Government Policies on Solar in India

New Solar Power policy

The Central Government is gearing up to launch a new solar power policy, Solar Mission, incorporating a slew of concessions and incentives for those involved in the manufacture of solar power generation equipment. Union Minister for New and Renewable Energy Farooq Abdullah said here on 17th Sep 2009 that the new policy would be announced on November 14. It will be based on National Solar Mission as drafted on July 18th,2009. The mission aims for solar grid parity by 2020 thereby achieving a generation capacity of 20,000MW and a capacity of 100,000MW by 2030.

National Solar Mission

AIM

National Solar Mission in Indias National action plan on climate change has the objective of making solar generated power a major source of meeting Indias power needs in the coming decades.

20,000MW of installed solar generation capacity by 2020. Solar power cost reduction to achieve grid parity by 2020

100,00MW by 2030 or 10-12% of total power generation capacity estimated for that year.

4-5GW of installed solar manufacturing capability by 2017

As per the aim of the mission an important aspect of its implementation methods which could prove benefitial in our current project are:

Pilot projects to validate business models for large scale rural electrification projects.

Stand alone power plants with micro grid for remote villages to provide electricity for residential, community and commercial purposes.

Small grid connected rural power plants upto 3MW for capacity addition to existing rural grids. Such plants will typically be connected to 11 KV grid.

Policies to be implemented in view of the national solar mission:

The policies which will prove beneficial to Mayur in its current rural electrification project are listed out as below:

1) Incentives for solar electricity generation

GBI to offset burden of utilities due to higher tariff for solar power fixed by regulators. (Rs 10/kWhbe provided for 20 years for projects for the first 3 years.)

Fiscal incentives- tax holiday, customs duty, excise duty exemption.

Interest rate subsidy and favorable loan repayment for off grid applications.

2) No capital subsidy or accelerated depreciation for power generation programmes except for solar heating and rural electrificarion.

In case Roof top PV systems are used in the project these various incentives will be provided by the government:

Central government will offer loans at the rate:

2% interest for 5 years for solar thermal water heaters for domestic use

2% interest for 5 years for off grid solar PV(5-100 kW installed with energy efficient light) ie for SLS to encourage its use particularly in rural areas.

Generation Based Incentive For Grid Interactive Solar Thermal Power Generation Projects

Eligible organizations:

All existing registered companies, central and state power generation companies and public/private sector solar thermal

power project developers who have set up or propose to set up a registered company in India will be eligible for consideration of generation based incentive. Individuals, NGOs, financial institutions, societies and other unorganized investors are not eligible to participate directly.

Grid interactive solar thermal Power Generation plants of a minimum installed capacity of one MW per plant at a single location will be eligible for generation based incentive. However, one mega-watt capacity may be set-up through modular units to make one megawatt at a single location.

The grid interactive solar thermal power generation projects will be undertaken on Build Own and Operate basis.

In case any project developer is desirous of availing the accelerated depreciation benefit for the project under section 32 of the Income Tax Act 1961, they would not be eligible for generation-based incentive.

There is a set procedure to be followed to obtain GBI for the solar thermal power plant from the MNRE.

The Generation Based Incentives include:

States (in this case Maharashtra) having a fixed tariff set up by the State Electricity Regulation Commission (MERC) for solar power during the period for which the Ministry is providing incentive, the utilities will offer a minimum of that tariff to the solar thermal grid interactive power projects in their respective states.

The Ministry may provide, through IREDA, a generation-based incentive of a maximum of Rs. 10 per kWh to the eligible projects which are commissioned by 31st December, 2009, after taking in account the power purchase rate (per kWh) provided by the State Electricity Regulatory Commission or utility for that project.

The maximum amount of generation based incentive applicable for a project will be determined after deducting the power purchase rate for which PPA has been signed by the utility with a project developer, from a notional amount of Rs. 13 per kWh. In all cases the maximum amount of generation-based incentive shall not exceed Rs. 10 per kWh.

Any project that is commissioned after 31st December, 2009 would be eligible for a maximum incentive with a 5% reduction and ceiling of Rs. 9.50 per kWh.

The generation-based incentive will continue to decrease, as and when the utility sign a PPA for power purchase at a higher rate. The proposed annualescalations agreed with the utility, as in force, should be reflected in the PPA.4.6 The generation based incentive approved for a grid interactive solar thermal power generation project may be available for a maximum period of

ten years from the date of approval and regular power generation from that project, provided the utility continues to purchase power from that grid interactive solar thermal power plant.

The Ministry may, at any given time, even before 31st March, 2010, announce a new generation based incentive and guidelines, which will be applicable to all such proposals / projects that have not been approved by that time.

The incentive will be released by IREDA to the eligible solar thermal power project developer on quarterly basis.

In case of delay for setting up the power plant A project developer will be informed about the time frame allowed for setting up the power plant. Generally a project developer will be allowed to commission a project as per the time schedule given by the project developer in the DPR, unless communicated otherwise.  The penalty will be imposed only after that time limit has passed. Since the generation based incentive under this demonstration programme is available till 31st March 2010, therefore, it is necessary to complete the commissioning work by 31st December 2009 so that in the remaining time the other formalities for entering into agreement with IREDA, inspection of the plant, rectification of deficiencies etc can be taken care of. After 31st March, 2010 the Ministry may  not be in a position to grant incentive for any project as per the present set of guidelines, which are not been approved by that time.  In case, the Ministry announces new guidelines after 31st March, 2010, any incomplete project may apply afresh under the new guidelines and in that case the incomplete project may be eligible for the new incentive applicable at that time. Therefore, the early completion of projects would be desirable to avail the incentive under the demonstration programme.

INCENTIVES FOR SOLAR PHOTOVOLTAIC

Silicon in all forms and undiffused silicon wafers have nil duty rate and excise rate.

Solar cells whether or not assembled in modules or panels are free

Solar lantern or lamp has 10.0% duty rate Equipment gadgets based on solar energy have 7.5% duty rate Specified raw materials for manufacture of solar cells & modules

have nil duty rate. Specified Non-Conventional Energy devices/systems have nil

excise rate Accelerated 80% depreciation on specified renewable energy

based devices/projects

Various government policies that can be benefitial for implementation of Mayurs REenergy project are:

SPV programme 2009-10 Solar lanterns programme 2009-10

SPV Programme 2009-10Central Financial Assistance (CFA) in form of capital subsidy will be available from the Ministry for installation of the SPV systems as follows:

SPV Home-lighting systems2500 (18Wp)4800 (37-74 Wp)

SPV Street Lighting systems9600 (74 Wp)

Stand-alone SPV Power plants- more than 1 kWp (withcapacity less than 1 kWp oncase to case basis.)Rs125/Wp

- more than 10 kWp withdistribution lineRs 150/Wp

Service Charges to SNAs/ Implementing AgencySPV Home-lighting systems Rs.200 per systemSPV Street lighting systems (For Urban areas only) 2% of CFA

Support to Implementing Agencies for Promotional Activities:The Ministry will provide Central Financial Assistance to the Implementing Agencies forthe following promotional activities:

Seminars/ workshops/ symposia/ training: Support upto a maximum of Rs. 2

lakhs per event will be provided to State Nodal Agencies/ Municipal Corporations

Technical institutions for organizing seminars/ workshops/ symposia/ training to create awareness and training etc. on installation of the systems in urban areas.

Publicity & Awareness: Financial support upto a maximum of Rs. 5 lakhs willbe provided for information and publicity

Implementing agencies should enter into a Comprehensive Maintenance Contract (CMC) for the SPV systems ordered, atleast for a period of three years after the expiry of the warranty period. The scope of the CMC should cover supply of spares/ parts and services during its tenure. The CMC should be a separate transaction and not necessarily part of the order. The cost of the CMC should not be included in the cost of the systems for the purpose of computing and claiming subsidy.

Interest subsidy for SPV systems by IREDARate of interest7% (commercial borrowers, who can claim depreciation benefits)5% (individuals and other organizations which undertake not to claim depreciation benefits)Loan period is 5 yearsAmount of loan is Upto 80% of the cost of the projectNo upper limits for a loanService Charge is 1% of the loan disbursed

Solar Lantern Programme during 2007-08 The Ministry will provide a subsidy of Rs.2,400/- per solar lantern

to the eligible beneficiaries in the un-electrified villages, hamlets of the (i) Special Category States and the (ii) UT islands (Thus this will not be applicable to Maharashtra)

Ministry will also provide Rs.100 per lantern as service charges to the state nodal agencies/Departments and the Akshaya Urja shops. MNES will also provide Rs. 100 per lantern to the state nodal agencies/Departments towards inspection charges of solar lanterns sold by the Akshaya Urja shops.

Subsidy will be provided only on eligible models of solar lanterns, procured from the pre-qualified manufacturers, after competitive bidding.

With a view to encourage girl child to continue their studies, it is proposed toprovide a solar lantern free of cost to a girl child belonging to a BPL family residing in the un electrified villages and hamlets of the special category states and UT islands.

Solar Thermal Energy Demonstration Programme

The cookers will either be sold/ distributed by the concerned SNA through their own network or could be directly sold by the manufacturers as per the modalities decided by the SNAs. Only those manufacturers would be eligible for supply of Dish Solar Cookers under this programme whose product confirms to MNRE specifications and has been tested at SEC/RTCs.The pattern of financial support available from MNRE for concentratingtype solar cookers is as follows:

Promotion of Sale of Box Type Solar Cookers

The box type solar cookers including the cardboard designs will be soldthrough outlets of SNAs as well as Akshay Urja Shops and private establishments/ NGOs/ Cooker Manufacturers/ Women Welfare Organizations/ Self Help Groups/ Institutions/ Petrol Pumps / LPG agencies etc. The outlets other than those ofSNAs will be called as associated promoters of SNAs. The incentive to the promoters will be disbursed after verification of the sale made and the performance seen by the SNAs. Support may be provided to reputed NGOs, Universities, Institutions, Regional Test Centres, etc. up to a maximum of Rs.1.50 lakhs, towards organization of promotional activities like publicity, cooking demonstrations/competitions, seminars/ workshops, evaluation studies, development of improved models, etc. on solar cookers based on specific proposal received from them in the prescribed format

Solar Dish Concentrator (ARUN-160) for Industrial Process HeatSystems

Large area solar dish concentrator (ARUN-160) technology has been developedand tested at a dairy for industrial process heat applications under a MNRE supported R&D project to IIT Bombay and M/s Clique Development Private Ltd. (CDPL), Mumbai. The technology has large potential in the industrial sector to meet process heat requirements.

Irrespective of the total cost of the projects, a fixed financial support of Rs.12.0 lakhs will be provided for each ARUN-160 dish involved in a project. The user organization will meet the balance cost of the solar system, and the cost of integration of solar system with the existing system, cost of AMC, etc.

The projects sanctioned to private sector organizations shall not be entitled to grant / support from any other government organization.

Village energy Security Programme The objective of the programme is to provide energy security in villages

by meeting total energy needs for cooking, electricity and motive power through various forms of biomass material based on available biomass conversion technologies and other renewable energy technologies, where necessary.

Village identification: The village / hamlet identified could be a tribal or forest-fringe village / hamlet. The selected village / hamlet should have adequate availability of fallow, common or uncultivated non-grazing land for raising plantations. A cohesive and progressive social structure is also an important requirement. The village / hamlet should have minimum of about 50 and maximum of 400 households and should be identified in consultation with forest, tribal and rural development departments /agencies. The test projects would be undertaken in unelectrified villages and hamlets that are not likely to be electrified through conventional means.

MNRE provides CFA of Rs. 20000/- per household for villages with 50-400 households. This programme is run by implementing agency such as department forest, department of rural development, reputed and recognized NGOs, cooperatives and SNAs etc. MNRE will provide 90% of project cost with the maintenance cost of project, a balance cost will be ensured by implementing agency.

Rural Village electrification Programme 2009-10 The objective of the Programme is electrification through

renewable energy sources of those unelectrified remote census villages and remote unelectrified hamlets of electrified census

villages where grid connectivity is either not feasible or not cost effective.

In accordance with the approved definition of village electrification, remote villages/hamlets will be deemed to be electrified if a minimum of 10% of the households are provided with electricity and electricity is also made available for community facilities and for dalit bastis (habitations) of the village, if any.

Central Financial Assistance of upto 90% of the costs of the Renewable electricity generation systems (including the cost of Annual Maintenance Contract (AMC), if any, for 5 years) will be provided for approved projects for electrification of remote unelectrified census villages and remote unelectrified hamlets. The balance cost of projects can be financed through contribution from State Plans, beneficiaries, or other sources. However, it will be necessary that at least half of the balance cost is met from state government’s funding.

Tariff decided as per MERCApplicable Tariff for solar power projects within Maharashtra:a) The tariff for solar power projects eligible under GBI scheme is determined as Rs 3.00 per kWh, so that maximum possible incentive (i.e., Rs 12.00 per kWh in case of solar PV and Rs 10.00 per kWh in case of solar thermal) is available to the project developers, while at the same time, distribution licensees and in turn, consumers are required to bear minimum cost of Rs 3.00 per kWh for promoting solar energy while gaining operationalexperience from such projects.b) While the current GBI scheme is applicable only for the first 10 MW capacity addition within the State, in future, whenever GBI scheme is extended to cover additional capacity, such project capacity shall also be covered under the same mechanism.Accordingly, applicable tariff for solar power projects eligible under GBI scheme as per MNRE Guidelines shall be as under:

As generation based incentive (GBI) under MNRE scheme is available for a period of 10 years, the above tariff shall be applicable for a period of 10 years from the date of commissioning of the project or for such other period as may be applicable under MNRE scheme.