Professional Documents
Culture Documents
Submitted by:
Ajay Pratap Singh
Registrration No.12 NPTI0031
MBA-Power Management
Declaration
I, Ajay Pratap Singh, Registration No: 12NPTIF0031, student of MBA Power
Management (2012-14) at National Power Training Institute, Faridabad hereby declare
that the Summer Training Report entitled Study of Business Environment for solar
Power Projects by New Market Entrants is an original work and the same has not been
submitted to any other institute for the award of any other degree.
A Seminar presentation of the Training Report was made on
__________________________ and the suggestions as approved by the faculty were
duly incorporated.
Presentation in-charge
Signature of Candidate
Countersigned
Director /Principal of the institute
Acknowledgement
Apart from the efforts of the person doing the project, the success of any project largely
depends on the encouragements and guidelines of many others. I take this opportunity to
express my gratitude to the people who have been instrumental in the successful
completion of this project.
I would like to thank Mr Amit Kumar, Sr. Vice President, Global Energy Pvt Ltd for
giving me this opportunity to execute my Summer Internship project.
I would like to extend my thanks to my guide, Mr Dipanshu Gupta, Sr. Manager,
Global Energy for showing me the right path and approach towards the project.
I would also like to thank Mr Niraj Kumar, VP, Global Energy and Mr Himanshu
Chandrakar, VP, Global Energy for their support during my project.
I feel deep sense of gratitude towards Mr J S S Rao, Principal Director, Corporate Planning,
NPTI, Mr S K Chaudhary, Principal Director, CAMPS, Mrs Manju Mam,
Director, NPTI and Mrs Indu Maheshwari, Dy. Director, NPTI for arranging my internship
at Global Energy Private Limited, New Delhi and being a constant source of motivation and
guidance throughout the course of my internship.
I also extend my thanks to the faculty and my batch mates from CAMPS, NPTI for their
support and guidance.
Organization Profile
Global Energy Pvt Ltd is an ISO 9001:2008 certified Energy Company which is
committed towards honouring the trust invested in it by its clients, by providing
uninterrupted power supply and commitments made to its employees by delivering them
a steady growth path. They are committed to achieving success in accordance with our
companys high business ethics and values with a focus on green and renewable energy.
Every member of GEPL has imbibed this commitment and purpose.
Global Energy Pvt Ltd focus is to efficiently operate our renewable facilities in order to
provide our customers with a reliable, low-cost source of power. GEPL is an ISO
9001:2008 Certified Company for generation of Power from Agro waste.
As a power trader, Global Energy supports their esteemed clients with data driven power
market analysis to help them get best returns. Global Energy has till date, transacted
almost 3 billion units of Energy. Global Specializes in renewable energy trading,
Especially wind and hydro.
Apart from this, they understand the dynamics of the various energy markets and goal is
to maintain effective relationships with stakeholders by using this extensive knowledge
to benefit clients through advisory services.
Services:
Power Trading: Power Trading powered by analytics directed towards equitable growth.
Analytics driven methodology
Renewable power transactions and Non Renewable power transactions
Power supply via OA
Power Generation: Generating energy through renewable sources for a cleaner and
greener tomorrow.
Clean Energy Initiatives: Helping provide for India's burgeoning energy needs.
Energy Certificate trading: Contribution towards the above effort lies in helping clients
build their RE Certificates sales portfolio at the optimum price range through:
Renewable Energy Certificate
Verified Emission Reduction Certificates, and
Certified Emission Reduction Certificates
Power Advisory: Share knowledge and expertise in the energy sector for a brighter future.
Capacity Design for Public and Private Enterprises
Infrastructure and Logistics Planning
Turnkey Advisory Services
Regulatory Advisory
EXECUTIVE SUMMARY
The growing energy requirement of our economy, coupled with concerns arising out of
conventional energy resources in context of rising finance and deteriorating ecological
conditions have created an environment conducive of a gradual shift toward healthier
options, generally referred to as non-conventional energy resources. These nonconventional energy resources include small hydro, wind, solar and biomass, our country is
endowed with a huge capacity encompassing all these sectors.
After persistent efforts, the share of renewable energy which stood at a meagre 2% of
installed capacity in 2003 stands at nearly 12% with a total installed capacity of 27,541
MWs as of June 2013,
With an average insolation of 4-7kwh/m2 and 300 sunny days the potential of our country
stands at 5000 trillion kilowatt of clean energy, if efficiently harnessed it can easily reduce
our energy deficit scenario but had been long neglected in wake of huge investment needed
and lack of supportive policies, finally the solar power is coming of the age with help of
various technological improvement and prevalence of abetting policies. The solar power
stands at 1,690 MWs moving up from a mere 45 MWs just a few years ago.
In the report I have tried to explore and analyze the solar PV markets complete value chain.
The Indian solar market has an expected potential 25,000 MWs by 2022, the only existing
demand driver until very recently due to very high cost of solar power was the renewable
purchase obligation but recently concluded allocations and bidding experience predicts that
we could achieve grid parity sooner than expected, turning solar into a more viable option
than ever before.
During the past couple of years, India has emerged as an attractive investment destination
for solar power developers. The government has taken several policy and regulatory
initiatives including the Jawaharlal Nehru National Solar Mission, for the large scale
deployment of solar energy. As a result of such policy support and incentives, investors
from around the world want to have a share of the pie of the growing Indian solar energy
industry. India stands second in the solar energy attractiveness index after US with a rating
index of 64
As we are already through the first phase JNNSM and most states with a high GHI have
declared exclusive solar policies we have learnt that we still have a long way to go before
grid parity and most of the development will still be driven by the fact that how well these
policies are implemented.
The solar market as of now has two off take route FiT and REC the former being the more
attractive of the two citing the uncertainty of returns in REC mechanism. The report will
also touch upon Indian solar manufacturing capacity which is bound to expand under a
rising demand.
Besides the grid connected potential the PV market has huge untapped potential in off grid
application where soon it may overtake diesel power, also it would be providing for rural
electrification and street lights.
Solar technologies are at a nascent stage in India and there are considerable risks in the
execution of projects. Projects based on crystalline cells and modules are comparatively
easier to execute and less risky as manufacturers generally guarantee the products for more
than 20 years. However, newer technologies like thin-film and concentrated PV, although
demonstrating higher efficiency and lower life-cycle cost of ownership, are yet unproven
and therefore considered risky in the Indian context. The returns of a solar project are
highly sensitive to radiation levels. High quality solar radiation data is a pre-requisite for
proper potential assessment and project development. Hence, solar radiation assessment is a
very important activity and typically requires several months for ground measurement of
solar radiations. Any error in solar resource estimation adds an uncertainty to the expected
future returns. As of now, on-ground solar radiation data is sketchy and the simulation
models are at a preliminary stage. Evacuation of the electricity generated from power plants
10
Abbreviation
APPC
CEA
CERC
CPP
CSP
DTC
FDI
FI
GDP
GOI
IDC
IEA
IFC
IREDA
IRR
JNNSM
KV
kWh
MNRE
MOP
NAPCC
NBFC
NTPC
NVVN
O&M
PE
PFC
PLF
PPA
PSA
PTC
PV
REC
REC
11
RES
RPO
SPD
STU
WtE
12
Contents
Figures............................................................................................................................................................... 15
Conceptualization .............................................................................................................................................. 16
SOLAR PV TECHNOLOGY ........................................................................................................................ 17
PROBLEM STATEMENT ....................................................................................................................................... 22
OBJECTIVES:- ..................................................................................................................................................... 23
SIGNIFICANCE OF THE STUDY: ............................................................................................................................ 24
Overview and installed capacity: ........................................................................................................................ 24
Review of existing literature............................................................................................................................... 28
Electricity Act 2003 ......................................................................................................................................... 28
National Tariff Policy ...................................................................................................................................... 28
GENERATION BASED INCENTIVE UNDER RPSSGP SCHEME OF MNRE ................................................................ 29
Classification of Project Scheme(s) and Eligibility Conditions: .......................................................................... 29
Applicability of these guidelines ..................................................................................................................... 30
Renewable Energy Scenario in India................................................................................................................ 30
Historical Growth of the Solar Market in India .................................................................................................... 32
Important market development: ........................................................................................................................ 34
NSM .............................................................................................................................................................. 34
Batch I, Phase I ......................................................................................................................................... 34
Batch II, Phase I ........................................................................................................................................ 36
GUJARAT SOLAR POLICY ....................................................................................................................... 37
KARNATAKA SOLAR POLICY ................................................................................................................. 37
RAJASTHAN SOLAR POLICY ................................................................................................................... 38
MADHYA PRADESH SOLAR POLICY ...................................................................................................... 38
ANDHRA PRADESH SOLAR POLICY....................................................................................................... 38
TAMIL NADU SOLAR POLICY ................................................................................................................. 39
Potential establishment for solar market in India ................................................................................................ 40
Rajasthan ...................................................................................................................................................... 44
Solar Irradiation in Rajasthan: ................................................................................................................. 45
Incentives .................................................................................................................................................. 47
Karnataka ..................................................................................................................................................... 48
Incentives for RE projects in Karnataka ................................................................................................... 51
Madhya Pradesh ........................................................................................................................................... 52
13
Solar irradiation in Madhya Pradesh: ....................................................................................................... 52
Incentives .................................................................................................................................................. 54
Gujarat ......................................................................................................................................................... 55
Haryana ........................................................................................................................................................ 56
Punjab .......................................................................................................................................................... 57
Solar irradiation in Punjab: ...................................................................................................................... 57
The govt. has offered the following financial and fiscal incentives for solar power projects: ......................... 58
Uttar Pradesh................................................................................................................................................ 59
Bihar ............................................................................................................................................................. 61
Solar irradiation in Bihar: ......................................................................................................................... 61
Kerala ........................................................................................................................................................... 62
Solar irradiation in Kerala: ....................................................................................................................... 62
Orissa............................................................................................................................................................ 63
West Bengal .................................................................................................................................................. 64
Imp Policy comparision ...................................................................................................................................... 65
Status of states .................................................................................................................................................. 66
RPO Demand analysis ........................................................................................................................................ 67
Off take options in India ..................................................................................................................................... 71
Terms and conditions of financing ...................................................................................................................... 74
Project Viability in India ..................................................................................................................................... 75
Financing trends ................................................................................................................................................ 78
Financing overview .................................................................................................................................... 78
Financing options .......................................................................................................................................... 78
Indian Commercial Banks ............................................................................................................................ 78
Non-Banking Finance.................................................................................................................................... 78
Export credit Agency .................................................................................................................................... 79
14
Tables
Table 1: Factor favouring solar energy in India.............................................................................................................. 26
Table 2: capacity target in NSM ..................................................................................................................................... 33
Table 3: Bidding results batch i phase i.......................................................................................................................... 35
Table 4: bidding results Phase i batch ii ......................................................................................................................... 37
Table 5: established potential of solar market in india ................................................................................................. 40
Table 6: Month wise solar insolation in rajasthan (Kwh/m2/day)) ............................................................................... 45
Table 7
Solar irradiation measured in kwh/m2/day onto a horizontal surface karnataka ............................. 49
Table 8:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Madhya Pradesh ................ 53
Table 9
Solar irradiation measured in kwh/m2/day onto a horizontal surface Gujarat ................................. 55
Table 10:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Haryana ............................. 56
Table 11:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Punjab ............................... 57
Table 12
Solar irradiation measured in kwh/m2/day onto a horizontal surface Uttar Pradesh ..................... 60
Table 13:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Bihar .................................. 61
Table 14:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Kerala ................................ 62
Table 15:
Solar irradiation measured in kwh/m2/day onto a horizontal surface Orissa ................................ 63
Table 16: Solar irradiation measured in kwh/m2/day onto a horizontal surface west bengal ..................................... 64
Table 17: Comparative analysis of various imp policies ................................................................................................ 65
Table 18: Top performing states .................................................................................................................................... 66
Table 19: Potential Riser ................................................................................................................................................ 66
Table 20: Slow moving states......................................................................................................................................... 66
15
Figures
Figure 1: SOLAR PV TECHNOLOGIES .............................................................................................................................. 16
Figure 2: types of basic PV techniques .......................................................................................................................... 18
Figure 3: CSP techniques in use ..................................................................................................................................... 20
Figure 4: various technology utilization under various schemes ................................................................................... 21
Figure 5: installed capacity............................................................................................................................................. 25
Figure 6: Discount offered in batch I Phase I ................................................................................................................. 35
Figure 7: discount offered phase i batch ii..................................................................................................................... 36
Figure 8 insolation on karnataka.................................................................................................................................... 49
Figure 9:solar insolation in Madhya pradesh................................................................................................................. 52
Figure 10:solar irradiation in Harayana ......................................................................................................................... 56
Figure 11: solar irradiation on Punjab............................................................................................................................ 57
Figure 12:solar irradiation in uttar pradesh ................................................................................................................... 59
Figure 13: solar irradiation in bihar................................................................................................................................ 61
Figure 14: solar irradiation in kerala .............................................................................................................................. 62
Figure 15: solar irradiation in orissa .............................................................................................................................. 63
Figure 16: Rising RPO demand in future ........................................................................................................................ 67
16
Conceptualization
Stars like Sun have a lifetime of about 11 billion years. Its tremendous amount of
hydrogen present at the core creates fusion providing the energy to light the planet
Earth. Sun does undergo fusion to emit light with the help of the hydrogen atoms
present inside its core. While about 5.5 billion years guaranteed till touchdown
occurs when there is no more hydrogen to light up the Earth, it is time that we
consider to make use of this unique, omnipresent, massive and significant source of
energy available to us. It was intriguing when the radiation can be converted into
energy, but then it has begun to be the mainstream part of electricity generation.
Producing electricity from solar radiation can be classified on the type of conversion
technology into two broad categories.
SOLAR ENERGY
TECHNOLOGIES
SOLAR
THERMAL
SOLAR PV
CRYSTALLINE
THIN FILM
17
Currently Solar PV technology has got an edge over the Concentrating Solar Power
(CSP). The initial cost of setting up a SPV plant is decreasing as the prices of the
poly-silicon required to manufacture the modules are reducing drastically day-byday. This acts as a catalyst in developing the solar PV on a large scale globally.
Serious players are now started to identify the importance and advantage of making
a foot mark in the Solar PV industry both as manufacturers and project developers.
Solar PV in India has the potential to meet the demand both at the utility scale and
small scale applications in India. There are many parameters to count on before a
place is well suitable for solar energy generation. Solar PV in India is attracting
many foreign players owing to its aggressive solar promotion plan through JNNSM
and favouring external factors. PV makes economic as well as environmental sense
and is a sustainable solution to the energy needs of our Nation. Indias current
contribution to the Global Solar installation capacity is a meagre 0.20 %. Providing
energy to the nation from renewable sources decreases the degree of dependency on
rapidly depleting fossil fuels.
SOLAR PV TECHNOLOGY
The solar PV is the direct conversion of Suns radiation into Direct Current (DC).
Solar PV systems shall be designed with either mono/ poly crystalline silicon
modules or using thin film photovoltaic cells or any other superior technology
having higher efficiency.
Three key elements in a solar cell form the basis of their manufacturing technology.
First is the semiconductor, which absorbs light and converts it into electron-
hole pairs.
18
The third is the contacts on the front and back of the cell that allow the current
Solar PV
Technology
Crystalline
Silicon
Mono Crystalline
Poly Crystalline
Thin film
Amorphous
Silicon a-si
Cadmium
Telluride
Copper
Indium(Gallium)
Diselenide
Crystalline Technology
Crystalline silicon (c-Si) has been used as the light-absorbing semiconductor in most
solar cells, even though it is a relatively poor absorber of light and requires a
considerable thickness (several hundred microns) of material.
Mono crystalline, produced by slicing wafers (up to 150mm diameter and 350
microns thick) from a high-purity single crystal
19
Multi crystalline silicon is made by sawing a cast block of silicon first into bars and
then wafers. The main trend in crystalline silicon cell manufacture is toward multi
crystalline technology.
20
21
Chart Title
120
100
80
60
Thin film
40
20
C-Si
0
Total
RPSSGP
NVVN
C-Si
Thin film
22
PROBLEM STATEMENT
With the expansion of global economy, trade activities etc. availability of, and
access to, electricity is a crucial element of modern as well as developing economy.
To keep pace with the growing energy demands and as a National Action Plan for
Climate Change (NAPCC), there is a need to switch from conventional to nonconventional source of energy. And solar energy is the most abundant permanent
energy source available to use in direct form.
But as the initial cost of setting up of solar pv project is very high and the state-wise
policies are still not formulated, so investors are not willing to set up plants. In order to
achieve grid parity there is a need of grid interactivity of solar pv projects but there are
technical, legal and financial barriers faced by solar pv developers in this regard.
23
OBJECTIVES:The goal of this report finds the true opportunity in Indian solar market till 2015. The
research is done on two key demand drivers policy implementation and market drivers. The
report analyzed the existing polices. The financial viability and bankability check is also
done. The key aspects included in this report would include:1) Potential in various states - Policy Target, Land Bank, Inclination of Market Players
2) Current status of utilization Include Hurdles if there is under utilization
3) Policy framework - analysis of prevailing policies and drafts at state and central level
Objective shall be to arrive at the reasons for state wise momentum
4) Financial model of a solar plant of 5 MW - would include the same for 3-5 different
states with a declared solar policy and establishment of the most suitable option from a
investor's prospective
5) Market scenario - analysis of supplier market and EPC contractors Existing EPC
contractors, Market Share, Margin of EPC contractors
24
25
Figure 5:
26
installed capacity
As foretold the Indian energy sector has grown enormously in the last few year from the
humble beginning of 22 MWs in 2010 it has grown beyond 1.7 GWs the ambitious mission
of NSM has started to pay off with unprecedented support from state wise policies has also
helped in the endeavor
As envisioned by our long term energy supply strategy; that solar power should achieve
parity with thermal power generation by 2022 but as it is being reported by a report by
Deutsche Bank and many other reports released recently that few states in India have
already achieved grid parity namely Kerala, Maharashtra and Delhi.
Table 1: Factor favouring solar energy in India
solar radiation
Clear sunny weather
Geographical alignment
27
1%
meet electricity
requirements till 2030
Estimated to be around
20MW/sq. km
Estimated to be around
35MW/sq. km.
28
29
The Project Proponents would be selected as per these guidelines for development of
solar power projects to be connected to distribution network at voltage levels below 33
kV.
The projects should be designed for completion before March 31, 2013.
The local distribution utility in whose area the plant is located, would sign a Power
Purchase Agreement (PPA) with the Project Proponent at a tariff determined by the
appropriate State Electricity Regulatory Commission (SERC).
Project schemes from States wherein Tariff tenure for duration of 25 years with Tariff
structure on levelized basis has been determined by SERCs shall alone be considered to
be eligible to participate in this Programme (RPSSGP).
16
Generation Based Incentive (GBI) will be payable to the distribution utility for power
purchased from solar power project selected under these guidelines, including captive
consumption of Solar Power generated (to be measured on AC side of the inverter).
The GBI shall be equal to the difference between the tariff determined by the Central
Electricity Regulatory Commission (CERC) and the Base Rate, which will be Rs 5.50 per
kWh (for Financial year 2010-11), which shall be escalated by 3% every year.
Base Rate of Rs 5.50/unit to be considered for the purpose of computation of GBI, shall
remain constant over duration of 25 years. Thus, GBI determined for a project shall
remain constant for entire duration of 25 years.
Base Rate for projects to be commissioned during each subsequent year shall also be
modified at escalation factor of 3% p.a. and such escalated Base Rate shall remain
constant over duration of 25 years.
GBI shall be payable to the distribution utility for period of 25 years from the date of
commissioning of the project.
30
Accordingly, the projects have been divided into following two categories.
Category 1: Projects connected at HT level (below 33 kV) of distribution network
The Projects with proposed installed capacity of minimum 100 kW and up to 2
MW and connected at below 33 kV shall fall within this category. The projects will
have to follow appropriate technical connectivity standards in this regard. 17
Category 2: Projects connected at LT level (400 Volts-3ph or 230 Volts-1ph) The
Projects with proposed installed capacity of less than 100 kW and connected to the
grid at LT level (400 Volts for 3-phase or 230 V for 1-phase) shall fall within this
category.
Capacity allocation to different project categories: It is proposed to develop solar
capacity of 100MW under these guidelines. This capacity addition shall be
achieved by developing the projects in the above-mentioned two categories in the
following manner: Projects connected at HT level of distribution network with installed capacity of
100 kW and up to 2 MW.
Projects connected at LT level of distribution network with installed capacity lower
than 100 kW.
Applicability of these guidelines
The issues related to grid integration, metering, measurement and energy accounting for
projects to be connected at LT level with installed capacity lower than 100 kW is
complex. Detailed guidelines for such Project Schemes will have to be issued once the
clarity on such grid integration standard emerges. As a result, the present Guidelines are
applicable to Category 1 projects i.e. with installed capacity of 100 kW and up to 2 MW
having grid connectivity at HT level (below 33 kV) of the distribution network.
31
Indeed, it is the only country in the world to have an exclusive Ministry for renewable
energy development, the Ministry of New and Renewable Energy. Since its formation,
the Ministry has launched one of the worlds largest and most ambitious programs on
renewable energy. Based on various promotional efforts put in place by MNRE,
significant progress is being made in power generation from renewable energy sources.
Indias 35 per cent electricity demands can be met from renewable energy by 2030 and
50 per cent of the projected energy requirements can be met simply from smart and
efficient generation, distribution and use of energy, according to a Greenpeace
International report. The demand for power supply has been increasing considerably year
after year due to more & more industrialization, development of various industries etc.
and the need to bring irrigation facilities to the farms in the dry zones, increased
dependency on power in domestic sector, to meet minimum needs programme of
electrifying the villages etc. The need for harnessing renewable source of energy has,
therefore, gained increased importance not only to meet the growing demand for energy
but also for the fact that sources like coal, oil, petroleum products and other hydro
carbons are fast getting in the world and particularly in India.
32
33
water availability, hence offering developers a project allocation packaged with the
necessary infrastructure. Other states like Karnataka, Andhra Pradesh and Rajasthan have
followed suit in developing solar power development programs. Rajasthan has implemented
land banks as well to make land acquisition easier. As more states plan to meet their solar
power obligations, new policies are expected to be offered, creating as very vibrant set of
markets across the subcontinent.
34
NSM
Application Segment
1000-2000MWs
4000-10,000MWs
20,000Mws
200MWs
1000MWs
2000MWs
15 million sq meters
Batch I, Phase I
The selection of Solar PV projects of 500 MW capacity was decided to be undertaken in
two batches over two financial years of Phase 1 i.e., 2010-2011 and 2011-2012. The size of
PV projects in the first stage in 2010-11 was fixed at 5 MW per project. Under Migration
scheme NVVN started the process of short listing the on-going projects to migrate to the
JNNSM. A total of 16 projects of 84 MW capacity were selected. These project developers
signed PPA with NNVN in October, 2010 and reported financial closure. The last date for
commissioning of 54 MW capacity PV projects was by end of October, 2011. The 30 MW
capacity solar thermal projects are to be commissioned by March, 2013.
Later in August 2010, NVVN started the process of selection of new grid solar power
projects comprising of 150 MW of Solar PV and 470 MW of solar thermal capacities. This
yielded a tremendous response and applications were received for over 5,000 MW capacity.
The projects were selected based on tariff discounting. Bidders offered substantial discounts
as given below.
35
400
70
350
60
300
50
250
40
200
30
150
20
100
10
50
0
601-700
501-600
401-500
301-400
201-300
101-200
zero
Solar PV
CERC Approved tariff for solar PV
(Normal Depreciation)
1791 Paise/ Kwh
Min. discount
Max discount
Offered
offered
(Paise)
(Paise)
515
696
Final tariff discount for Solar PV (Paise /
Kwh)
1276
1095
Solar Thermal
CERC Approved tariff for solar Thermal
(Normal Depreciation
1531 Paise / Kwh
Max discount
Min. discount
offered
Offered
(Paise)
(Paise)
482
307
Final tariff discount for Solar Thermal (Paise
/ Kwh)
1049
1224
Total 30 SPV projects were selected after bidding process and subsequently 28 project
developers signed PPAs for 140 MW capacity with NVVN. Similarly seven solar thermal
projects were selected after bidding process and signed PPA with NVVN. Average tariff for
selected SPV projects was 1216 Paise/kWh which was 32% lower than the CERC approved
benchmark tariff of 1791 Paise/kWh. For solar thermal projects, average tariff for selected
36
projects was 1141 Paise/kWh which was 25% lower than the CERC approved benchmark
tariff of 1531 Paise/kWh for solar thermal plants.
1200
60
1000
50
800
40
600
30
400
20
200
10
0
0
701-790
601-700
501-600
401-500
301-400
201-300
101-200
zero
37
Table 4: bidding results Phase i batch ii
Solar PV
CERC Approved tariff for solar PV (Normal Depreciation)
1531 Paise / Kwh
Min. discount Offered (Paise)
Max discount offered (Paise)
595
790
Final tariff discount for Solar PV (Paise / Kwh)
944
749
38
39
40
State
Policy
target
Land
availability
Financial
exemptions
and
incentives.
Notes
Rajasthan
Nearly
10,000 mw
by 2022
Solar park
planned in 4
districts each
of 1000mw
each
Three different
channel
underway total
to nearly
700MW by
2017 no cap on
addition for
sale through
REC mech
Karnataka
200 mw by
2014
No land
allocation
specifically
for the
purpose but
land set aside
for renewable
development
in all major
districts
Govt. land to
be made
available on
concessional
rate 10% of
dlc
Energy used
by self
exempted
from
electricity
duty
Also there are
various
exemptions
on taxes as
high as 70%
in some cases
Incentive of
upto 12Rs per
KWh for
solar PV and
10Rs per
KWh for
solar thermal
41
Madhya
Pradesh
1102 MW
envisaged by
end of 2017
Land
allocation
already made
for solar park
in 5 districts
with capacity
of 200 MW
each
Tamil Nadu
3000 MW by
year 2015
Atleast a park
0f 50MW
capacity in 24
districts
Various other
sizes of solar
park defined
Gujrat
3000MW by
2014
Haryana
Lacking a
clear cut
target
(targeted 500
MWs of RE
by 2012 but
only 160
MWs
achived till
jan 2013)
Exemption
from
electricity
duty and
CESS for 10
year also 4%
grant for
wheeling
charges
Equipment
free from
VAT
100%
exemption
from various
duties for 5
years
Power
purchase upto
15Rs/KWh
SPO (solar
purchase
obligation) of
6% from march
2014 which
will make it
necessary for
the state to
have around
1000 MW of
installed
capacity
PPAs for
nearly 972
MWs already
signed
Exemption
from electricity
duty and
various land
conversion
charges also
various other
benefits
42
Punjab
500 MWs by
2020
In case of
land
availability
land may be
leased out for
38years on
notional lease
of 1 sqmt
/annum
Uttar
Pradesh
500 MWs by
2017
Land yet to
be identified
Bihar
Lacks a clear
cut target but
a tender for
100 MWs of
solar power
was floated
with last date
for
submitting
bids being 1st
july
500 MWs by
2017 and
1500 by
2030
Kerela
Exemption
from octroi
Captive
generation
exempt from
electricity
duty, 100%
exemption
from payment
of stamp duty
also
No special
privileges as
such.
Privileges
under the sate
industrial
policy 2012
No special
privileges
other than
ease in land
allotment
Policy in draft
state
Policy in draft
state
Also there is
going to be a
obligation on
everyone
including
domestic
consumer
43
Maharashtra
Not defined
Not allocated
None
Orissa
14000 as per
state
regulatory
body
Not defined
looking for
proposals
Buying
power at
incentivized
rates
Jharkhand
500MWs by
2017
1000MWs by
2022
Chhattisgarh
500 to 1000
MWs by
2017
West Bengal
2000 MWs
by 2020
Exemption of
50%
electricity
duty and cess
for 10 years
to all plants
also 50 %
exemption to
captive plants
for 5 years
4% grant on
wheeling
charges
Equipment
exempted
from VAT
Exemption
from
electricity
duty and
relief in vat
and other
associated
None
SPO is 4%
Comprehensive
policy yet to be
declared
44
Himachal
Pradesh
10 MWs by
2017
J&k
4000 MWs
by 2017
North
eastern
states
Land bank
are being
identified
Exemptions
in line with
pioneering
states
A high SPO is
likely to be
declared soon
Yet to define
comprehensive
RE policies
In this part of my report I have emphasized on the policy driven potential of the various
state as show above in the table and elaborated further below.
Rajasthan
Highest annual global radiation is received in Rajasthan (Solar insolation ranging between
6-6.4 Kwh/m2/day in about half of Rajasthan). Large areas of land are barren and sparsely
populated, making these areas suitable as locations for large central power stations based on
solar energy. Rajasthan received the second largest amount of solar radiation in the world as
per DOE.
Rajasthan is situated in the north-western part of India. The north-west part of the country is
best suited for solar energy based projects because the location receives maximum amount
of solar radiation annually in the country.
45
City
Ajmer
Alwar
Bali
Bharatpur
Bhilwara
Bikaner
Jaipur
Jodhpur
Kota
Pali
Jan
3.9
3.75
4.13
3.67
4.1
3.51
3.9
3.84
4.01
4.03
Feb
4.58
4.5
4.89
4.6
4.89
4.11
4.67
4.54
4.87
4.75
Mar
5.42
5.32
5.59
5.43
5.62
4.9
5.4
5.48
5.55
5.55
Apr
6.08
5.82
5.99
5.9
6.06
5.85
5.99
6.27
6.11
6.18
May
6.64
6.26
5.79
6.23
6.36
6.52
6.35
6.79
6.31
6.65
Jun
6.43
6.06
4.49
5.95
6.08
6.44
6.21
6.6
6.01
6.38
July
5.3
4.99
4.09
4.95
4.87
5.77
5.08
5.57
4.83
5.22
Aug
5.04
4.66
3.9
4.54
4.53
5.36
4.68
5.27
4.36
4.89
Sep
5.1
4.93
3.88
4.76
5.11
4.95
5.05
5.23
5.12
5.18
Oct
4.76
4.59
4.32
4.62
4.9
4.38
4.75
4.64
4.92
4.79
Nov
4.04
3.92
4.21
3.93
4.2
3.66
4.04
3.96
4.19
4.18
Dec
3.64
3.47
4.02
3.46
3.83
3.19
3.66
3.52
3.81
3.7
Avg
5.08
4.86
4.61
4.84
5.05
4.89
4.98
5.14
5.01
5.13
Rajasthan solar policy came into operation with effect from 19.04.11 and will remain in force
until superseded or modified by another policy.
The objective of this policy is to establish Rajasthan as a national leader in solar energy. It
targets a minimum of 550MW of grid connected solar power in Phase 1 (up to 2013)12.
Projects will be awarded through a process of competitive bidding. PV projects will be worth
300MW, out of which 100MW are reserved for project developers and 200MW for panel
manufacturers. The minimum and maximum sizes for PV projects are 5MW and
10MW.Module manufacturers that set up their manufacturing in Rajasthan can bid for either
10MW or 20MW worth of PV projects based on their manufacturing capacity. A further
50MW will be allocated for rooftop PV (1MW each) and other small solar power plants. The
DISCOMS in Rajasthan will provide PPAs for the projects. In addition, projects worth
100MW (50MW PV and 50MW CSP) are targeted for bundled solar power. In such projects,
46
the developer can sell conventional power and solar power in a ratio of 4:1 at the weighted
average tariff to the distribution utilities in Rajasthan. Varied project sizes will attract small
as well as large developers looking to invest in projects of different scale.
The Rajasthan Renewable Energy Corporation Limited (RRECL), the nodal agency
responsible for implementing the states solar policy, has published the revised draft for the
Request for Selection (RfS) document for 250MW worth of projects in July 2011. The
revised draft incorporates some crucial suggestions from industry players and will most likely
be released as the official document to be used by developers looking to submit their bids for projects
under the Rajasthan solar policy. The RRECL has also published the draft for the Power Purchase
Agreements (PPA) for these projects.
Developers will be required to offer discounts on these in order to win the bid. Bids are open
to both Indian as well as international companies. Out of the 250MW being auctioned, a
single parent company can bid for 61MW worth of projects - one rooftop project of 1MW, up
to 10MW worth of PV and 50MW of CSP projects. Unlike the National Solar Mission, there
is no domestic content requirement in the Rajasthan solar policy. The developer can choose
any established and operational technology from India or abroad. The draft also gives clear
parameters for setting up evacuation infrastructure from the plant to the nearest substation.
This has been an issue between the distribution utility and developers in other solar policies.
For solar PV and CSP projects, if the power plant lies within 15km of the nearest substation,
the cost will be borne by the distribution company (DISCOM). For any length above 15km,
the cost will be borne by the developer. For rooftop projects, the cost will be borne by the
DISCOM but the developer will need to takepermission from the DISCOM before finalizing
the location of the project.
47
48
Karnataka
Karnataka, with its growing interest in the green energy space, is targeting installation of
350 MW solar projects by 2016, under the Karnataka Solar Policy. As part of this,
KREDL has recently floated tenders for setting up a 80 MW solar projects. A few
months from now, the State is expected to start allocation of 400-MW grid-connected
solar power generation projects. For this, the government will allot 40MW worth of
projects every year till 2016, a fact that provides much needed certainty on the allotment
timelines to the developers. The split of projects between PV and CSP technologies will be
defined at a later stage. About 50MW of the total 350MW will be allotted to utilities for
development, based on a bundling mechanism with an equivalent capacity of thermal
power. In these cases, the utility mixes thermal power sourced from outside Karnataka with
solar power that it generates within the state. The bundling of solar power from within the
state with conventional power bought from outside is significant. Through this mechanism
the state will obtain thermal power in addition to its allocation from the federal generating
utilities like the National Thermal Power Corporation (NTPC) or from an independent
power producer located outside the state. Karnataka is a power deficit state and will be able
to supplement its thermal power supply through this mechanism. These projects are
reserved for the state and federally owned utilities, as it is easier for them to enter into PPAs
for thermal power. The National Thermal Power Corporation (NTPC), a public sector
undertaking and Indias largest power generation utility will be a key player to develop
these 50MW. It has aggressive expansion plans for renewable energy and a large capacity to
bundle this solar power with its own thermal power.
The sizes of projects at the moment are only defined for the 200MW worth of projects that
will sell electricity to the DISCOMS. PV projects can have a capacity of 3MW to 10MW,
while for CSP the minimum is 5MW with no cap on the maximum. Though the state has
now come up with its own policy, it will continue to support programs like the NSM. It has
set a combined target of 126MW of solar power to be developed by 2013-14 through the
NSM and its own solar policy.
The policy also lays out plans for building solar power capacity for captive users. There is
no cap on the capacity installed by captive users. Further, the policy promotes projects for
the sale of solar power directly to third party players through open access. This will help
users fulfill their RPOs and will bring more investment into the states solar market. The
policy allows developers to inject power at 11kV and above, while under the NSM the
49
requirement is 33kV and above. Developing 11kV substations at power plants is cheaper
than a 33kV substation which requires high-cost components. This will help bring down
project costs for the developers.
Mr Prasanna Kumar also said that KREDL would also put up projects for 200 MW
under the REC scheme as a continuous process'. He told Business Line' that a few
companies had already applied for projects under this and allotments would be made very
soon.
Few months from now, Bangalore will see several of the city's lakes dotted with royal blue
solar panels floating the surface, replacing plastic covers and garbage amidst sheets of
algae.
Karnataka receives global solar radiation in the range of 5.1-6.4 kWh/sq.m during summer,
3.5-5.3 kWh/sq.m during monsoon, and 3.8-5.9 Kwh/Sq.m during winter. Coastal parts of
City
Belgaum
Bellary
Bengaluru
Bidar
Bijapur
Gulbarga
Table 7
Jan
5.32
5.21
5.31
5.11
5.23
5.14
Feb
5.99
5.88
6.07
5.91
5.86
5.82
Mar
6.46
6.34
6.53
6.39
6.38
6.28
Apr
6.5
6.29
6.43
6.44
6.37
6.3
May
6.03
6.1
6
6.29
6.26
6.3
Jun
3.85
4.95
4.92
4.88
4.98
5.13
July
3.35
4.37
4.45
4.25
4.49
4.51
Aug
3.65
4.43
4.53
4.16
4.44
4.39
Sep
4.6
4.92
4.89
4.6
4.88
4.85
Oct
4.82
4.86
4.57
4.92
4.93
5.03
Nov
5.08
4.89
4.49
4.96
4.98
4.98
Dec
4.96
4.87
4.72
4.81
4.84
4.81
Avg.
5.05
5.26
5.24
5.23
5.30
5.30
50
Mangalore
Mysore
Raichur
Shimoga
Tumkur
5.65
5.39
5.14
5.38
5.31
6.33
5.89
5.88
6
6.07
6.81
6.31
6.33
6.38
6.53
6.84
6.01
6.4
6.21
6.43
5.85
5.54
6.09
5.58
6
4.37
4.15
5.04
3.62
4.92
4.25
3.8
4.28
3.26
4.45
4.87
4.01
4.34
3.53
4.53
5.44
4.82
4.71
4.58
4.89
5.19
4.71
4.81
4.66
4.57
5.21
4.77
4.87
4.94
4.49
5.44
4.95
4.78
5.11
4.72
5.52
5.03
5.22
4.94
5.24
Karnataka with the higher global solar radiation are ideally suited for harvesting solar
energy.
Under Karnataka Renewable Energy Policy, Karnataka will have a target for achieving
126MW of solar power up to 2013-2014. The policy came in to effect from 1.06.2011 and
shall remain in force up to 31.3.2016 or until any changes are made by the state
government or by the KERC (Karnataka Electricity regulatory commission) whichever is
earlier.
It is proposed to install 200MW upto 2015-16 (in addition to the allotment under JNNSM),
for the purpose of procurement by the Electricity Supply Companies. The annual capacity
approved will be 40MW per year. The minimum capacity of single solar power generating
unit shall be 5MW each and maximum unit shall be 10MW both in respect of solar PV and
solar thermal.
Mode of approval of projects will be decided by a committee. Captive power plants and
those put up for sale of power to third party do not form part of the target of 200MW
envisaged in the policy. In such cases the wheeling charges have to be paid at the rates
determined by the KERC.
Under the Renewable Energy Certificate mechanism, the solar energy generators can sell
the electricity to the ESCOMS at the pooled cost of power purchase, as determined by the
KERC and sell the renewable energy certificate to other obligated entities. Under this
scheme, a capacity of 100MW can be installed in the state.
The state reserves the right to directly allot any project to the central or Karnataka state
owned undertaking for setting up solar projects in the state, for providing solar power
bundled with thermal power from outside the state at the rates to be determined by the
government subject to the approval of KERC. A maximum of 50MW solar power will be
approved under this clause.
51
If a project is approved under clause-3, the developer has to sign a PPA with ESCOM. The
quantum of power that is to be procured by ESCOMS from solar resources will be 0.25%
of the total consumption. In case of short fall in the procurement of solar energy by
ESCOMS, it can be made good by purchase of solar specific renewable energy certificates.
The solar power generator has to share CDM benefits with the ESCOM with whom PPA is
signed, in the manner prescribed by the KERC. KREDL will be the nodal agency for
facilitating and implementing this policy. Metering and evacuations shall be in compliance
with the CEA Regulations 2006 as applicable from time to time and in compliance with the
norms fixed by KERC/CERC from time to time.
The state will continue to implement JNNSM and all other schemes of the MNRE.
Incentives for RE projects in Karnataka
1. The various concession and incentives allowed by MNRE/GOI regarding DSI/DPR, GBI
etc will ipso-facto continue to be passed on by the State Government to the project
developer through KREDL.
2. RE power procurement by distribution companies will be at tariffs as determined by the
KERC.
3. Government of Karnataka vide GO No EN 216 NCE 2006 dated 2.3.2007 accorded
approval for the upper limit of the share of renewable energy in the total quantum of
energy purchased by each ESCOMs enhanced to 20 %.
4. KERC in its notification No S/03/1 dated 23rd January 2008 issued amendment to KERC
(power procurement from renewable energy sources by distribution licensee) Regulations
2004 fixing the minimum renewable energy to be procured by each distribution licensee
between 7 to 10%.
5. Sale of electricity: On the electricity generated by the RE projects, the developers will be
encouraged to sell power to the state grid on priority. Such purchases may be in whole or
part as per the rules and regulations of KERC subject to the provisions of the Electricity
Act 2003.
6. Wheeling and Banking of electricity: With Wheeling and Banking arrangements for RE
projects, necessary co-operation and facilitation will be provided for executing Power
purchase agreement (PPA) and evacuation clearance as per the Govt./KERC norms.
7. In case of Renewable Energy projects, if Government land (belonging to urban local
bodies/panchayat) is available, the required land for setting up RE projects will be
provided on lease basis as per rules and regulations of the Government, for a period of 30
years, subject to further renewal as determined by the Government.
8. The state Government will exempt Octori and entry tax on the RE equipment for erecting
capacity sanctioned as per rules.
52
Madhya Pradesh
Solar irradiation in Madhya Pradesh:
Madhya Pradesh is endowed with high solar radiation with around 300 days of clear sun.
Madhya Pradesh offers good sites having potential of more than 5.5 to 5.8kWh/sq m for
installation of solar based power projects.
53
Mar
6
6.18
Apr
6.46
6.54
May
6.49
6.64
Jun
5.43
5.36
July
4.09
4.22
Aug
3.62
3.75
Sep
4.7
4.64
Oct
5.1
5.21
Nov
4.6
4.72
Dec
Avg
4.08 5.01
4.32 5.13
Dewas
Gwalio
r
Indore
Jabalp
ur
Punasa
Ratlam
4.33
3.76
5.2
4.71
6.02
5.54
6.47
6.01
6.59
6.3
5.61
5.86
4.23
4.76
3.72
4.42
4.77
4.71
5.07
4.73
4.59
4.02
4.06
3.57
5.06
4.87
4.46
4.18
5.31
5.18
6.13
5.98
6.52
6.61
6.72
6.56
5.51
5.25
4.25
4.1
3.74
3.55
4.65
4.34
5.12
5.06
4.65
4.62
4.2
4.1
5.11
4.96
4.48
4.37
5.34
5.23
6.11
6.04
6.53
6.54
6.63
6.77
5.48
5.7
4.25
4.21
3.71
3.76
4.64
4.74
5.18
5.05
4.67
4.57
4.2
4.08
5.10
5.09
Rewa
4.01
4.94
5.82
6.26
6.47
5.36
4.35
3.99
4.29
4.84
4.33
3.86
4.88
Sagar
4.43
5.2
5.95
6.46
6.33
5.3
4.08
3.56
4.46
5.06
4.53
4.13
4.96
Satna
4.02
4.96
5.8
6.37
6.5
5.33
4.33
3.85
4.32
4.96
4.35
3.89
4.89
Ujjain
4.37
5.23
6.04
6.54
6.77
5.7
4.21
3.76
4.74
5.05
4.57
4.08
5.09
Table 8:
In 2010, The Government of Madhya Pradesh has released a draft policy for Solar Energy.
The objective of the draft policy has been set to accelerating the harnessing and
development of solar energy in the state.
The Government of Madhya Pradesh has a target of total capacity of 500MW during the
operative period of the policy. A minimum capacity of a large grid connected Solar Power
Project has been set to 1MW each.
This policy is applicable to all solar power developers and manufacturing units of
equipment and ancillaries related to solar power projects. Nodal Agency is Madhya Pradesh
Urja Vikas Nigam (MPUVN) Ltd.
54
Only new plant and machinery shall be eligible for installation under this policy. Fossil
fuels shall not be allowed to be used in the grid connected solar thermal project. Hybrid
system shall be allowed as per guidelines of MNRE.
Any enterprise willing to establish solar PV/solar thermal projects in MP shall be eligible
for incentives under this policy. Eligibility for availing benefits under this scheme shall be
based on techno-economic viability and available resources. Captive units will be eligible
to get benefits under this policy as an investor/consumer.
Incentives
1) The solar plants shall be exempted from electricity duty and CESS for 10 year
2) 4% grant for wheeling charges
3) All the Equipment to be utilized shall be kept free from VAT
55
Gujarat
Gujarat has been categorized as the best Solar & Wind power generation destination and 2nd
highest renewable energy generation capacity state. Gujarat has been described as one of the
best place which has very high direct normal irradiance (DNI-5.5 to 6.5) in the country.
Higher the DNI, higher the capacity of solar power generation. According to the geographic
distribution of the estimated potential for renewable energy across States, Gujarat has the
highest share of about 14% (12,948 MW) followed by Gujarat with 13% (11,364 MW).
City
Jan
Rajkot
4.49 5.3
Vadodara
4.53 5.31 6.12 6.59 6.66 5.73 4.48 4.19 4.96 5.21 4.72 4.16 62.66 5.22
Surat
4.5
Ahmedabad
Bhavnagar
4.5
Table 9
Feb
5.3
5.3
Mar Apr
6.1
May Jun
Jul
Aug Sep
Oct
Nov Dec
Total Avg
6.57 6.64 5.77 4.75 4.48 5.13 5.17 4.62 4.18 63.2
4.29 5
5.26
4.28 5
Gujarat government introduced solar power policy 2009 to promote green and clean power
using solar energy to promote green and clean power in Gujarat using solar energy. This
policy shall remain in operation upto 31.03.2014. Solar power generators (SPG) installed
and commissioned during the operative period shall become eligible for the incentives
declared under this policy, for a period of twenty five years from the date of commissioning
or for the life span of the SPGs, whichever is earlier.
A maximum of 500MW SPG shall be allowed for installation during the operative period of
the policy. The minimum project capacity of a SPG, in case of solar photovoltaic and solar
thermal shall be 5MW each.
Any company or body corporate or association or body of individuals, whether incorporated
or not, or artificial judicial person will be eligible for setting up of SPGs, either for the
purpose of captive use and/or for selling of electricity. The entity desiring to set up solar
power project, either for sale of power and/or for captive use of power within the state, shall
submit a proposal, with requisite details, as may be specified to the nodal agency, for
qualifying for setting up of the project.
Fossil fuel shall not be allowed to be used in solar thermal power project.
56
Haryana
Haryana has about 320 clear sunny days in a year and the solar insolation level in the state is
in the range of 5.5KWH to 6.5KWH per sq. metre of area.
57
Punjab
Solar irradiation in Punjab:
Punjab receives a solar radiation equivalent to 4-7Kwh/m2. Punjab has more than 330 days
in a year with good insolation levels.
Feb
4.28
4.39
4.58
4.21
4.33
4.39
4.58
Mar
5.35
5.55
5.65
4.97
5.38
5.55
5.65
Apr
6.39
6.46
6.66
5.66
6.6
6.46
6.66
May
7.31
6.45
7.39
6.14
7.39
6.45
7.39
Jun
7.22
6.33
7.08
6.25
7.28
6.33
7.08
July
6.11
5.92
5.86
5.57
5.99
5.92
5.86
Aug
5.66
5.7
5.43
5.35
5.56
5.7
5.43
Sep
5.5
5.59
5.54
5.04
5.59
5.59
5.54
Oct
5
4.88
5.25
4.53
5.23
4.88
5.25
Nov
3.92
4.08
4.22
3.71
4.09
4.08
4.21
Dec
3.19
3.32
3.4
3.16
3.25
3.33
3.39
Avg
5.27
5.18
5.38
4.84
5.33
5.18
5.38
The State is endowed with vast potential of solar energy estimated at 4-7 KWH / Sq mtr of
solar insolation levels and the Government is keen to tap this resource for strengthening
power infrastructure in the State by setting up Solar energy based power projects.
58
The govt. has offered the following financial and fiscal incentives for solar power projects:
To promote manufacturing and sale of NRSE devices/ systems, and equipments /
machinery required for NRSE Power Projects, Value Added Tax (VAT) shall be levied
@ 4%.
Octroi: on energy generation and NRSE devices/ equipment/ machinery for NRSE Power
Projects shall be exempted.
Wheeling: The PSEB/LICENSEES will undertake to transmit through its grid the power
generated from NRSE projects setup inside or outside the state and make it available to
the producer for captive use in the same company units located in the state or third party
sale within the state at a uniform wheeling charge of 2% of the energy fed to the grid,
irrespective of the distance from the generating station.
Sale of power: Power generation from Solar Energy Projects- Rs. 7.00 per unit (Base
Year 2006-07) with five annual escalations @ 5% upto 2011-2012.
Banking: The banking facility for the power generated shall be allowed for a period of
one year by the PSEB/ Licensees.
Exemption from Electricity duty: The Power Generation from NRSE projects shall be
exempted from levy of Electricity Duty.
59
Uttar Pradesh
Uttar Pradesh receives good amount of sunshine throughout the year.
The annual average solar radiation in Uttar Pradesh is about 4-6 Kwh/m2/day.
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg
3.58 4.65 5.53 5.96 6.33 5.98 4.94 4.51 4.68 4.69 3.91 3.42 4.85
3.58 4.65 5.53 5.95 6.33 5.98 4.94 4.51 4.68 4.69 3.92 3.42 4.85
3.79 4.83 5.93 6.39 6.55 5.68 4.56 4.31 4.48 4.8 4.23 3.6 4.93
3.73 4.85 5.97 6.89 7.39 6.51 5.16 4.65 4.88 5.18 4.3 3.64 5.26
3.84 4.98 6.02 6.56 6.48 5.85 4.47 4.43 4.36 4.7 4.26 3.72 4.97
3.71 4.64 5.73 6.17 6.39 6.04 5.19 4.78 4.99 4.79 4.07 3.45 5.00
3.68 4.7 5.66 6.05 6.39 5.85 4.81 4.47 4.54 4.8 4.05 3.55 4.88
3.72 4.75 5.71 6.64 6.39 5.98 5.01 4.49 4.78 4.93 4.05 3.5 5.00
3.58 4.65 5.53 5.96 6.33 5.98 4.94 4.51 4.68 4.69 3.91 3.42 4.85
3.71 4.64 5.73 6.17 6.39 6.04 5.19 4.78 4.99 4.79 4.07 3.45 5.00
3.41 4.25 5.28 5.88
6.5 6.34 5.66 5.35 5.02 4.54 3.74 3.2 4.93
3.71 4.64 5.73 6.17 6.39 6.04 5.19 4.78 4.99 4.79 4.07 3.45 5.00
3.95 4.84 5.66 6.19 6.26 5.66 4.52 4.21 4.72 4.85 4.17 3.75 4.90
3.62 4.63 5.68 6.19 6.54 5.88 4.78 4.45 4.45 4.83 4.14 3.52 4.89
60
Lucknow
Mathura
Meerut
Mirzapur
Moradabad
Muzaffarnagar
Saharanpur
Shahjahanpur
Table 12
3.62
3.68
3.6
3.78
3.74
3.6
3.58
3.73
4.63
4.6
4.53
4.86
4.82
4.53
4.52
4.75
5.68
5.43
5.73
6.01
5.9
5.73
5.69
5.71
6.19
5.9
6.7
6.44
6.47
6.69
6.77
6.64
6.54
6.23
7.28
6.48
6.62
7.28
7.5
6.39
5.88
5.95
6.68
5.68
6.12
6.68
6.89
5.98
4.78
4.95
5.54
4.53
5.2
5.54
5.62
5.01
4.45
4.54
4.9
4.31
4.74
4.9
5.05
4.49
4.45
4.76
5.17
4.47
4.94
5.17
5.35
4.78
4.83
4.62
5.01
4.69
4.97
5.01
5.36
4.93
4.14
3.93
4.15
4.24
4.13
4.15
4.33
4.05
3.52
3.47
3.47
3.71
3.49
3.48
3.51
3.51
4.89
4.84
5.23
4.93
5.10
5.23
5.35
5.00
61
Bihar
The Bihar government has announced new energy policy to attract capital investments in
producing energy through non-conventional sources.
Bihar Renewable Energy Development Agency (BREDA) Director Manish Kumar said
under the new policy christened as New Energy Policy 2011the state government has
allowed many concessions to the investors on this score.
Solar irradiation in Bihar:
Jan
4.13
4.06
3.95
4.04
4.08
3.95
4.06
Feb
5.26
5.21
5.21
5.01
5.25
5.21
5.21
Table 13:
Mar
6.2
6.19
6.32
5.69
6.2
6.32
6.19
Apr
6.57
6.81
6.84
6.21
6.71
6.84
6.81
May
6.48
6.87
7.04
6.29
6.71
7.04
6.87
Jun
5.36
5.71
5.85
5.19
5.55
5.85
5.71
July
4.37
4.55
4.61
4.36
4.47
4.61
4.55
Aug
4.33
4.54
4.7
4.21
4.44
4.7
4.54
Sep
4.06
4.37
4.45
4.2
4.18
4.45
4.37
Oct
4.82
4.92
5.03
4.53
4.86
5.03
4.92
Nov
4.57
4.57
4.61
4.27
4.56
4.61
4.57
Dec
4.07
3.97
3.93
3.87
3.97
3.93
3.97
Avg
5.02
5.15
5.21
4.82
5.08
5.21
5.15
62
Kerala
Solar irradiation in Kerala:
City
Jan
Cochin
5.63
Kollam
5.75
Thrissur
5.63
Thiruvananthapuram 5.75
Table 14:
Feb
6.18
6.39
6.18
6.39
Mar
6.58
6.75
6.58
6.75
Apr
6.03
6.15
6.03
6.15
May
5.39
5.47
5.39
5.47
Jun
3.96
4.74
3.96
4.74
July
4.17
4.82
4.17
4.82
Aug
4.64
5.18
4.64
5.18
Sep
5.29
5.66
5.29
5.66
Oct
4.8
5.18
4.8
5.18
Nov
4.87
4.89
4.87
4.89
Dec
5.17
5.25
5.18
5.25
Avg.
5.23
5.52
5.23
5.52
The objective of Kerala renewable energy policy is the development, propagation and
promotion of renewable energy sources and provision of single window services for project
clearance etc.
As per the mandate given by the MNES, ANERT shall be the state nodal agency for
coordinating all activities relating to renewable energy department.
63
Orissa
The average annual solar radiation in Orissa is between 5 to 6 kW-h/m2/day. Orissa, because
of its sub-tropical geographical location between the latitudes of 17 to 23oN, receives an
abundance of solar radiation throughout the year except for some interruption during the
monsoon and winter seasons.
With a total land area of 155,707 square kilometers, Orissa holds a vast potential for
harnessing very large quantities of solar power.
Moreover, large portions of the western part of the state, far away from the coasts, are in rain
shadow areas, which receive solar radiation round the year, virtually, without any
interruption.
According to Orissa Renewable Energy Development Agency (OREDA) estimates, the
potential of solar photovoltaic power of Orissa is 14,000 MW.
64
West Bengal
Howrah is set to do a Rajarhat as solar power will soon light up the town. The funds for the
dream project will be provided by the Union ministry of new and renewable energy
(MNRE).
"The central funds will give Howrah a badly needed makeover and make dark lanes a thing
of the past. A 16member team has been set up to give direction to the project," said Howrah
mayor Mamata Jaiswal.
Rajarhat has already seen the birth of eco-friendly houses and streets lit by solar power. The
Rajarhat New Town project was the first in SAARC countries and streets are lit up by solar
lights. Apart from the mayor and commissioner, the team includes professors from the
Bengal Engineering and Science University (BESU).
According to solar energy guru SP Gon Choudhury, 10% of the required energy would come
from the sun. Gon Choudhury is also the vice-chairman of the project.
Solar irradiation in West Bengal:
On an average West Bengal receives nearly 1600 kWh/m2 of solar radiation per year with
250 average sunny days.
Solar irradiation data of West Bengal cities monthwise:
City
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg
Asansol
4.1 4.97
5.7 6.11 6.09 4.96 4.33 4.13 4.08 4.39 4.26
4 4.76
Baranagar
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Barasat
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Barddhaman 4.1 4.97
5.7 6.11 6.09 4.96 4.33 4.13 4.08 4.39 4.26
4 4.76
Haora
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Kamarhati
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Kulti
4.19 5.01 5.59 6.01 6.11 4.85 4.24 4.05 4.06 4.45 4.21
4 4.73
Naihati
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Nangi
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Panihati
4.13 4.89 5.59 5.99 5.79 4.49 4.09 3.9 3.88 4.32 4.21 4.02 4.61
Siliguri
4.03 4.95 5.82 6.14 5.97 4.95 4.19 4.24 3.96 4.76 4.47
4 4.79
Table 16: Solar irradiation measured in kwh/m2/day onto a horizontal surface west bengal
65
Bank
Guarantee
Time available
to sign PPA
Time available
for
commissioning
Gujarat Policy
JNNSM
INR 15 for 12
years, INR 5 for
the next 13
years levelised
tariff for 25
years INR 13.30
INR 5 Million
per MW
45 days from
issue of letter of
intent
Fixed by
committee in
consultation
with developer
Median bid
INR 3 million
per MW
30 days from
issue of letter of
intent
12 after signing
PPA
Rajasthan
Policy
Competitive
bidding on
benchmark
tariff INR 15.32
Karnataka
Policy
Competitive
bidding on
benchmark
tariff INR 14.50
INR 2 Million
per MW
30 days from
the issue of
letter of intent
12 months after
signing PPA for
project upto 5
MW and 18 for
a larger size
180 days after
signing the PPA
INR 2 Million
per MW
30 days from
the issue of
letter of intent
18 months after
signing the PPA
No restriction
on foreign use
but specific IEC
standards to be
met
No restriction
on foreign use
but specific IEC
standards to be
met
66
Status of states
Top Performers
State
Gujarat
Rajasthan
Maharashtra
Karnataka
Tamil Nadu
Madhya Pradesh
Potential Risers
Orissa
Andhra Pradesh
Punjab
Haryana
Uttar Pradesh
Bihar
Kerala
J&K
Jharkhand
No Policy
Policy in draft status
Lacking
Existing Policy
Existing Policy
Policy in draft status
Existing Policy
Existing Policy
Total of 13 MWs
Total of 23.15MWs
Total of 9.325MWs
Total of 7.8MWs
Total of 12.4MWs
Total of 0.025 installed
Total of 16 MWs
Slow movers
Himachal Pradesh
North eastern states
West Bengal
Chhattisgarh
Table 20: Slow moving states
Lacking
Lacking
Lacking
Lacking
Total 2 MWs
67
Given the high cost of solar energy compared to grid electricity, the market relies on policy
support in order to create the demand for solar in the market. The Government of India
has introduced the RPO mechanism and is now making the purchase of renewable energy
mandatory by an amendment in the National Tariff policy. This will create a demand pull
for renewable energy in India. With this RPOs are the only demand drivers for solar power
until it reaches grid parity.
The forecast shows that states like Gujarat and Rajasthan with the highest solar potential
in India also have the largest RPO based demand. There are also states like Haryana and
Uttar Pradesh which have notified their RPOs but lack solar policies to support capacity
addition to meet their demands. For this, they will likely rely on projects under the NSM
and on the REC market. The demand in Andhra Pradesh, West Bengal and other states for
which the CERC benchmark for RPOs is used to project the demand, will be dependent on
the RPO policy adopted by each state in the future.
The government has taken concrete steps to create the demand for solar power in the
country, its turn of the industry to convert this potential demand into actual installed
68
capacity. NSM and Gujarat collectively awarded around 600MW worth of PV projects
which are to be commissioned by March 2012 but most of the projects will overshoot their
deadline. Future of some projects is unpredictable due to slow progress in projects, failure
to achieve financial closure and un-ability of developers which created un-willingness to
execute projects. The policy has provision to penalize the developers who failed to
develop the projects. It seems the developers are not taking it seriously as Indian
government is known for its leniency. Recently projects under NSM are given almost a
month extra from deadline to achieve financial closure. The government defended the
step by saying that as the market is new it has to show some leniency. The actual installed
MW capacity demand for solar power will rely on various key drivers in medium and long
term. The medium term driver tree shows that drivers of energy consumption like
economic growth and drivers of RPO requirements like enforcement of RPOs by the
respective states directly affects the potential of solar power. While in the long term apart
from policy and growth, cost of conventional energy fuels and countries strategy to
achieve energy security will create potential demand for renewable energy source like
solar
69
70
71
72
A third option is independent projects which are not under any specific solar policylike the
125MW solar plant being developed by MAHAGENCO, a state utility in Maharashtra. This
project is being developed to fulfill Maharashtras RPO. It will receive a FiT decided by the
Maharashtra Electricity Regulatory Commission. NTPC the central generating utility is
developing solar power plants of 10MW to sell solar power by bundling it with thermal
power to state of Orissa. The tariffs are not decided by any commission and the average per
unit cost of bundled solar power is less than FiT. The difference is compensated by the extra
revenue from thermal power component. In future private generators like Reliance Power
and ESSAR power can also develop such independent projects selling bundled power
directly to obligated entity at pseudo FiT.
FiTs offered have been reduced by close to 20% in the last one year due to the aggressive
bidding for projects and the expected fall in capital costs. The expected fall in costs are
reflected in the benchmark tariffs used in the solar policies of Karnataka and Rajasthan that
are around Rs. 15 ($0.37) per kWh, 15-20% lower than Rs.17.9120 ($0.44) per kWh under
the NSM.This has put a pressure on the viability of projects as, in many cases, the project
costs and risks have been underestimated. This, along with the payment risks associated with
the state utilities has jeopardized the bankability of projects. In the absence of a FiT, the
power producer can sell power to a DISCOM at the Average Pooled Purchase Cost (APPC)
or to third party consumers using the open access mechanism. The APPC is the average cost
of the total power bought from different sources at different rates by the DISCOMS. The
APPC tariffs however, are not as high as the FiTs and are unviable. RECs were introduced to
solve this problem. In addition, RECs also address the challenge of selling solar power
across states. Transmitting solar power over a long distance is challenging due to its un-firm
nature and scheduling required in inter-state transmission. A solar project can generate RECs
for sale in the open market to a consumer anywhere in India while receiving the APPC from
the local DISCOM. This also helps some small and medium size states like Himachal
Pradesh, Arunachal Pradesh and Jammu and Kashmir meet their RPOs as they either lack
the potential or the ability to build their own solar plants.
RECs can be generated by any developer who sells solar power to the public grid at the
APPC of the relevant distribution utility. The APPC varies from state to state and was
between INR 1.60-2.69($0.04-0.06) per kWh in 2010-1121.Each MWh worth of electricity
sold to the grid at the APPC is eligible to generate one REC which can be sold in the open
market to obligated entities that have a shortfall in their RPO compliance. Each REC issued
is valid for one year from the date of issuing. RECs in turn are worth a minimum of INR
12,000 ($300) per MWh or INR 12($.30) per kWh22(this is the guaranteed floor
price).RECs could also be generated when a developer sells solar power to third party
consumers at a mutually decided price. RECs are not applicable for projects in which power
is sold to the grid at a preferential tariff. Further, power producers which have begun to sell
power at a preferential FiT are not allowed to later switch to the REC mechanism. This
73
includes the NSM projects as well as the FiT based solar policies of Gujarat, Rajasthan and
Karnataka. The developers can sell RECs through the power exchange market to consumers
looking to fulfill their RPOs anywhere in India. The REC market is yet to pick up in India.
The biggest challenge it faces is the lack of a long term trajectory of REC pricing. The
current REC floor and forbearance price are only applicable up to 2012. The CERC issued a
suo-moto order to lower down the REC price post 2012. Recently, the CERC suggested that
if the prices of the RECs are reduced, then they may introduce a vintage REC mechanism.
A vintage REC mechanism is followed in many countries, in which a higher weightage is
given to the RECs generated from power plants which have been installed earlier. This
compensates for the higher capital cost associated with these plants. Another challenge is
that the trading price inside the CERC bandwidth depends on the market conditions creating
uncertainty on the returns. Due to this, developers face problems in raising debt because
they are unable to project their returns accurately for the loan repayment period. The REC
market will grow once the solar market strengthens in India. The market is also looking to
the government for making changes in the REC policy. Currently the RPOs which create
the primary market for the RECs have to be fulfilled on a yearly basis. As a result, obligated
entities go to the market to purchase RECs only at the end of a financial year. This creates a
spike in the cash flows of projects rather than continuous cash flows throughout the year.
This problem can be addressed by mandating that the RPOs are fulfilled on a quarterly
basis. The Indian solar market will be dependent on these two off-takes. The FiT will
provide the initial boost to the market and will gradually come down to the actual grid rates.
On the other hand, RECs, partially regulated and partially exposed to the market conditions,
will make the Indian solar market self-sustained in the long-term.
74
75
The heavy discounts offered are based on an overly optimistic assessment of the many
imponderables in the market. These are, for example, on-site solar irradiation, plant
availability and performance (Graph 2). The irradiation data used for projects at the
moment are either from NASA or The National Solar Radiation Data Base (NSRDB). This
data is based on satellite information and not on Direct Normal Incidence (DNI) observed
from on-ground locations. The developers have not factored the risk of the possibility of
76
lower DNIs based on on-ground measurements. Further, sunshine is only available for a
limited time in the day during which a breakdown in the BOS would cause heavy losses in
generation. The risk underperformance of the plant due to a breakdown in the BOS
components like inverters, switch-gears and the cooling system has been underestimated
for projects.
The developers have also tended to underestimate technical execution risks in their business
plans. Furthermore, land acquisition is proving to be a challenge along with increasing land
rates once the project is awarded. EPC sots too are proving to be higher than estimated.
Raising non-recourse debt from the Indian banks at low interest rates is another challenge
for developers. Banks do not have benchmarks to calculate the risks of solar projects. They
are passing on the cost of uncertainty to the developers and charging higher than average
interest rates. Large companies are able to raise debt on their balance sheets but have to pay
heavy collaterals. Stringent lending norms like the use of high quality equipment,
collaboration with a strong technology partner and a well-known EPC contractor have
caused delays in financial closures for projects and cost overruns. Such delays have left
little time for plant erection, leading to drastic cost inflations as developer shave tried to
employ more resources than initially planned to meet the deadlines. In the construction and
commissioning phases, there are difficulties like the limited availability of a power
transmission network. Laying transmission lines up to the sub-stations requires right-of-way
permissions from the land owners. In some cases, more than 50 permissions were required
to commission the plants. The melting of cables due to high temperatures and the damage to
BOS by rats in the solar field increased the O&M cost and also affected generation.
77
Security of the modules against theft is also a concern in India. Most of the developers have
miscalculated the costs associated with these risks.
78
Financing trends
Financing overview
Financing of solar projects in time continues to be a critical challenge for project developers. Banks show
concerns over factors such as: bankability of PPAs, lack of experience in the sector, uncertainty on
implementation of regulatory mechanisms such as RPOs and the REC mechanism and absence of reliable
irradiation and plant performance data among other factors.
For Indian banks, lending to solar projects is part of their overall lending to the power sector. With a limit
on the exposure a bank can have in a particular sector, most Indian banks consider solar projects to be too
small and also risky to even be considered for power sector lending.
Interest rates in India have been at an all-time high. This has a significant downside on the margins for
project developers who are already working with some of the lowest solar FiTs in the world.
These reasons have prompted many project developers to look for cheaper and more reliable sources of
project finance internationally. Developers such as Azure Power, Green Infra, Mahindra Solar and Kiran
Energy among many others have financed their projects using international financing sources in the past.
Overall, with an installed capacity of over 1.7 GW, much more clarity is emerging on the process and
structure of debt financing for solar projects in India. For projects under the batch two of phase one of the
NSM, most project developers were able to achieve financial closure for project capacities as large as
50MW within eight months. This shows the level of maturity that has developed in the market since batch
one of phase one of the NSM, where many developers had to show an internal financial closure through
pure equity funding for project capacities of 5MW. The improvement can be attributed to the large size of
the companies in terms of their balance sheets and also prior solar project development experience.
Financing options
There are various sources for debt finance available in the Indian solar market. They vary with respect to
speed, cost (interest rate), lending criteria, risk perception and motivation. Finding the right source of debt
financing is one of the key competitive advantages in an increasingly commoditized solar market.
Non-Banking Finance
Non-bank financial companies (NBFCs) are financial institutions that provide banking services without
meeting the legal definition of a bank, i.e. they do not hold a banking license. Some of the prominent
NBFCs that are open to financing solar projects include: L&T Infrastructure Finance Company (subsidiary
79
of L&T Financing Holdings), Power Finance Corporation (PFC), Mahindra Finance, IDFC, IL&FS and SBI
Capital Markets.
The procedure, interest rates and expectations with regards to IRR and DSCR for NBFCs is similar to that
of the Indian banks.
NBFCs can be of the following types:
1. Infrastructure funds: Infrastructure funds are specialized NBFCs focusing on infrastructure
investments. It is useful to categorize them separately as most of them are actively involved with
solar investments in India. Infrastructure Development Finance Company (IDFC) is a key
infrastructure fund that is actively financing projects in India.
2. Dedicated power sector financing: The Power Finance Corporation (PFC) and Rural Electrification
Corporation are the two leading public finance companies dedicated to India's power sector. Both are
financing solar projects in India. PFC is Indias largest state-run lender to electricity utilities.
3.
Investment banks: Investment banks typically syndicate debt from multiple sources and make it
available to the borrower under a single contract. Among Indian investment banks, SBI Capital
Markets (SBICAPS) has been a prominent player in financing solar projects. In most instances,
foreign banks that are not comfortable with lending to a developer directly may be open to lending to
such Indian investment banks for a portfolio of similar projects. This debt is then passed on to the
developers with a margin and a hedging charge.