Policy & Regulatory Enablers for off-grid solar PV growth in India-Madhavan Nampoothiri

Off-grid PV – Policy and Regulatory enablers

September 3-5, 2012, Bangalore India

About RESolve

• Advisory firm with strong capabilities in Strategic, Regulatory , Commercial and

Technical aspects of renewable energy projects

• Founded by professionals from India and Germany with strong global exposure

• Specific focus on Solar PV and Wind in India

• Offerings in

– Advisory on Concept-to-Commissioning of PV projects

– Policy and Regulatory advice

Off-grid PV 2

Overview

1. Introduction

2. Policy and regulatory environment

3. Challenges

4. Possible enablers

Off-grid PV 3

Why Off-grid?

• About 30% of India’s population(400 million) do not have access to electricity.

• Over 90% of this population live in villages.

• Electricity transmission losses >30% (one of the highest in the world)

Off-grid PV 4

356,393

27,878

90,684

163,641

Already electrified villages

De-Electrified villages

Un-Electrified villages

Un-Qualified villages (very lessor no population)

Type of off-grid customers

.

Off-grid PV 5

PV as an alternative to Rural Urban

Kerosene Lanterns, Home lighting,

cooking

Home Lighting

Diesel Diesel water pumps Diesel generators

Free/Subsidized

power

Water pumps

Overview

1. Introduction

2. Policy and regulatory environment

3. Challenges

4. Possible enablers

Off-grid PV 6

JNNSM Goals and Policy support

• Off-grid PV systems target – 2 GW by 2022

• Solar lighting – 20 Million households by 2022

• Policy support

Off-grid PV 7

Regulatory support : Off-grid RECs

• Two models likely

1. Regular model - Power producer sells RECS at the exchange in addition to selling power at

mutually agreed price

2. Franchisee model - Power producer to

i. become a franchisee of a Discom

ii. supply to the rural consumer as per the state electricity regulatory commission

determined rates

iii. The Discom pays the franchisee for the power generation and fulfills its RPO.

But, what about metering? More clarity needed..

Off-grid PV 8

Overview

1. Introduction

2. Policy and regulatory environment

3. Challenges

4. Possible enablers

Off-grid PV 9

Challenges – Big systems(>10 kW)

1. Technical

• Service centers and

technical assistance for

the installed products

• Installation issues like

structures

• Lack of local workforce

for assistance

• Operation and

maintenance cost

Off-grid PV 10

2. Financing

• High initial cost

• Financing

3. Others

• Subsidy disbursal

timescale

Challenges – Small systems(<10 kW)

1. Technical

• System specifications– Customization difficult

– Reduces choice and innovation possibilities

– Energy

• Benchmark cost– Framed for AC systems

– Not suited for DC systems

• Servicing and

maintenance cost

Off-grid PV 11

2. Financing

• Capital subsidies

• Margin requirements

on loans

3. Institutional

• In some cases, banks

like NABARD add

one more level of

bureaucracy

• Synergies across

ministries

The ideas are elaborated by SELCO in the document The National Solar Mission – A practitioner’s Perspective

Overview

1. Introduction

2. Policy and regulatory environment

3. Challenges

4. Possible enablers

Off-grid PV 12

Enablers– Big systems(>10 kW)

1. Technical

• National level

Certification similar to

PV Installer

Certification by North

American Board of

Certified Energy

Practitioners(NABCEP)

• Standardizing off-grid

systems to reduce

engineering cost

Off-grid PV 13

2. Financing

• Encourage retail

financing for off-grid

systems by banks

3. Others

• Reduce subsidy

disbursal timescale

Enablers – Small systems(<10 kW)

1. Technical

• Avoid specifying

components so as to

facilitate customized

solutions

• Benchmark costs to

be avoided (or)

• Benchmark costs to

include cost of off-

grid solar and

maintenance costs

Off-grid PV 14

2. Financing

• Decentralized

procedures and localized

financing to provide ease

of access to capital

• Reduction in margin

requirement on any loan

taken for off-grid

applications

• Eliminate complications

of loan procurement by

diverting ALL subsidies

towards soft loans

instead of capital

subsidies

3. Institutional

• Elimination of tiered

subsidy disbursement

procedures

• MNRE acts as single

window for subsidy

disbursement

• All subsidy claims by

regional bank branches

to be processed by

MNRE

• Transferring subsidy

disbursement duties to

NABARD at a later

stage

The ideas are elaborated by SELCO in the document The National Solar Mission – A practitioner’s Perspective

Support for Innovative business models

Pay-as-you-go -Example :Simpa Networks

• Metered solar energy system

• Installed in rural homes

Model

• Purchased for a small upfront cost

• Like ESCO model – recharged by SMS by local agent

• If meter runs out, it switches off and comes back once the user recharges the system

• After 3-5 years, once enough recharges are done the system gets unlocked and the user gets free

access to electricity.

Off-grid PV 15

PV Vouchers instead of Kerosene through

Aadhar(UID)

-

Off-grid PV 16

Government

MNRE

Channel

PartnersPDS

Part of

Kerosene

Subsidy

Off-grid

Fund

End User (Rural

Customers)

Re

cha

rge

Co

de

Solar

MeterCode

The biggest enabler – removal of subsidies!!

KerosenePDS kerosene price - Rs.14.83/Litre

Government Subsidy : Rs.0.82/Litre

OMC under recovery : Rs. 32.70/Litre

(Price in Delhi Effective Sept 1, 2012)

OMC Under-recovery

2010-11 : Rs. 19,484 Crores

2011-12 : Rs. 27, 352 Crores

Free/subsidized powerExamples

• Tamil Nadu(for farmers)

– Rs. 1950 crore (2012-13)

– 25.5% total power solar in TN goes to agriculture

• Andhra Pradesh

– Rs. 4200 Crores(2011-12)

– Rs. 5530 Crores(2012-13)

Off-grid PV 17

DieselOMC Under-recovery

2010-11 : Rs. 34,706 Crores

2011-12 : Rs. 81,192 Crores

Total Under-recovery on fossil fuels ~ Rs. 138,500 Crores(2011-12) – Equivalent to 13.8

GWp of solar Projects(@ Rs. 10 Crore/MWp) – Wishful thinking?

LPG

LPG Domestic cylinder - Rs.399/CylinderGovernment Subsidy : Rs.22.58/CylinderOMC under recovery : Rs. 346.79/Cylinder(Price in Delhi Effective Sept 1, 2012)

OMC Under-recovery2010-11 : Rs. 21,772 Crores2011-12 : Rs. 29,997 Crores

Thank you

Madhavan Nampoothiri

Founder and Director

[email protected]