We are Investing in Solar rooftops at Rs. 7 and below per KWh as well as MW Scale Power Plants

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Determination of generic levellised tariffs for Solar PV Projects (Draft) under Regulation 17 of the Himachal Pradesh Electricity Regulatory Commission

The tariff so determined in respect the current financial year shall apply for the FY 2016-17 also in cases where PPA is signed by 31.03.2016 and the entire capacity covered by the PPA is commissioned on or before 31.03.2017. The Commission however observes that since there can be situations in which the PPA for a particular capacity is signed by 31.03.2016, but the capacity covered by the PPA may not be commissioned fully or partly on or before 31.03.2017, it may be appropriate to address the matter as a part of conditionalties attached with the tariff.

Himachal Pradesh Electricity Regulatory Commission (HPERC) (Draft) proposed tariff will be applicable for the projects signed on or before 31st March 2016 and the entire capacities are commissioned on or before 31 March 2017.

Comments and suggestions of the stakeholders on the above proposal/draft order are invited by 16th July, 2015, so that the comments and suggestions so received are also considered, while finanlizing the generic levellised Solar PV tariff and the associated terms and conditions.

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Joint Regulatory Commission for Goa and Union territories (JERC) has determined the solar tariff for ground-mounted and rooftop solar projects

Tariff is applicable for projects in the State of Goa and the Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep, and Puducherry.

Screenshot 2015-06-24 14.01.09

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Posted in Climate Change, DISCOM, Government, India, JERC, Ministry of Power, MNRE, Net Metering, PV, Renewables, Residential, Rooftop, Solar, Solar Policy | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Clarification on standard format of Power Purchase Agreements in respect of Solar Power Plants of 1-3 MW projects of land owners and Institutions – Karnataka 

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Posted in Crystalline, Grid Interactive Distributed Solar Energy Systems, India, Karnataka, KSERC, PV, Renewables, Solar, Solar Policy, Thin Film | Tagged , , ,

Implementation of scheme for setting up over 2,000 MW of Grid-Connected Solar PV Power Projects with Viability Gap Funding (VGF) under Batch-III of Phase II of the JNNSM. 

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for setting up of over 2,000 MW of Grid-Connected Solar PV Power Projects on Build, Own and Operate basis by Solar Power Developers (SPDs) with Viability Gap Funding (VGF) under Batch-III of Phase-II of the Jawaharlal Nehru National Solar Mission (JNNSM).

This would help in:

o Creation of additional 2000 MW capacity of Grid-connected solar PV power generation projects.

o Employment generation of about 12,000 people in rural and urban areas.

o Reduction of about 3.41 Million Tons of CO2 emissions into the environment every year.

 The total investments expected under this scheme is about Rs 12,000 crore. The estimated requirement of funds to provide VGF for 2,000 MW capacity solar projects is estimated to be Rs. 2100 crore [Rs 1 crore / MW for open category and Rs 1.31 crore / MW for Domestic Content Requirement (DCR) Category]. This includes handling charges to SECI @ 1 percent of the total grant disposed. 

 The tenders will be State-specific based on the demand from particular State. States/Union Territories/Discomes/State Utilities are the beneficiaries. This will also facilitate to create employment and infrastructure in the States. Installation of 2000 MW Solar PV plants will generate about 3,320 Million Units per year, which caters power to almost one Million Households.

The Viability Gap Funding (VGF) scheme will be implemented for setting up over 2000 MW capacity of grid connected solar power projects by solar power developers on Build, Own and Operate basis through open and transparent competitive bidding to provide solar power at a pre-defined tariff of Rs. 5.43 per kWh for the first year, with escalation of 5 paisa per kWh each year till the tariff reaches the level of Rs. 6.43 per kWh. This would take 21 years and the tariff, thereafter, would remain fixed at Rs. 6.43 per kWh. The levelized tariff would be Rs. 5.79 per kWh. The overall effort is to continuously reduce Government financial support for grid connected solar power as the prices of solar power comes down.  

The Scheme will be implemented by Solar Energy Corporation of India (SECI) as per Ministry of New and Renewable Energy (MNRE) Guidelines. Solar Energy Corporation of India (SECI) shall prepare necessary bidding documents for inviting the proposals for setting up of projects on a competitive bidding through e-bidding. SECI will enter into Power Purchase Agreement (PPA) with the selected developers and the Power Sale Agreement (PSA) with the buying entities.   

 Requisite funds for provision of the VGF support will be made available to MNRE from the National Clean Energy Fund (NCEF), operated by Ministry of Finance.

Out of 2000 MW, 250 MW will be developed with mandatory condition of solar PV cells and modules made in India. This will be called the DCR category and remaining 1,750 MW will be in open category. Some other important features are as follows:

a) Project Locations: Projects could be set up in the Solar Parks being developed under a separate MNRE Scheme and also at other locations, which could be selected by bidders on their own.

b) Commissioning period would be 13 months from the date of signing of PPAs.

c) The VGF is to be disbursed in six trenches; 50 percent after commissioning and balance 50 percent at the rate of 10 percent at the end of each year subsequently for the next 5 years,

d) Tenders will be State-specific based on the demand from particular a State.

e) Due to competitive bidding, there may be savings in the VGF amount of Rs 2100 crore. In that case, the total capacity will be increased from 2000 MW, so that, maximum capacity can be set up in the VGF of Rs 2100 crore after accounting for grant to be given for payment security mechanism.

f) Bidders will be free to avail fiscal incentives like Accelerated Depreciation (AD), concessional customs and excise duties, tax holidays, etc. available for such projects. However, no bidders will be allowed to claim both AD and VGF.


The Jawaharlal Nehru National Solar Mission (JNNSM) was launched in January 2010 by the Government of India with a target to setup 20,000 MW of grid connected solar power by 2022.

 In addition to Government of India, several States have taken initiatives and come out with solar policies to support setting up solar power projects. Amongst others Andhra Pradesh, Karnataka, Tamil Nadu, Telangana, Uttar Pradesh and Uttarakhand have come out with tenders for procurement of solar power recently.

Source: PIB

Posted in Batch III, Crystalline, Government, Grid Interactive Distributed Solar Energy Systems, India, JNNSM, Ministry of Finance, Ministry of Power, MNRE, News, NTPC, NVVN, Phase II, Power Generation, Prime Minister, PV, Renewables, Solar, Solar Parks, Solar Policy, Thin Film, VGF | Tagged , , , , , , , , ,

Sunrise sector steers ahead

It is the country’s biggest initiative to make the most of sunny days. Initiated as part of the National Action Plan on Climate Change, the Solar Mission has propelled the country to new heights as far as clean energy is concerned. It is projected that by 2017, India will be among the top three solar markets
A rooftop solar panel installed by villages (Image by Abbie Trayler-Smith / Panos Pictures / DFID)

It was in 2006 that S.P. Gon Chaudhuri, a well-known renewable energy consultant, wrote the concept note on the Solar Mission and made a presentation to the then Prime Minister of India, Manmohan Singh, for the Rural Electrification Programme. At that time, he recalls, “The situation in the country, in terms of power in rural areas, was very grim and almost 60% of the rural populace had no electricity. So, in the initial plan, the aim was to provide power to the rural people. However, international pressure to reduce emissions, by 2009, led to the need for alternative sources of energy such as solar.”

In the same year, a 2 MW plant was inaugurated in Asansol, West Bengal by then renewable energy minister Farooq Abdullah. It was the first large size grid-connected solar power plant in the country. “This initiative created the base of large size grid connected solar power plant in the country,” he reveals.

According to Gon Chaudhuri, the aim behind the National Solar Mission was generation of solar power to reduce the consumption of coal and produce 2,000 MW of power for rural electrification. Large scale dissemination of solar power was also one of the objectives. “When the JNNSM (The Jawaharlal Nehru National Solar Mission) began in 2010, 10 MW and 5 MW capacity power plants came up in Rajasthan and Gujarat. A shift to move away from small-sized power plants occurred when the new government came to power in 2014. It was decided that they will reduce the consumption of fossil fuels more by going for larger plants and a bigger target. That is how the National Climate Protection Programme was thought up and it was decided that 17, 5000 MW RE (Renewable Energy) power would be generated by 2022 and of this, 1 lakh MW will be generated from solar power.”

NAPCC & Solar Mission
According to the National Action Plan on Climate Change (NAPCC), the National Solar Mission was launched “to significantly increase the share of solar energy in the total energy mix.”
Another aspect of the Mission was to launch a major R&D programme, which could draw upon international cooperation as well, to enable the creation of more affordable, more convenient solar power systems and to promote innovations that enable the storage of solar power for sustained, long term use.

In 2010, it was decided that 20,000 MW of solar power would be generated by 2022 (the last year of the 13th Five-Year Plan).

Paving the way for clean energy

Those involved in the country’s solar sector, be it the industry experts or manufacturers, are upbeat about its development and consistent progress over the years.

Siddharth Malik, CEO, Megawatt Solutions, believes that irrespective of the actual targets set and practical achievements, the NAPCC has played a major role as a stimulator for Indian economy for adopting renewables and specifically solar. “Its role cannot be undermined in the wake of the fact that until a few years ago, solar was given a feed-in-tariff and today it is stand-alone competitive without substantial government support.”

Power being a state subject, there are issues which need to be dealt with and will be done in due course of time, but no one can undermine the snow-ball effect of the awareness campaign that has spread its roots to remotest parts of India, Malik adds.

Concurring, Raveesh Budania of Headway Solar, which provides consulting services for the Indian solar market, feels that NAPCC’s target of increasing the share of renewable energy is still the main driver for policymaking related to solar and imposition of renewable purchase obligation (RPO) on major distribution companies and similar entities. “Without these RPO targets, we wouldn’t have seen allocation of funds (from National Clean Energy Fund) to support economically unviable solar energy.”

The sunrise sector will also aid in graduating towards a cleaner economy. Malik says, “Solar thermal heating can play a major role in transition to a carbon-neutral economy, since it is more competitive than solar power and can address emissions pain point for commercial & industrial market segments.”

Ritesh Pothan, Director, Natural Group, a solar and RE focused consulting organization, believes that the success of the solar mission can be credited to a number of factors, including a drop in the prices of panels globally. “Moreover, engineering efficiency has increased, making solar a contender to replace almost all forms of energy.” Solar now competes on an equal footing with other conventional energy sources. The government is looking to deploy 15GW via India’s largest energy PSU (Public Sector Undertaking) along with other large mega scale developments.

However, he feels that the real solution lies around the storage of energy once India has exhausted the 41GW Hydro Battery which can mainline solar into the grid.

Gaining ground

In terms of implementation, Gon Chaudhuri believes that there has been a remarkable change from small to large power plants. For instance, the biggest one of 150 MW has come up in Madhya Pradesh. Also on the anvil is a 750 MW plant also at MP by Bharat Heavy Electricals Limited. “From 1 to 2 MW, owing to international pressure, we moved to 5 to 10 MW and then very large solar power plants. This has been the transition in the solar energy sector.”
Apart from the industry, households have a tremendous potential in rooftop solar. In cities such as Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, roof top solar is gaining ground and coming in a big way. “I believe that if you involve people, it will bring in a lot of change. This is something which has also been stated in the NAPCC.” Around 1 KWH of solar can help to save 0.7 kg of CO2.

Srinivas Krishnaswamy from Vasudha Foundation argues that rooftop solar installations need a bigger push in India where availability of land is limited and there is this fear of giant solar projects displacing people from arable lands and destroying biodiversity.
Owing to shortage of land in India, yet another emerging trend is that of a floating plant. A 1 MW plant needs around four acres of land. So, if we can develop solar floating technology, it can benefit the country immensely, Krishnaswamy adds. Gon Chaudhuri has set up India’s first floating solar power plant in a water body near Kolkata. Maharashtra is also racing to build India’s first solar farm on a dam wall.

Solar parks

Yet another initiative, announced by the Ministry of New and Renewable Energy, to set up ultra-mega solar power projects in 25 solar parks, has been welcomed by the industry. Budania feels the solar park model will accelerate capacity addition, because it will establish the infrastructure required for large photovoltaic cell installations – mainly, suitable land and grid connectivity. The project developers will have to bother less about the challenges related to acquiring and converting suitable land, and thereby, larger projects could be set up in less time. He goes on to add that it will not impact the cost of generation as much as it is popularly perceived – “we estimate approximately 3-7% decrease in the bid tariffs due to this factor.”

While Raj Prabhu, CEO and co-founder, Mercom Capital Group, a cleantech research and communications firm, agrees that ultra-mega projects in solar parks seem to provide a solution to the land and infrastructure issues faced by developers, he feels they are still under construction and the finer points, like the final cost implication for the developers and the grid stability with large MW solar power being connected, is yet to be observed. However, he’s sure it will help to achieve the 100 GW installation goal if project costs can come down due to economies of scale realized through such large projects.

Government’s role
According to Budania, “The government needs to focus more on establishing and smoothing a free market in this segment. Secondly, it should have a long-term plan for upstream capacity building in-house, and this might be the right time as the global prices are stabilizing. Thirdly, focusing on skill development could make India the global downstream leader.”

Completely doing away with subsidies would help the distributed generation market – residential and industrial rooftops, and policy makers are already taking steps in the right direction. Smoothing the transition of net-metering adoption in the market is another important aspect.
Stressing that execution is going to be the key, Prabhu reasons that the most impactful policy support which the government can provide to help the solar industry take off and bring in investments is to fix the financial health of power distribution companies and improve the credit rating of off takers and bring renewables under the priority lending sector category.

The road ahead

The MNRE has proposed a subsidy cut on rooftop solar power plants from 30 to 15%, reasoning that the lower price of components would offset the proposed subsidy reduction. Individual states have been asked to come out with their own favourable policy and regulatory framework to support rooftop solar. This proposal comes in the background of another goal set by the government to target 40 GW of grid-connected rooftop solar over the next five years.

However, Ritesh Pothan feels that “this has resulted in the rooftop segment being sidelined whereas mega scale PV projects which could create dissonance in the grid are being promoted by most states. Also, while the focus has been on grid scale plants, solar really shines in the distributed energy segment.”
Budania adds that as far as the off-grid segment is concerned, the market potential is huge, and remains untapped. Countless studies have been done on energy access through distributed generation, and many start-ups in this space have proven the outcome of these studies right. “Policymakers have tried hard to in the past, but results of the measures taken by the government have not been up to the mark. We hope that we learn from countries such as Bangladesh in this aspect.”

Ritesh feels that yet another energy medium of solar, water heating, which is capable of driving tremendous energy efficiency and reducing peak load, has also been relegated to the no subsidy zone. “There has to be a tremendous push from the government in the Solar PV Rooftop and Water Heating to make India an energy secure and healthy country,” he concludes.

Source: India Climate Dialogue

Posted in Articles, Batch I, Batch II, Biomass, Canal Top, Climate Change, Commercial, Crystalline, DISCOM, Energy Minister, Government, Grid Connected, Hydro, India, JNNSM, Maharashtra, Ministry of Power, MNRE, NTPC, Phase I, Phase II, Power Generation, PV, Renewable Energy Certificates, Renewable Purchase Obligation, Renewables, Rooftop, Rural Lighting, Solar, Solar Parks, Thin Film, Waste To Energy, Wind | Tagged , , , , , ,

Maharashtra govt clears new renewable energy policy

The Maharashtra state cabinet on Tuesday passed the New and Renewable Energy Policy 2015 and has set a target of generating 14,400 MW…

The Maharashtra state cabinet on Tuesday passed the New and Renewable Energy Policy 2015 and has set a target of generating 14,400 MW from new and renewable sources in five years. The state has set a target for 7,500 MW from solar energy, 5,000 MW from wind, around 1,000 MW from bagasse based cogeneration, 400 MW from mini hydel projects, 300 MW from agri waste and 200 MW power generated from industrial wastes.

With 1,000 MW target from cogeneration, the state expects to see around Rs 5,000 crore investment to flow into the power cogeneration business in five years. Around Rs 412 crore for this is expected to come from the Green Energy Fund.

The state is offering a 10 year electricity tax holiday for self generated power if 30% of the power is generated through cogeneration and 5% through other sources. This is expected to cost the state exchequer Rs 370 crore.

Source: FE

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Barriers to Solar Financing in India

By Vedant Rathi

The Indian solar industry has grown about a hundredfold in the past four years, from 36 MW in March, 2010 to 2,600 MW in March, 2014. The Modi government has set an ambitious target of reaching a 100 GW installed capacity by 2022. As a developing nation, India faces many financing and policy barriers to reach this target. This blog addresses potential solutions to solar financing in India. 
What is the problem?

Like any other nation, commercial banks (both in the public and private sector) constitute a major source for financing for infrastructure projects, including renewables in India. Compared to the US or Europe, banks in India have high interest rates. For example, State Bank of India (SBI) and other national banks provide debt at interest rates of about 11% to 13%. Compared to this, international development banks like KfW and US Export-Import Bank and multilateral banks like Asian Development Bank and the International Finance Corporation provide funding at rates as low as 4%. Additionally, project developers have expressed concerns over insufficient debt tenors in India. Higher costs and inferior terms of debt in India may raise the cost of renewable energy by 24-32% compared to similar projects financed in the US or Europe. High inflation, growth, intense competition (even outside of renewable energy) to get investments, and inherent risks of a developing nation are all factors that contribute to high interest rates in India.

What are the potential solutions?

This blog discusses a few potential solutions to obtain low-cost capital for solar projects. While this is not an exhaustive list, the author has focused on solutions that have been successfully implemented in other countries and thus have a proven track record.

1. Government Loan Guarantee Program – The Department of Energy (DOE) in the U.S. offers loan guarantee programs for early stage renewable projects without capital. Through this program the DOE ensures that if the renewable energy manufacturing or generation project defaults on its loans, the DOE will repay the outstanding balance. The Indian Ministry of Finance approved a program that would provide a guarantee of up to 20 percent of the debt financing of projects in the power sector, including projects in renewable energy. The guarantee allows projects to attain a higher credit rating, thus broadening the investor pool to include pension funds and insurance companies, and lowering interest rates.

2. National Development Banks/Funds – The National Clean Energy Fund (NCEF) was announced in FY 2011 to encourage renewable energy generation in India. The Indian Renewable Energy Development Agency (IREDA) in collaboration with the NCEF announced a refinancing scheme under which as much as 30% of the clean energy loans issued by commercial banks could be refinanced at 2%. The refinancing is subject to the condition that the interest rate from the lending institution does not exceed 5% per annum. This limits access to low-cost financing given that solar projects borrowing from national banks are generally paying an interest of 11%-13% per annum. As of June 2014, the NCEF has allocated just over 1% of the available funds to the Ministry of New and Renewable Energy (MNRE). For NCEF to be truly effective and widely accessible, limiting factors on interest rates need to be relaxed.

            Brazil has a similar growth and financing environment to India. The Brazil National Development Bank (BNDES) is a great example of an institution that has been successfully and consistently offering low-cost, long-term, financing solutions to renewable energy projects. In 2012, BNDES offered a 15-year interest rate of 2.5% which is less than a third of Brazil’s benchmark interest rate. BNDES has exclusive access to low-cost, risk-free funding from a workers’ welfare fund (FAT). According to a 2012 study by Deutsche Bank Climate Change Advisors, the availability of BNDES loans cut renewable energy costs in Brazil by as much as one fifth.   

3. Green Bonds – Green Bonds were first issued by the European Investment Bank in June 2007. Green Bonds are similar to any other asset-backed bond expect that they are used to finance green projects. A green project may include any project related to renewable energy, energy efficiency, or sustainable land use. Green Bonds can be issued by national/state governments, local municipalities, banks, and international financial institutions. The National or State governments may offer low-cost, long-tenured funds by using Green Bonds. The Climate Bonds Initiative Study indicates that in 2014, $36.6 billion worth of Green Bonds were issued. A recent study indicates that clean energy costs may go down by one-fourth if India would issue its Green Bonds.

4. Infrastructure Debt Funds (IDFs) – As tradable instruments that are attractive to domestic and international long-term investors, IDFs can act as vehicles to refinance existing debt for infrastructure companies at more favorable terms. In 2011, the Reserve Bank of India (RBI) issued guidelines for the operation of new IDFs, structured either as mutual funds or companies, but they have not yet been used for renewable energy projects in India. In the recent budget, a National Investment and Infrastructure Fund (NIIF) with an annual flow of US$3.2 billion was announced. This will help raise investments as equity in infrastructure finance companies which can further fund the renewable projects at competitive pricing. A central authority like IREDA or Solar Energy Corporation of India (SECI) with a high credit rating is well-positioned to successfully utilize NIIF to not only refinance existing debts low-costs but also provide low-cost capital to new projects.

In addition to facilitating low-cost finance, other potential options like tapping into public equity markets by forming solar yieldcos and encouraging foreign investment by developing new PPA structures to minimize forex risks can boost the solar industry in India. The solar market is upbeat and such suitable financial policies present a great opportunity to make hay while the sun shines.

The author would like to thank Andrew Gilligan from Sol Systems LLC and Michael Kline from The Brattle Group for their inputs.

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