Hedging Solar Project risk with Insurance

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With Solar Power projects being largely backed with Non-Banking Financial Companies (NBFCs) and Private Equity Firms (PEs), Solar PV Projects were never considered something anyone would easily invest in. While the project return expectations were high, the risks were considered equally high (refer, despite dropping costs, it’s still around 14%).

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‘Solar Project Investment’ had a futuristic aura linked to it making it ‘non-mainstream’ financial instrument. Even though banks have been directed in the budgets of 2015, 2016 and 2017 to start disbursing loans for solar, little action has been seen on ground. (more…)

Solar Net & Gross Metering in the state of Jharkhand

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This blog would cover the net-metering and gross-metering regulations for the state of Jharkhand. The regulations were issued in January, 2016 and would be valid upto March 2021. The gazette may be accessed here.

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Distribution Licensees of Jharkhand who it applies to (refer): JBVNL (refer)

JUSCO (refer)

BPSCL (refer)

As an increasing trend, state regulatory commissions are including ‘gross metering’ as well in their regulations. Similarly, these regulations apply to both Gross and Net- Metering.

Highlights

Anyone claiming accelerated depreciation on a project cannot avail gross metering, but only net-metering

A customer may only opt for either net-metering or gross metering for single or multiple projects within the same premises

Net/ Gross metering would be offered on a first come first serve basis

Capacity limit: 100% of the sanctioned load of the consumer

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A suppressed Rooftop Solar demand set to rise again in Gujarat

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In an amendment of the Gujarat Solar Net Metering Policy (refer), there seems to be some good news. One of the reasons why Rooftop Solar Projects had slowed in the recent past in Gujarat can be attributed to the limit put by GERC earlier on ‘what capacity’ solar plant can be installed which was only 50% of the sanctioned load (refer).

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However, in the amendment, the limit has been altogether removed. But, this has been done only for the Residential Customer. The capacity limit of 50% remains for all other segments for the ‘Initial 2 years’. This would probably mean, the capacity maybe increased after 2 years or operation. This regulation is unique to Gujarat and may have a lesser thought of implication which is that in two years, AD maybe completely phased out hence, allowing the government not to lose out on tax collection by too much. This is considering that most Commercial Establishments use Installation of Solar Power also as a tax saving tool.

 

Looking at some facts
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Assessing the battery backed utility scale Solar Project: Andaman

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As per recent developments, the first ever battery backed Solar Project has been awarded to Mahindra Susten (refer), which emerged as the lowest bidder! This comes as a surprise with Mahindra not winning the last few bids which discovered progressively lower tariffs (INR 3.15, INR 2.44).

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Neyveli Lignite Corporation (NLC) invited bids for setting up the 20 MW project in Andaman and has recently awarded it Mahindra after an extending the bid owing to a poor response earlier (refer). The project will have 28 MWh of battery which equates to 28 MW consumed continuously for one hour. This is a 5 times increase from the current capacity of solar PV around 5 MW in Andaman (Page 1, refer).
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Rooftop Solar Projects in the Uttar Pradesh Solar Policy 2017

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The Uttar Pradesh Solar Policy (Draft) highlights a few important figures on capacity of Solar Energy in India. It states that the potential stands at a whopping 23.8 GW in the state out of which the MNRE target is 10.7 GW (4.3 GW in Rooftop) by 2022. The current installed capacity however, stands at 0.269 GW (as of January 2017) which is only 2.5% of the target (refer).

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Among the types of Solar Projects for which the Solar Policy is applicable for (see below), only Rooftop Projects have a definite target to achieve:
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Standardizing Solar PV in India: MNRE

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Our last few blogs have been about analyzing some of the announcements and clarifications by Ministry of New and Renewable Energy and yet again, the organization has some more news for us. The gazette was signed on 30th August, 2017 itself, however, was published on the website only recently.

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This gazette (refer) focuses on standardizing quality of material used and hence the Solar PV projects executed. It aims to address the larger concern in the market of “who takes responsibility if my solar power system doesn’t work”. MNRE takes that responsibility.
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Who’s eligible for Solar Subsidy: MNRE Clarifies

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MNRE is actively putting out clarifications that the industry has been seeking. The last one was on Concessional Custom Duty Exemption (refer) and now, there is one on who’s eligible for subsidy (refer). We hope that this clarifies the mess about who really is eligible for subsidy. A brief of the clarification is as follows:

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  • All rooftop solar power plants, whether net-metered/ gross-metered or not, are all eligible for Central Financial Assistance or Subsidy of 30% provided by Ministry of New and Renewable Energy. Of course, this has a restriction that it is only for those of the Institutional, Domestic or Social Sector (refer)

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MNRE clarifies: Concessional Custom Duty Exemption continues post GST

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Slowly, but surely, clarifications are coming in about the duties and taxes that are there to stay and those that would no longer be valid. In a recent notification on 21st August 2017, Ministry of New and Renewable Energy clarified that Concessional Custom Duty Certificates (CCDC) will continue to be issued. It will be issued on the Bill of Materials to be imported for setup of the Solar Plant (refer).

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The process to be followed for acquiring CCDC may be viewed here. The application for CCDC may be submitted via this link. The move to keep CCDC has led to the industry taking a sigh of relief in the midst of projects that EPCs have acquired but have not yet started construction for. Although, most industry members would agree, the delay in these clarifications has led to considerable delay in project execution as well, meaning costs.
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The birth of something new: Ezy-Bidding

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Yes, the industry has progressed. Solar Energy is booming, it’s the future! We just hit a record low tariff of INR 2.44 for Solar Energy- proving that grid electricity won’t be here for long. Yet, there is something extremely important that has lacked in the industry: Efficiency. It’s ironical that we speak of ‘energy efficiency’ when the industry is not able to deliver efficiency in work completion itself.

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Sometimes, it’s about approvals and sometimes about lagging timelines for equipment delivery or high prices offered by equipment suppliers. Of course, we all get bothered by it, yet, we have not been able to address this issue since our hands had been tied. After a lot of thinking and brain-storming, we came up with an idea which we thought may address part of the problem. (more…)