.5 7.8 7.3 7.2

Tariff Gap (₹/kWh) 3.45 -1.14 -1.44 -0.94 -0.84

Viable in 2016? 2020 2016 2016 2016 2016

Up to 75 kW >75 kW

Fig ure 18: Solar grid parity for PuVVNL40

APP C (`/ kWh)

Average Ta r if f (`/ kWh)

S ola r Ta r if f `/ kWh

6

8

10

4

2

Poorvanchal Grid Parity

`/k

Wh

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

40Solar tariff as per CERC tariff order.41Solar rooftop system prices analysed by CEED. Detail of prices in Annexure.42Commercial and industrial consumers in Private sector are not eligible for Central Financial Assistance (CFA) from MNRE. PSUs are also not eligible for CFA. Only residential, Institutional and social sector consumers are eligible for CFA from MNRE. http://mnre.gov.in/file-manager/UserFiles/gcrt-cfa-notification-04-03-2016.pdf

2018 when cost of solar power matches with retail tariff.

4. 3 VIA BILIT Y OF SOLAR ROOF TOP PV IN CONSUMER GROUP OF VARANA SI IN 2016

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4.3.1. SOLAR RO OF TOP P V VIABIL IT Y FOR RESIDENTIAL CONSUME RS

The average grid tariff paid by an urban residential consumer in Varanasi is Rs. 5.3/kWh43 2016. The tariff rate of power for residential consumer is highly subsidised, but on the other hand the cost of a solar rooftop PV system for residential consumers is the highest. The cost disparity is high because that the typical size of a solar rooftop PV system is small and normally ranges from 1 kWp to 5 kWp depending on the individual rooftop space available. This leads to high upfront cost for the residential consumer. Assuming a typical size of 5 kWp

for a residential consumer, the levelled cost of generation from a solar PV system amounts to Rs. 8.75/kWh 2016 with the input parameters shown in Table 4. If the consumer is avails the 30% subsidy given by the Ministry of New and Renewable Energy (MNRE), GOI; this cost of generation comes down to Rs. 6.36/kWh which is higher than the grid tariff rate of Rs. 5.3/kWh.

Residential consumers have 432 MW of solar rooftop potential which is the highest among all consumer groups in Varanasi. With the dipping prices of solar PV system and escalation in grid tariff prices, the grid parity for residential consumer can be reached by early 2019.

4.3.2. SOLAR ROOF TOP P V VIABIL IT Y FOR COMMERCIAL CONSUME RS

Commercial consumers’ requirements can be mainly divided into two categories; a)load connection up to 75 kW and b)load connection more than 75 kW. Both commercial consumer groups pay an average grid tariff of Rs. 7.5/kWh44 and Rs.7.8/kWh45 respectively in Varanasi, which is much higher than the residential consumers. The cost of solar rooftop PV system for Type A commercial consumers is more than the Type B commercial consumers. With the escalation of scale of the PV system, the cost decreases accordingly. The cost of PV systems for both types of commercial consumers and various

Fig ure 19: Viability of Solar Rooftop PV for Residential Consumers

L evel i sed C os t (`/ kWh)

Average Gr id Ta r if f (`/ kWh)

L evel ized C os t (/ kWh) wi t h S ubs idy

`/k

Wh

2016 2017 2018 2019 2020 2021 2022

input parameters are mentioned in Table 4. Assuming a typical system size of 25 kW and 75 kW for Type A and Type B consumers 2016 respectively, the levelled cost of generation from solar PV is calculated to be `6. 36/k Wh 2016.

Considering this scenario, the Type A and Type B commercial consumers are paying Rs 1.14/kWh and Rs 0.94/kWh extra in each case if they use electricity from the grid. 30% Central Financial Assistance (CFA) from MNRE for these consumers is no longer available because grid-parity for solar energy is already reached in these consumer groups.

4

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43As per 2016-17 tariff order of UPPCL | http://www.uppcl.org/uppcllink/documents/25062015115241tariff%202015-16%20final_New.pdf44As categorized by PuVVNL45As per tariff order 2016-17 of UPPCL | http://www.uppcl.org/uppcllink/documents/25062015115241tariff%202015-16%20final_New.pdf

Gr id par it y reache d in

2017Gr id par it y

reache d in 2019

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4.3.3. SOLAR ROOF TOP P V VIABIL IT Y FOR INDUSTRIAL CONSUME RS

Varanasi does not have any registered large scale industries as such. It only has medium and small scale industries with connected load up to 75 kW46. The small and medium scale industries include agro processing industry, weaving industry, floriculture and mushroom farming units, etc. There are a few induction furnaces, rolling and mini-steel industries whose connected load is more than 75 kW and falls under the part of Ram Nagar industrial area. But Ram Nagar industrial area is not a part of this study. The average grid tariff for these industries is Rs. 7.3/kWh47 2016. The cost of solar rooftop PV systems for these types of industries

is relatively lower due to the scale of escalation, since the size of the systems in these industries varies from 25 kW to 100 kW. For calculation purposes, we have considered a typical size of 50 kW of a solar rooftop PV system for industries. The levellised cost of generation from solar PV system by considering various parameters (as mentioned in Table 4) comes out to be Rs. 6.36/kWh 2016. The total solar rooftop potential for industrial consumers in Varanasi is 35.84 MW, and the consumer is paying Rs. 0.94/kWh more, since they use electricity from the grid. 30% of Central Financial Assistance (CFA) from MNRE for these consumers is no longer available because grid-parity for solar energy has already been reached.

Fig ure 20: Viability of Solar Rooftop PV for Commercial

L evel i sed C os t (`/ kWh)(upto 75 kW)

Average Gr id Ta r if f (`/ kWh)(upto 75 kW)

`/k

Wh

up

to 7

5 k

W

2016 2017 2018 2019 2020 2021 2022

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6

8

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12

2

46As categorized by PuVVNL47As per tariff order 2016-17 of UPPCL; http://www.uppcl.org/uppcllink/documents/25062015115241tariff%202015-16%20final_New.pdf

Fig ure 21: Viability of Solar Rooftop PV for Industrial Consumers

L evel i sed C os t (`/ kWh)

Average Gr id Ta r if f (`/ kWh)

`/k

Wh

2016 2017 2018 2019 2020 2021 2022

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4.3.4. SOLAR RO OF TOP P V VIABIL IT Y FOR GOVERNMENT AN D PUBL IC INSTITUTIONS

The public institutions owned by the state or central governments or their agencies including the offices, hospitals, colleges, schools and other public buildings are considered under this category. The grid tariff rate for these types of consumers is Rs.7.2/kWh48 2016. These types of buildings are relatively larger in size and have a fair amount of rooftop space available for the PV system. The size of a solar rooftop PV system varies from 75 kW to as much as 200 kW. In a few cases, this size may exceed the 200 kW capacity. Due to the larger size of the system, the cost of these systems in lesser than the system cost for other consumers. We have assumed a typical size of 100 kW for these types of consumers to study the economic viability

of the system. The levelled cost of solar rooftop generation from this system is calculated to be Rs. 6.36/kWh 2016 by taking the various input parameters as mentioned in Table 3.

The combined solar rooftop potential for government and public buildings in Varanasi is calculated to be 172.5 MW. Grid Parity for these buildings has already reached in 2016. Grid tariff is Rs.0.84/kWh more expensive than the levelized cost of solar energy for these consumer groups. Although, 30% CFA from MNRE are available for institutions and social sector consumers, the economics viability of solar energy is already available. Therefore, these types of consumers do not need government support and are the easiest to target as most of these buildings are under government control.

Fig ure 22: Viability of Solar Rooftop PV for Government and Public

L evel i sed C os t (`/ kWh)

Average Gr id Ta r if f (`/ kWh)

`/k

Wh

2016 2017 2018 2019 2020 2021 2022

6

8

10

12

48As per tariff order 2016-17 of UPPCL, http://www.uppcl.org/uppcllink/documents/25062015115241tariff%202015-16%20final_New.pdf

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Fig ure 23: Year Solar Capacity addition under grid-ceiling factor until 2025

Gr id C eil i ng Fac tor (M W)

Cumulat ive S ola r capacit y (M W )

Yea r ly S olar C apaci t y Addi t ion (MW)

Varanasi has been selected to be one of the smart cities out of a hundred cities in the list that was launched by the Government of India under the Smart City Project. Being the Spiritual Capital of India, Varanasi must also be self-reliant in terms of its energy needs, since it welcomes millions of tourists every year. For the city to meet its growing energy demands, decentralised energy is the only sustainable solution. Tapping the solar potential of the city will not only help it being a ‘smart city’ in terms of growth, but will also make the city smart in terms of utilising its resources most efficiently. Varanasi has a potential of 675 MW, which represents 80% of the current electricity demand.

By factoring grid ceiling of 20%, we limit the distributed solar energy potential for Varanasi to 300 MW by 2025. We suggest a phase-wise approach for the deployment of 300 MW (factoring in grid-ceiling) and creating islands of reliable daytime electricity supply starting in areas with minimum power outages and moving toward higher power deficit areas. Reliable and affordable storage facilities and other generation resources should be explored to generate reliable power supply at night-time.

Varanasi can be divided into different parts depending on the availability of power. The areas which have power outages for less than 2 hours should be first targeted for deployment of rooftop solar energy. This will help to

deliver maximum benefits of a grid connected with the solar rooftop system and reduce any power outage during the daytime in these areas. Some of these areas in Varanasi could be Sigra, Chetganj, Lahurabir, Mulvibag, Gurubag, Sidhgiribag, Ramakant Nagar, Maldhiya and Ashok Nagar Colony. Surplus power in these areas can be diverted and supplied to the other areas which have higher power cuts i.e. 2-4 hours during daytime. This would help the areas with higher power cuts also become suitable for the adoption of grid-connected solar rooftop systems.

Varanasi can start with 20-25 MW of installation annually in the first three years till the grid parity is reached for residential consumers by 2019-20. Grid-parity for large-scale installations like industrial and commercial consumers are already reached in 2016. Solar rooftop installation in residential segment can start from 2020. Following assumptions are considered for solar rooftop roadmap for Varanasi:

1. Solar rooftop installation can be initiated in government, public institutions49, commercial and industrial consumers50 for the first couple of years where the grid parity has been reached already.

2. Capacity addition will be slow in the initial years as support mechanisms and the market for the solar rooftop system will develop along the way.

50 50

100 100

150 150

200 200

250 250

300 300

350 350

0 0

49Refer chapter 4. Viability of Solar Rooftop PV for Government and Public Institutions45As per tariff order 2016-17 of UPPCL50Refer chapter 4. Viability of Solar Rooftop PV for Government and Public Institutions45As per tariff order 2016-17 of UPPCL

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3. In the initial years, net-metering policy will be implemented and tested on public and government sector consumers.

4. Commercial and industrial consumers will be targeted from 2018, after the success of net-metering policy piloting in public and government sector consumers.

5. During the initial two years, ‘Smart Meters’ will be installed among all consumer classes for forecasting purposes.

51Refer chapter 4. Viability of Solar Rooftop PV for Residential consumers

6. Once the grid parity level is reached for residential consumers51, there will be a drastic increase in the installation process, since the residential consumers have the largest share of solar rooftop potential.

7. This added solar capacity will help meet the peak power requirements during the daytime while the traditional power can cater to the peak power requirements during the evening and night, until the battery storage is economically feasible.

Solar water heaters on a rooftop in Varanasi

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Several business models exist today that can be utilized for solar rooftop installation. The pros and cons of all these models are listed below.

6.1 TRADITIONAL SALES MODEL

The most common type of business model for solar rooftop installation in India is the Capex based Traditional Sales model. This is also called the Self-Consumption model or the Capital Subsidy model. According to this model, the complete solar power generation system or plants including solar modules, inverters and batteries (if required) are purchased directly by the consumers. Any EPC or system integrator required are purchased and installed by the consumer for the roof-space.

The rooftop system under this model can be both off-grid or on-grid. If the consumer wants to connect with the grid, they can do so on the gross metering or net-metering systems.

As per this model, the consumer is the plant owner and is entailed to invest 100% cost of the setup upfront. Hence, the model is suited for the consumers who can not only afford the investment for solar rooftop plant but also have the willingness to invest the entire capital upfront. Such an investment is mostly feasible for the industrial and commercial consumers who can claim tax benefits in the form of depreciation for owning such power plants. A subsidy of 30% is provided by the MNRE for this model for residential, public and government institutions like schools, hospitals, educational institutes and social sector consumers. However, this subsidy will be based on the benchmark cost provided by the MNRE, which is Rs. 75/ kWh. This model is also favourable in terms of zero legal hassles concerning the purchasing and installation process.

However, the biggest drawback for this model is that it requires the consumers to pay the entire cost upfront which can be difficult for most residential consumers. A typical 5kW solar rooftop (suitable for two-bed-room house) cost Rs. 3.75 lacs. With the 30% subsidy from MNRE, this cost will reduce to Rs. 2.62 lacs52. To invest such a capital upfront is a limiting factor for large-scale adoption in residential segments. Moreover, a model that runs on subsidy will eventually make it difficult for the government to scale up, owing to the huge financial deficits it will add on the state exchequer.

In a city like Varanasi with abundant low-rise buildings and a majority of moderate income groups, this model can be promoted through the roof aggregator model, where consumers and system installers are connected, offer low system cost to consumer groups and acts as sales channels or agents for system installers. The roof aggregator model is highly successful in many parts of the world including United States.

6. 2 RENEWABLE ENERGY SERVICE COMPANY (RESCO) MODEL

Under the RESCO model, a third party investor would invest in solar PV on the rooftop of potential consumers and sell power to them. This model does not mandate the consumers to pay any amount upfront, and they are liable to only rent out their roofs for solar PV installation. If solar power is viable, the consumers can save from paying exorbitant amounts in electricity bill. The model entails the consumers and RESCO to make an agreement on power purchase, which mainly includes long-term tariff with annual escalation and duration of the purchase (usually 15-20 years). In some cases, the investor may also offer a monthly or quarterly payment of a fixed amount to their consumers. Such a setup is called a Lease RESCO Model. RESCO bears the responsibility of the installation, operation and maintenance of solar rooftop system.

This model is more feasible for large-project sizes with either large individual plants or with multiple small plants clustered together. Such a setup helps in reducing the transaction cost which is quite high in case of small individual projects. A typical 50 kW system in Varanasi costs Rs. 26 lacs upfront while 75 kW systems will cost Rs. 39 lacs. In Varanasi, this model can be availed by commercial and industrial consumers who do not wish to bear the entire cost but are willing to commit for a long-term tariff or monthly payment option. Cooperative housing societies can also adopt this model with regular monthly payments for a long-term period. This model can become more attractive if RESCO offers solar tariffs lower then the grid tariff.

However, the biggest concern with the project arises in terms of bankability since its feasibility depends on the credit-worthiness of the consumers. The roof-owner and the power consumer happens to the be the same entity.

52CEED economic model

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Thus, there is a risk factor since the power will be sold to the roof owner cum consumer for a long period of time. Nevertheless, the model also has a bright side, which is that the consumer is not mandated to make the upfront investment and can thus be easily convinced to participate in such a setup. Also, the consumer can also make potential savings from the electricity bill if the solar tariff os lower than the grid tariff.

6. 3 LOCA L MICRO UTILIT Y MODEL

The Local Micro-Utility Model can address the key concern of bankability of the RESCO model if solar power generators are allowed to operate without any restriction to sell power to a third party. Solar power developers can take clustered roof space in designated areas on rent, install solar PV system and sell power to multiple consumers including roof-space owners and also DISCOMs at a pre-fixed tariff. Such a setup can provide more options for the investor, thus lowering the risk factor and improving the bankability of the project.

The Local Micro-Utility Model is effective with the gross metering system. This model is highly attractive for cooperative housing societies where large roof-spaces are available but consumers do not have enough resources or are not willing to invest on solar power upfront. Furthermore, this model can also offer additional income for roof-owners through lease or roof rent.

For solar power generators or project developers, this model offers the feasibilty to scale-up since it involves large numbers of consumers which thereby reduces transaction costs due to the large scale of the solar plant. With scalability as an option, this model makes solar power a viable choice even before grid parity reaches for residential consumers.

Building owners will also benefit as they will be able to generate additional income through renting out their roof space for a longer duration of time (about 15-20 years). Renting out the roof separately for solar power generation is an incentive to earn extra income for house-owners. In most cases, the roof is not included in the house rent, hence renting out the roof-space will give owners monetary gains that were not tapped into before. Furthermore, having a solar PV installed on the roof will help top-floor residents since the panels will keep the ceiling cool during the scorching summer months in Varanasi.

This model can be combined with the RESCO model, wherein the project developer can sell power back to the building owner as well. In such a case, the lease for the rooftop might be waived in favor of a lower solar power tariff.

A key drawback with this model is the possible change of building owners from time to time. If the building is sold to new owners who are not willing to have a solar PV system on their roof, the project developer will have to shift the system to another location. Shifting an existing system to another roof would create significant additional costs and would push back the viability of solar. However, such things can be minimized if a proper legal contract is formulated in the beginning. Moreover, in housing societies, the roof is considered as common property. Thus, as long as there is an understanding between investors and housing societies, such a risk can be managed.

Another big challenge with this model is the lack of regulatory support for selling distributed power directly to end customers in Varanasi.

This model’s greatest advantage is that it unlocks a greater number of residential rooftops for PV systems by providing economies of scale to the developers and an easy income opportunity to rooftop owners. The city of Gandhinagar in Gujarat has initiated a pilot project that has some characteristics of the solar rooftop leasing model described above.

6. 4 COMMUNIT Y OWNERSHIP MODEL The community ownership model is quite similar to the Local Micro-Utlity model with only one major difference; which is that of the ownership. As per this model, the investors are the group of housing societies, residential complexes and apartments who, through Resident Welfare Associations (RWAs) or cooperative housing societies, invest in rooftop systems of a fairly large scale (100 kW), and hire RESCO to manage the system. Each member of the RWA or housing society is entailed to pay a pre-fixed tariff per unit of electricity. A gross metering system is used in this kind of model.

Such a system is quite prevalent in group housing societies in high-rise buildings who use solar energy as their power back-up. However, due to the local scale of the system, the tariff for back-up power is fairly high.

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Air pollution is severely affecting the health of the citizens in Varanasi

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The Varanasi solar rooftop programme can be implemented based on two models. The first is the parity model where the solar energy deployment will depend on the grid parity of the particular consumer group. The second option is incentive based. Capital subsidy or generation based incentives will be provided to early adopters who could not avail the grid parity. These incentives will be withdrawn when the gird parity reaches these consumer groups.

As mentioned in the previous chapter, PuVVNL looses INR 1.33 on every unit of electricity it sells in the FY 2016-17. Despite the improvement in Transmission and Distribution infrastructure, it will continue to be INR 1.29 in the FY 2025-26. This loss would cumulate to INR 27402.3 crores in the next couple of years. In the following section, we will discuss different fiscal support models for incentivizing early deployment of solar in Varanasi and the amount of financial savings the government shall make through such fiscal models.

7.1 CAPITAL SUBSIDY MODEL

Upfront capital subsidy for promotion of solar energy in India is the most prevalent and dominant form of fiscal support from the government. This is also the most plausible way for the government to promote solar energy through fiscal support. It reduces the cost of solar energy setup to make it a viable and attractive investment opportunity. MNRE had brought back 30% capital subsidy for consumers under the residential, social-sector and public institution categories. They removed this subsidy for industrial and commercial consumers citing other benefits like accelerated deprecation, custom and excise duty exemption, and tax holidays53.

However, capital subsidy leads to under-performance and over-pricing of solar energy systems in the country, because it does not focus on actual generation of power and plant quality. Buyers of the systems tend to opt for the cheapest product in the market, which are of low quality. Quite often, the capital subsidy scheme is criticized for promoting businesses which take advantage of government fiscal support rather than establishing truly functional solar energy systems. This has also caused reputational damage to solar energy systems due to inefficient, under-preforming and over-priced power plants.

If Varanasi chooses to adopt the Capital Subsidy Model the city must learn from past experiences and adopt a more effective and transparent system of regulation. This would involve ensuring standardization of the equipment as well as the process for monitoring the system performance.

To make solar energy an economically viable and attractive investment opportunity in FY-2017-18, 30% subsidy in the form of Central Financial Assistance (CFA) provided by MNRE should be continue. This will help in lowering the cost of solar rooftop system to the level of retail tariff for grid power. We expect the annual subsidy amount to reduce every year as grid tariff increases while the cost of solar energy reduces every year. In the year 2017-18, the total subsidy required is 29% of the total system cost which will be reduced to 15 % in year 2018-19, and will become nil in the year 2019-20. From FY 2019-20, there will be no subsidy requirement, even from MNRE.

The total expenditure required from the government (only MNRE subsidy) to provide capital subsidy till 2020 shall be Rs. 148.5 crores spread over three years. In return, the government would accrue savings on account of avoiding T&D losses to the tune of Rs. 149 crores over the next 10 years. This means the Government will virtually recover all the subsidy it paid in the initial three years by 2025, while also incurring massive savings for the next 15 years in terms of saving transmission and distribution losses.

7. 2 GENERATION BA SED INCENTIVES

Some of the key concerns related to upfront capital subsidy model can be addressed through Generation Based Incentive (GBI) Model. In the GBI model, the upfront cost of the solar rooftop system is not reduced but it ensures a periodic additional revenue based on the generation of electricity through rooftop solar system, that also makes the return on investment (RoI) of the project far more attractive.

This model is much more difficult to implement compared to the Capital Subsidy model because it requires the government to monitor the performance of the plants, with a periodic review and accounting of the energy generated, and checking pilferage or any other malpractices.

53https://natgrp.files.wordpress.com/2015/12/cfa-notice-grid-connected-rooftop-19112015.pdf

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However, this model allows solar rooftop projects to receive easy finance as the government incentives and fiscal support are spread over many years. Also, this model can absorb more projects, since the government expenditure in the form of incentives shall be lower, as compared to the capital subsidy.

In case the GBI model is adopted in Varanasi, the government would be required to invest Rs. 24.27 crores for the next ten years. The annual expenditure in the form of GBI will range between Rs. 0.44 crores to Rs. 7.8 crores. Meanwhile, the government will also be able to save Rs. 149 crores during the same time-period.

7. 3 LOW-COST LONG -TERM FINANCING

A low cost financing mechanism which is also referred as the ‘soft loan programme’ can address both the high upfront cost as well as the financial viability of the rooftop solar system. In this programme, the consumers are offered a highly subsidized loan at the rate of 4-5% p.a with longer repayment schedule and low processing fee. Standardization of equipment is an essential element in such programmes, in order to maintain its effectiveness and check pilferages. Such programmes help the government to absorb more number of projects and spread it out to the low-income group of consumers.

Tot al Exp endi tu re Y-o -Y (Rs.mil l ion)

Tot al Exp endi tu re Y-o -Y (Rs.mil l ion)

Cummulative Savi ng C apaci t y Y-o -Y (Rs.mil l ion)

Cummulative Savi ng C apaci t y Y-o -Y (Rs.mil l ion)

I ns t a l led C apaci t y (M W )

I ns t a l led C apaci t y (M W )

Fig ure 25: Annual Expenditure under Proposed GBI Scheme for Varanasi

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0 02017 -18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Fig ure 24: Annual Expenditure under Proposed Capital Subsidy Scheme for Varanasi

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150 150

200 200

250 250

300 300

350 350

0 02017 -18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

2017 -18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

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Soft Loan Programmes can be financed through the climate finance route or through development finance using lending portfolios of Multi-lateral Development Banks (MDBs), hedge funds, private funds, the Green Climate fund, etc. NABARD has a similar kind of a low-cost long-term financing scheme which can be utilized for Varanasi.

Another approach through which easy long-term loan can be financed is through inclusion of solar rooftop as part

of “home loan” or “Home improvement loan”. A circular in this regard has been issued by Ministry of Finance, Government of India to all Public Sector Undertaking (PSU) banks dated 19 November 2014, asking them to encourage home loan or home improvement loan seekers to include solar rooftop cost in their loan proposal. Most of PSU banks had responded positively and informed the ministry about their action and plan for promoting solar rooftop through home loans/ home improvement loans54.

54 http://mnre.gov.in/file-manager/UserFiles/financing-of-Solar-Rooftop.pdf

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8 .1 NEW SOLAR P OLICY FOR UT TAR PRADESH

The solar energy policy of Uttar Pradesh, which was notified in 2014 expired in March 2017. We suggest a revision in the new solar energy policy focussing on the promotion of distributed energy generation like rooftop solar projects to address the rising energy crisis as well as the increasing air pollution. Furthermore, the city whose identity has been closely associated to the pious river of Ganga has been a victim of climate change due to the inflated consumption of coal for power generation.

Therefore, we suggest a new solar energy policy broad-basing incentive support for all consumer groups, with clear targets that aim to promote sustainable development, create new green jobs and improve air quality in cities.

8 . 2 STANDARDISATION

One of the key barriers to the promotion of solar energy is the sub-standard quality of equipment sold in the unorganized market, which is creating bad perception about solar energy amongst the masses. Uttar Pradesh New and Renewable Energy Agency (UPNEDA) in consultation with MNRE and other government agencies must establish a suitable standard for all the equipment required for solar rooftop projects on its website, on the website of PuVVNL and through the Varanasi district administration. UPNEDA should also develop a standard list of products along with registered companies involved in the business of solar energy in Uttar Pradesh, the information of which can be posted online for the public to refer to. Such an information system will not only benefit the consumers but will also provide a platform for the consumer to review and send feedback of the products sold. A product certification process of solar equipment marked by UPNEDA can further strengthen the standardisation process.

8 . 3 SMA RT SOLAR CIT Y PLAN

Varanasi is part of the smart city scheme launched by Government of India in the year 201555. Ensuring a round-the-clock power supply is one of the key features of a smart city plan, which can be delivered through smart solutions

like adopting a large-scale use of rooftop solar combined with adopting energy efficiency measures and smart meter application systems. Therefore, it is imperative for Varanasi to have a city-level plan for solar energy with emphasis on solar rooftop projects. The plan should educate the citizen about the potentiality and viability of solar rooftop systems. The document must also elaborate on the available support mechanisms including financial support for easy deployment of solar energy within different consumer groups of the city.

A city level target of 300 MW by the year 2025 should be fixed, which is 20% of total power demand in that year, given the current power demand growth. 20% is considered as the grid ceiling factor for the current status of the distribution grid in Varanasi.

The solar energy plan should be part of the Smart City Plan prepared by Varanasi Municipal Corporation (VMC) for the second phase of smart city scheme.

Further, the plan should also educate the citizen about the savings they can incur on their power bill through the use of solar rooftop systems. The plan should be widely advertised to create awareness among the citizens of Varanasi.

8 . 4 FINANCING FRAMEWORK

The Government of India and the State Government have prioritised solar energy through their policies. Despite their wide promotion, getting a loan from the bank for distributed solar energy projects such as solar rooftop systems is an uphill task for individual consumers due to lack of bankability of individual projects because of its scale. Although, the cost of solar energy has reduced by 70% since 2009, it still demands a high upfront cost for residential consumers and small enterprises.

To address these concerns and making credit access at the level of local banks convenient, we suggest creating a risk guarantee fund to support the banks lending distributed solar projects in the city. This may also help in reducing the interest rate in commercial private banks and create a wider consumer base that can receive the financial support. Furthermore, we also suggest the inclusion of solar energy in the soft loan category, equivalent to

55http://www.thehindu.com/news/national/centre-releases-list-of-98-cities-for-smart-city-project/

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agriculture equipment and that it should be given a priority-lending status.

A dedicated Non-Banking Financial Corporation (NBFC) can also be considered to enhance the credit line for distributed renewable energy projects including solar rooftop systems. This NBFC can be created at the national or state level for decentralized solar energy projects.

Finally, the government should instruct all public and private sector commercial banks to adopt easy credit access facilities for solar energy projects and instruct them to train their staff at local and branch levels on solar energy technology, its performance and benefits.

8 . 5 INCENTIVE STRUCTURE

Based on our analysis of different incentive models for rooftop solar projects, we suggest a long-term financing model with low interest rate and Generation Based Incentive (GBI) as the preferred incentive model for residential consumers in Varanasi with a phase-out timeline. The phasing out of such incentives will be the year when the grid parity reaches for consumer groups. For residential, it is estimated to be the year 2019.

This incentive model is best for consumers as well as government because it keeps the government expenditure to a minimum level and spread across a span of multiple years. Moreover, since the incentive will be given on an annual basis and on generation of power, it will motivate consumers to buy quality products and maintain the system well. This model is also beneficial for the consumers as it reduces the upfront cost and provides them with yearly incentive for over a long period of time which will help reduce their annual or monthly energy bill.

This report suggests that the government is not required to give out any additional capital subsidy over the 30% CFA that is already implied by the MNRE. The additional subsidy will not meet the intended target and will only accrue as a wasteful expenditure. However, if the government intends to provide a capital subsidy to its consumers, it should be provided in the form of collateral management for low cost long-term financing.

We also suggest an exemption of electricity duty from rooftop solar energy projects for a period of five years starting from the year 2017-18. This will assist in lowering down the cost of electricity under RESCO model and the Micro-utility model, and will encourage consumers to opt

for such an option. Delhi, Maharashtra and Telengana have waived off electricity duty from solar rooftop projects.

8 . 6 OPEN ACCESS

To improve the bankability of solar rooftop systems and reduce project risks for developers, the government should allow an open access under projects exceeding 100 KW. This will provide more off-take options for developers and help them receive more capital infusion. With the allowance of open access, the micro-utility model becomes more successful. However, this should be allowed with minimum distribution charges.

8 . 7 BUNDLING OF GOVERNMENTS PROJECTS ON PUBLIC AND SEMI -PUBLIC INSTITUTIONS

The only consumer groups in Varanasi where economic viability of solar energy projects exists today are government and public institutions. Bundling provides scale to developers who could save significant capital on engineering, installation and procurements. It is much easier for the governments to bundle projects together as it does not require lengthy negotiations and ownership hurdles.

Varanasi administration can aggregate the roof-space of all government, public and semi-public buildings under its jurisdiction. They can initiate a transparent tender process where one or a consortium of developers can install a solar rooftop system and sell power to the government and institutions based on either power purchase agreement (PPA) or the tariff fixed by Uttar Pradesh Energy Regulatory Commission (UPERC).

8 . 8 MANDATORY PROVISION OF SOLAR ROOF TOP FOR NEW COMMERCIAL AND INDUSTRIA L BUILDINGS

As mentioned before, Varanasi’s air quality is deteriorating due to the rising air pollution caused partly by diesel generators. As such, we suggest a mandatory provision of the solar rooftop system covering 20% of the power demand for all existing and new commercial and industrial establishments with a power load above 75 KW. This mandatory provision for industrial consumers should start from 2017, when the grid parity is attained

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for them. This mandatory provision for industrial and commercial consumers having load capacity of 75 KW and above, should start from 2017 itself.

8 .9. GROUP PURCHA SING INCENTIVES FOR HIGH -RISE BUILDINGS

Several high-rise buildings and cooperative societies are coming up in Varanasi in and around the areas of Sigra, Cantonment, etc. This report suggests adopting a neighbourhood approach for the implementation of rooftop solar deployment in the heritage city. A group purchasing model may be helpful in implementing this approach more effectively. The district administration and VMC with support from UPNEDA may organise neighbourhood events where housing societies can come together to purchase rooftop solar systems with loans and incentives. Large number of buyers at one place reduces the cost incurred by the banks for processing individual applications. This would, in turn, help the buyers get loans and incentives in lesser durations of time and would make it a hassle free process. For the district administration, this will help in deploying the solar rooftop system in the particular neighbourhood within a shorter timespan and will also make it easy to monitor.

8 .10 CRE ATION OF ROOF -BANK S

Similar to land bank for ground mounted solar projects, the state government can provide support for creating roof banks through policy instrument in the new solar policy. This will build a new entrepreneurship model where roof aggregators can link prospective roof-owners with project developers. These roof aggregators may act as facilitators with attractive business models to offer to roof owners and project developers.

The state government, or in this case, the VMC, can create roof banks by identifying prospective roof-owners, measuring their roof-space and publishing a list on its website. A set of guidelines should be prepared for protecting the interests of roof-owners to build their confidence, so that they don’t hesitate to volunteer to offer their roof space for solar energy projects.

8 .11 GUIDELINE FOR GRID CONNECTIVIT Y

The distribution grid managed by PuVVNL in Varanasi

is outdated and inefficient. Among all DISCOMs in UP, PuVVNL has the highest AT&C losses. Apart from inefficiency, grid connectivity for solar rooftop systems will be an even tougher task considering issues related to voltage fluctuation, unintentional islanding, possible reverse power flow and occasional tripping of the local transformers. Moreover, there will be constant wear and tear of equipment. Cumulatively, all of this will reduce the desired impact of a solar rooftop system on power supply in the city. However, these challenges can be reduced to a significant level with proper connectivity guidelines and safeguard equipments. Therefore, UPERC should issue a set of guidelines keeping in mind the best possible practices available the world over.

8 .12 METERING GUIDELINE Uttar Pradesh has guidelines for net metering, which were issued in 2015 with provisions for both net-metering as well as gross metering. However, we recommend two key changes in the existing draft of the guidelines.

The first suggestion is to increase the capacity addition limit to local distribution transformers from the existing 15% to 20%. A basic level of minimum investment is required to make this possible. Few steps that can be included in the process can be to introduce specific standards for PV inverters, guidelines for grid connectivity and forecasting and planning for better load.

In the current guideline, the rate for unadjusted electricity credit owed to the DISCOMs is only Rs. 0.50 / kWh, which is rather conservative and also in the favour of the DISCOMs. Therefore, our second suggestion is to increase the rate to the level of the lowest slab of prevailing tariff of the consumer groups.

8 .13 FORECA STING

To achieve the solar energy target envisaged for Varanasi, the city needs to adopt improved weather forecasting techniques. Forecasting for conventional power planning is already in practice on a daily basis.

However, forecasting technique for solar power needs to be far more accurate, since even a single parameter can affect power generation from the solar energy plants. Achieving a cent percent accurate prediction is impossible. But an efficient forecasting technique can help the DISCOMs to

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manage solar effectively and also help to optimally utilize the different power resources at its disposal. This will

also reduce the cost for DISCOMs on spot purchases of electricity, in case of deficit.

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9.1 METHOD OLO GY FOR CALCUL ATING THE SOLAR ROOF TOP P OTENTIAL FOR VA RA NA SI

The Varanasi Development area has been broadly divided into 2 zones: Zone A and Zone B. Zone A comprises of the area to the left of River Ganges (including areas like BHU, Varanasi Municipal area). Zone B comprises of the area along the right bank of river Ganges (including areas like Ramnagar and Mughal Sarai). The Master Plan 2031 has been prepared for both the zones while the erstwhile Master Plan 2011 only covered Zone A. This study only analyses the areas under Zone A, since the data for Zone B is not yet available. As per the Master Plan 2031, the total area under the 2011 plan is 96.24 km2, which is mainly the area under Nagar Nigam Varanasi. This area is divided under various categories. For the purpose of the study, we have considered the area under residential, commercial, industrial, government, public, semi-public and transportation categories, which sums up to 79.71 km2.

The best method for calculating the solar suitable rooftop area is through GIS mapping. But the GIS data required to accurately calculate the solar suitable rooftop area is not available for Varanasi and the data collection process is very expensive and time consuming. So, the elimination method is chosen to calculate the solar suitable rooftop area in which various factors depending on the categories are discounted from the available land use area. These factors are calculated using various techniques such as google map mapping, using the census data and by conducting field visits. Field visits were done in various localities of Varanasi including Sigra, Lanka, Pandeypur, Beniyabag, Mundvadhih and BHU areas.

9. 2 COMPUTATION OF SOLA R SUITABLE ROOF TOP ARE A FOR VARIOUS CATEGORIES 9.2.1 R ESIDENTIAL BUILDINGS

Residential buildings are the largest type and a total of 54.76 km2 out of the total land use area under Nagar Nigam. These type of buildings have a solar potential of 443 MW which accounts for the 67% of the solar potential for Varanasi. The total area of city can be divided into three parts: old city, central city and new peripheral city.

The old city part is more than 100 years old and is a maze of buildings and narrow streets that run along the length of bathing ghats. The areas adjacent to the central part of the city are constantly under great development pressure due to close proximity to the core areas. These areas have been categorized as “proximal areas” in developing the growth analysis. The peripheral areas encompassed by the municipal wards have a strikingly different development pattern than the rest of the city. These areas are becoming more popular among the citizens as they provide a more organized development pattern with infrastructure being in relatively better conditions.

To calculate the total built area, various factors are discounted from the total land area for residential buildings. In the old city the structures are too antiquated and dilapidated to sustain the weight of a solar PV. As such, an area of 2 km2 is discounted from the area in the old city56. 10% of the total residential area is discounted for the trees and pavements57 and another 10% is discounted for the slum area of the city58. A further 30% of the area is discounted to account for the low-income class of the

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Table 4:Category wise geographical solar rooftop potential of Varanasi

Land area type Total qualified raw roof area (km2)

Solar Suitable roof area (km2)

Suitability Factor Solar Potential (MW)

Residential 13.30 5.32 40% 443.32

Commercial 0.93 0.28 30% 23.34

Industrial 0.71 0.43 40% 35.84

Public & Semi-public 2.76 1.39 50% 115.83

Government 0.73 0.59 80% 56.66

Transport 0.0275 0.0137 50% 1.15

Total 18.43 8.01 676

56A total of 2 km2 area is calculated for old city along the banks of river Ganga using Google Earth.5710% discount factor for trees and pavements in the residential colonies is taken as the city is densely built than other cities and after discussing with the Nagar Nigam Varanasi officials. 58As per Slum Free City report of Varanasi by MoUD, GoI a total of 7% of the area of city is covered with slum. Hence a 10% of discount factor is taken into account considering worst case. | http://mhupa.gov.in/writereaddata/UP_Varanasi_sfcp.pdf

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city, which will not be able to afford the cost of a solar PV system59. Taking into account all of these factors the discounted area comes to19.9 km2. 90% of the city’s development is unplanned and only the remaining 10% is planned. For the planned part of city, a ground coverage of 85% is considered and for unplanned part, a ground coverage of 70% is considered60. Hence the total built area comes around 16.62 km2. 80% of the built area61 is considered as raw rooftop area, which is 13.30 km2. To calculate the acceptable solar rooftop area, 40% of the area is considered suitable62.

Hence the total available solar rooftop area for residential buildings is 5.31 km2, which is suitable for installing approximately 443 MW63 of solar PV rooftop systems.

9.2.2 COMMERCIAL BUIL DINGS

Commercial buildings cover an area of 2.33 km2 out of the total area under Nagar Nigam and have a solar potential of 23.33 MW, which is 4% of the total solar potential of Varanasi city. Commercial buildings in Varanasi are mainly hotels, shopping malls and markets.

To calculate the suitable solar rooftop area, a certain amount of the total land area is deducted by considering various factors. A discount factor of 50% is used to exclude small shops64 as installing a solar PV system would not be economically viable for them. Then 20% is discounted for old shops65 which will not be able to withstand the weight of the PV system.This gives the total built area of 0.93 km2.

To calculate the suitable solar rooftop area 30% of the built area is considered66 which gives us the total suitable solar rooftop area of 0.28 km2. This area is suitable to install approximate 23 MW of solar rooftop systems.

9.2.3 INDUSTRIAL BUIL DINGS

The total plotted area under Nagar Nigam Varanasi

is 2.81 km2 which has a solar potential of 36 MW, which is 5% of the total solar potential of the city. The main industrial areas are Chanderpur industrial area, Ramnagar Industrial area and Agro Park.

To calculate the suitable solar rooftop area, a certain amount of the total land area is deducted by considering various factors. A discount factor67 of 50% is used to exclude covered areas and a further 20% of the area is excluded68 for small industries which leaves a remaining area of 1.128 km2. Another 10% of the area is discounted for old buildings and a further 30% of area is discounted for roof material69. After takingall the discounted areas into consideration, the built area comes to 0.71 km2.

A further 40% is discounted from the built area to calculate the suitable solar rooftop area, which comes to 0.43 km2. Approximately 36 MW of solar PV rooftop systems can be installed on this available area.

9.2.4 PUBLIC & SEMI - PUBLIC BUILDINGS

The total area under public & semi-public buildings is 7.19 km2. The total solar PV potential for this category is 139 MW which is 17% of the total solar rooftop potential for the city. Public & semi-public buildings include hospitals, educational institutes, universities, colleges, social & cultural complexes, stadiums, police stations, fire stations, religious buildings, burial grounds and crematoriums. Such buildings are commonly large and well-built that provide a fair amount of unused rooftop space. Generally most of these buildings are under government administration which is an added advantage as the government can ensure the installation of solar PV rooftop systems.

To calculate the suitable solar rooftop space, 20% of the area is discounted for religious places70 and 40% is discounted for open spaces and trees71. 70% is taken as the ground coverage72 for calculating the built area. This gives the total built area of 2.76 km2. 50% of the area is

59Considering the number of dwelling rooms data for households of censes 2011, households having less than 3 dwelling rooms is considered as low income class group. An approximate 30% of discount factor is calculated considering area required for a room as 10 m2.60 As ground coverage for complete unplanned and planned area requires time and a detailed ground survey so ground coverage of 85% and 70% is taken respectively for unplanned and planned area after discussions with architectural experts.61 Discounted for balconies and open spaces etc62 Factor which gives us a solar suitable area after considering the current rooftop use, water tank shadow and various irregularities in structures. S.F. of 40% is taken after various site visits and mapping of roof areas for sample areas using Google Earth63Assuming area required to install 1 kW of solar rooftop PV system as 12 m2 as per Solar Energy Corporation of India (SECI) standards64Shops having connected load less than 10 kW are considered as small shops65Commercial area along the banks of river Ganga is very old are structure is not suitable for installing PV systems. To discount is area a factor of 20% is used66 Suitability factor of 30% is used as most of the rooftops are occupied by air conditioning units, space for lifts, water tanks and irregular shapes etc67 Ground coverage rate as per UP State Development Corporation Ltd68 Industries having connected load less than 10 kW 69Industries having temporary roof70 Varanasi city having more than 4000 temples and 500 mosques. Hence this area is discounted from the total area as these structures don’t have much built up area and a solar plant may not be wanted at such places71Discount factor of 40% for trees and open spaces as these places are built as per the bylaws. Sample area of BHU analysed on Google Earth72Ground Coverage rate taken as 70% by discussion with architectural experts

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considered to calculate the suitable solar rooftop area. A total of 139 MW of solar rooftop systems can be installed on this available rooftop space.

9.2.5 GOVERNME NT BUIL DINGS

This category includes buildings of government courts, government offices and areas allocated for government use. The total area of government buildings is 2.33 km2 and has a solar PV potential of 49 MW, which is 7% of the total solar PV potential of the city.

To calculate the suitable solar rooftop area 20% of the area is discounted for plot development, 50% of area is used for ground coverage73 and 10% is discounted to exclude old structures, which will not be able to bear the weight of the solar PV system. This in result gives us the total built area of 0.83 km2. 80% of the area is considered74 to calculate the suitable solar rooftop area.which amounts to 0.68 km2. This area is

suitable for installing approximately 57 MW of solar PV rooftop systems.

9.2.6 TR ANSP ORT BUILDINGS

The transport category in Varanasi mainly includes railways stations, bus stops and the airport. The area under this category is considerably less. Hence rather than using land use area we used Google Earth for mapping the built rooftop area of these buildings. The mapping was done for Varanasi Junction Railway Station, Varanasi City Railway Station, Kashi Railway Station, Mundvadih Railway Station, Varanasi Bus Station, Kashi Bus Depot and Varanasi Airport. The total area mapped under these stations is around 27500 m2. 50% of this area is considered to calculate the suitable solar rooftop area which amounts to13750 m2. The total solar rooftop capacity that can be installed under this category comes to1.15 MW.

73As per architectural by laws74Sample areas of Nagar Nigam building and Vikas Bhavan analysed by site visits

9. 3 E XISTING TARIFF RATES OF UPP CL FOR 2016-17

Table 5 : Grid tariff rates of UPPCL from FY10 to FY17

Year FY10 FY11-FY13 FY14 FY 15 FY 16 FY17

PETITION NO. :624, 625, 626, 627, 628 OF 200931 March 2010

PETITION NO.: 738 / 2011& 792 / 201219 October 2012

Case No.02, 03, 04, 05, 06of 201331 March 2013

New Slab PETITION No.: 888 & 919 OF 2013 1st October, 2014

New Slab Tariff Order 2015-16

Tariff Order 2016-17

Domestic Urban

0-200 `3.45/kWh `3.45/kWh `4.0/kWh 0-150 `4/kWh 0-150 `4.40/kWh `4.40/kWh

201-500 `3.8/kWh `3.8/kWh `4.5/kWh 151-300 `4.5/kWh 151-300 `4.95/kWh `4.95/kWh

>500 `3.8/kWh `3.8/kWh `5.0/kWh 301-500 `5/kWh 301-500 `5.6/kWh `5.6/kWh

>500 `5.5/kWh >500 `6.2/kWh `6.2/kWh

Non Domestic 0-300 `4.95/kWh `5.75/kWh `6.0/kWh 0-150 `6/kWh 0-300 `6.7/kWh `6.7/kWh

>300 `4.95/kWh `6.0/kWh `6.5/kWh 151-300 `6.5/kWh 301-1000 `7.1/kWh `7.75/kWh

301-1000 `6.8/kWh >1000 `7.25/kWh `7.95/kWh

>1000 `7.1/kWh

Industrial Small & Medium

All Units `4.95/kWh `5.85/kWh `6.0/kWh 0-1000 `6.2/kWh 0-1000 `6.6/kWh `7.0/kWh

>1000 `6.8/kWh 1001-2000

`7.1/kWh `7.35/kWh

>2000 `7.1/kWh `7.6/kWh

Public Institution

All Units `4.6/kWh `6.2/kWh `6.5/kWh 0-1000 `6.5/kWh 0-1000 `6.75/kWh `7.0/kWh

>1000 `6.8/kWh 1001-2000

`7.0/kWh `7.2/kWh

>2000 `7.0/kWh `7.4/kWh

Private Institution

All Units `4.95/kWh `6.75/kWh `6.75/kWh 0-1000 `6.8/kWh 0-1000 `7.1/kWh `7.75/kWh

>1000 `7.1/kWh >1000 `7.3/kWh `7.95/kWh

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9. 4 P OWER QUALIT Y ISSUES

Power quality describes the quality of power exchanged at the point of connection and depends on the quality of voltage and current. Awareness of power quality is highly increased in a sensitive industry, where standardisation and performance is an important aspect. The intervention of renewable energy to the grid affects the electric grid power supply quality. Therefore it is necessary to maintain the power quality norm at the interface of the grid and prevent disruptions such as voltage fluctuation, switching operations, voltage dips, and reactive power & harmonics. These disruptive effects can be minimized by adopting suitable control techniques.

9.4.1 CONCERNS WITH RO OF TOP P V P OWER QUALIT Y

DISCOMs are apprehensive about the quality of power being injected into their distribution grids. This is mainly to do with flicker, harmonics and DC injection.• Safety: Utilities are rightly concerned about the safety

of their personnel, especially while working with the possibility of the formation of an unintentional island from the operation of the distributed solar PV systems.

• Low voltage distribution grid: They are also concerned about the impact on the LV distribution grid (voltage levels, power factor, higher wear and tear of equipment, etc.) from high penetration of a large number of distributed solar generators.

• Transaction Costs: Another logistical worry for utilities is the significantly higher transaction cost of metering, inspection and certifications.

9.4.1.a SIGNIFICANT CAUS ES OF CONCER N

1) Technical: Grid-integration challenge with likelihood of:

• Reversal of power flows across the LT network. • Breach of voltage regulations with tail-end generation

feed.• Erratic behavior of LV protection systems.

2) Commercial: Utility is likely to have certain valid long-term concerns of:

• Loss of consumers /reduction in revenue in net-metering / captive operation.

• Regulators don’t often factor in / compensate for the cost of grid support provided to distributed generators.

9.4.1.b NEED TO FOCUS ON P OWER QUALIT Y CONC ER N

New microprocessor based control and power electronic devices are more sensitive to power quality issues than used in past.• To increase the overall efficiency in the system, use

of adjustable speed motors, power factor correction results in the increase of harmonics levels in the power system.

• Deregulation of utilities, distributed generations have increased the power quality problem.

• Awareness of end user for interruption, switching transients.

• Globalization of industry around the world.

9.4.2 MOST COMMON P OWER QUALIT Y PROBLEMS AND P OSSIBLE MITIGATION

9.4.2.a Most Common Power Quality Problems

• Voltage sag (or dip): A decrease of the normal voltage level between10 and 90% of nominal RMS voltage at the power frequency, for durations of 0.5 cycles to 1 minute.

• Very short interruptions: Total interruption of electrical supply for durations of few milliseconds to one or two seconds.

• Long interruptions: Total interruption of electrical supply for durations greater than1 to 2 seconds.

• Voltage spike: Very fast variation of the voltage value for durations of several microseconds to few milliseconds. These variations may reach thousands of volts, even in low voltage.

• Voltage swells: Momentary increase of the voltage, at the power frequency, outside the normal tolerances, with durations of more than one cycle and typically less than a few seconds.

• Harmonic distortion: Voltage or current waveforms assume non-sinusoidal shape. The waveform corresponds to the sum of different sine-waves with different magnitude and phase, having frequencies that are multiples of power-system frequencies.

• Voltage fluctuation: Oscillation of voltage values, amplitude modulated by a signal with frequency of 0 to 30 Hz.

• Noise: Superimposing of high frequency signals on the waveform of the power-system frequency.

• Voltage Unbalance: A voltage variation in a three-phase system in which the three voltage magnitudes

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or the phase- angle differences between them are not equal.

9.4.2.b Possible Mitigation Techniques

• Reactive Power Compensation Techniques• Static Synchronous series compensator (SSSC)• Synchronous Condenser• Active Filters• Static Synchronous compensator (STATCOM)• Unified Power flow convertor (UPFC)• Dynamic Voltage Restore (DVR)

9.4.2.c Factors Influencing How These Issues Are Addressed 1. Role of the government, regulators and

electricity utilities • Training Programs • Developing and establishing standards • Strict enforcement

2. Institutional and regulatory barriers • Existing standards have relatively low penetration • Standardized grid connection agreements

are required3. Constant Voltage Transformers4. Superconducting magnetic storage systems5. Existing electricity infrastructure6. Local expertise in renewable and associated

technologies

9.4.2.d Need For Clarity Regarding Rooftop Connectivity

• CEA (Technical Standards for connectivity of the Distributed generation resources) Regulations needs to addressthe question: What should be the appropriate voltage level for connectivity?

• Norms for capacity (kWp) restrictions for connectivity at each voltage level.

• Connectivity at LT level, even though consumer connection at HT/EHT.

Solar panels on a rooftop in Varanasi

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Abhishek Pratap Director - Programmes

abhishek@ceedindia.org | Ph : +91 9931446964

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New Delhi - 110029Ph. - 011 4103 2200

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