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).

UP
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:

  • Utility Scale Solar Power Projects
  • Rooftop Projects (4.3 GW)
  • Off-Grid Applications

The regulations that would be followed for Net-Metering & Gross-Metering of grid connected rooftop projects would be the same as before (refer). Among Rooftop Projects installed on government/ public institutions, push would be given to RESCO Projects where investor invests in the project and the institution pays a tariff. Security of payments in such a scenario remains under question. Also, it would largely depend on the framework of the contract that would be designed by UPNEDA.
The policy interestingly states, that the Government of Uttar Pradesh would allocate funds and payment security for CAPEX and RESCO projects respectively. However, with our past experience, we can say it remains under question. For projects done on CAPEX, the institutions will avail benefit of ‘Achievement Linked Incentive’ (refer) which is a cost compensation depending on the percentage of target achieved.

Residential and Private Institutions
An incentive of a maximum absolute amount of INR 20,000 rupees would be disbursed in subsidy/customer; below which it would be disbursed at the rate of INR 10,000/ kW. This is similar to what Haryana had proposed in its 2014 Solar Policy and thereafter removed it in the policy that came out in 2016 (refer). This subsidy is over and above the subsidy provided by Ministry of New and Renewable Energy and would be disbursed only after the completion of the project. Let’s say, disbursement is not a problem. Let’s see how the viability of the project will be increased.
Example case:

  • 3 kW project priced at INR 2.25 lakhs
  • Subsidy by the central government~ INR 75000
  • Subsidy by the state government= INR 20000
  • Cost after subsidy= INR 1.30 lakhs
  • Cost of the net meter~ INR 15,000

So the subsidy will merely just absorb the cost of the net meter. But, that’s a decent difference made for a small project. The project payback period will be reduced by a full year! However, that depends on two major factor:

  • Availability of funds with the State
  • Seamless process of application disbursement of subsidy

From the directional stand point, the policy is definitely sound. We hope, from an implementation stand point, some schemes/ orders follow. Till now, the issues in Uttar Pradesh that have remained are: lack in training support for implementation of net-metering, subsidy disbursements etc. We hope these are resolved with the new policy and new government in place in Uttar Pradesh.

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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MNRE brings transparency and takes accountability for subsidy

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The Ministry of New and Renewable Energy recently put out a public notification which highlights the complaints received by customers about EPC Companies and State Nodal Agencies (refer). This comes hugely in favor of end customers be it Commercial or Domestic.

It clearly highlights the complaint and who it has been raised against. Also, the action that would be taken if the accused party fails to resolve it. This was a much needed move that was needed in the market to build trust. So far, the market had witnessed many projects being executed with unmet promises and end customers were left merciless.

MNRE clearly makes it transparent the State Nodal Agencies who are not or have not released subsidies for projects (despite submission of applications) giving them a time frame of 15 days to do the same. MNRE also claims that should the SNA fail to do so, the complaint will not be removed from the website.
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Emergence of a unique customer-base for Solar: Powerloom Units

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If you’ve been in the Solar Energy Industry for the past 3-4 years and you’re beginning to think the excitement of the government might have died for Solar Energy, I’d like to stop you right there. The government has introduced yet another scheme for the Solar Energy sector which is an opportunity for those doing business and affordable & beneficial for the end customers.

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