India 2015 Solar Year in Review – Major developments and future outlook

The year is coming to an end and India’s solar energy industry has come a long way this year. From being a fringe sector, solar energy has become the centerpiece of not only India’s energy industry, but also the world’s energy industry. This is what we at greenworldivnestor had predicted way back in 2010, when we had started our blog saying that solar energy in India will revolutionize the world. This is being belatedly recognized by others as well. The Indian solar energy has seen a huge amount of traction with gigawatts of tenders being issued this year, by both state and central bodies. A number of policy changes have been made and new regulations are still in the offing. A new RE law and a rooftop solar policy law are in the works. We look back at the major changes that have taken place this year.

SOLAR PROJECTS UNDER NATIONAL SOLAR MISSION:

The Union Cabinet gave its approval for the implementation of he scheme for setting up of 15,000 MW of Grid-connected Solar PV Power projects under the National Solar Mission through NTPC/ NTPC Vidyut Vyapar Nigam Limited (NVVN) in three tranches namely, 3000 MW under Tranche-l under mechanism of Bundling with Unallocated Coal based Thermal Power and fixed levellised tariffs, 5,000 MW under Tranche-ll with some support from Government to be decided after getting some experience while implementing Tranche-l and balance 7,000 MW under Tranche-Ill without any financial support from the Government.

SOLAR PUMPS:

The government has implemented a scheme to install one lakh solar pumps for irrigation and drinking water through State Nodal Agencies and NABARD. MNRE provides 30% capital subsidy to farmers for installation of solar pumps for irrigation purpose through state nodal agencies. The state governments can give additional subsidy through own funds. The government presented 40% subsidy with mandatory loan to farmers for irrigation purpose through NABARD.

  OTHER SCHEMES LAUNCHED FOR ACHIEVING SOLAR ENERGY TARGETS:

Ø      Off-grid Rooftop:  It is proposed to set up 40 GW solar rooftop programmes where grid connectivity is already exist.  15% Government subsidy for non-commercial and non-industrial categories for using domestic solar panels would be provided.

Ø      Solar Parks: The Government  has approved on 10th December, 2014 a Scheme for setting up of 25 Solar Parks, each with the capacity of 500 MW and above and Ultra Mega Solar Power Projects to be developed in next 5 years in various States and will require Central Government financial support of Rs 4050 crore. These parks will be able to accommodate over 20,000 MW of solar power projects. As on date, 27 parks with capacity of about 18000 MW in 21 states have been sanctioned.

Ø      Setting up of over 300 MW of Grid-Connected Solar PV Power Projects by Defence establishments and Para Military Forces with viability gap funding. More than 150 MW projects have been sanctioned under the scheme.

Ø      Implementation of Scheme for setting up 1000 MW of Grid Connected Solar PV Power projects by CPSUs and GOI organization’s with Viability Gap Funding in three years period from 2015-16 to 2017-18. About 100 MW have been allocated to various CPSUs under the scheme.

Ø      Scheme for Development of Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops: MNRE launched a Scheme   for Development of Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops in the country dThe Solar PV Power Plants on Canal Banks and Canal Tops with 50 MW capacities under each category have been approved to 8 States (Gujarat, Andhra Pradesh, Karnataka, Kerala, Uttar Pradesh, Punjab, Uttarakhand and West Bengal).

Ø      New loan scheme to promote rooftop solar power projects announced by IREDA. The scheme will provide loans at interest rates between 9.9 and 10.75 percent to system aggregators and developers.

Ø      Surya Mitra Scheme launched for creating 50,000 trained personnel within a period of 5 years (2015-16 to 2019-20). The course content has been approved by the National Council of Vocational Training as per the National Skill, Qualification Framework. As on 30.9.2015, a total of 27 programmes involving Rs 17 crore have been sanctioned to SNAs by NISE.  In 2015-16, 70 programmes will be conducted against which 27 programmes have started.  As on 30.9.2015, about 360 Surya Mitras were trained under the schemer.

Ø      Inclusion of Renewable Energy Projects in Priority Sector Lending Norms of Commercial Banks: Reserve Bank of India vide its circular dated 23^rd April, 2015 on ‘Priority Sector Lending: Targets and Classification’ has issued revised guidelines for all scheduled commercial banks making significant inroads for renewable energy in the priority sector lending:

Ø    Inclusion of renewable energy in categories of priority sector, in addition to existing categories.

Ø    Bank loans up to a limit of Rs 15 crore to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual households, the loan limit will be Rs 10 lakh per borrower.

Ø    Investments in RE is on Automatic route. No RBI/FIPB approval required.

Ø    Automatic approval for up to 74% foreign equity participation in a JV. Liberalized foreign investment approval regime. 100% foreign investment as equity is permissible with the approval of Foreign Investment Promotion Board (FIPB). Various chambers of commerce and industry associations offer guidance on partners

Ø    PPAs have been standardized for projects under JNNSM.

Ø    Land procurement- Many states have provided deemed Non Agricultural status for land purchased for RE projects.

Ø    Clean Energy Fund: Coal Cess has been increased from Rs 100 to Rs 200/ton which will make available around Rs 12000 crore/year for supporting and incentivizing development of RE in the country.

Ø    Enforcement of Renewable Purchase Obligations has been strengthened by recent judgement of Supreme Court for captive power generators and Appellate Tribunal Judgement on fulfilment of RPO obligation by State regulators.

Ø    Net-metering schemes has been rolled out in majority of States which will help in meeting 40 GW rooftop grid connected solar projects.

Ø    Must Run Status for RE projects in most of the states

Ø    Fiscal incentives in the form of Accelerated Depreciation for wind and solar by Central Govt. and refund of stamp duty, refund on Value Added Tax (VAT) & Goods and Service tax (GST) by some State Govts.

POLICY AMENDMENTS UNDERWAY:

 Ø      Renewable Generation Obligation (Proposed): There is a policy proposal under consideration that all conventional power plants should have a minimum renewable generation obligation.

Ø      Amendment in Electricity Act, 2003 (proposed)

• Proposed inclusion of “specific mention of penal provisions for non-compliance of RPO including financial penalty and punishment”.
• Suggested amendment in the tariff policy to include a RPO trajectory reaching at minimum 15 % of the total electricity mix by March 2019 with solar RPO of Minimum 8% and support by states. It implies that there is a special category for solar RPO and other renewable energy sources have been clubbed in non-solar category.
• To allow generating / purchasing and bundling of renewable and allow pass through to such power plants where generation and transmission assets are fully depreciated.

Ø      Draft RE Act 2015: In addition to the existing provisions in the above act. there is a need for a Renewable energy act in India to facilitate increase in the use of renewable energy for all relevant applications including off-grid, heat and transport in an effective and coordinated manner,  which  is  well  integrated  with  the  energy  and  electricity  system,  and  to do  so  by developing a supportive ecosystem and laying down an institutional structure.