Rooftop Solar Projects in the Uttar Pradesh Solar Policy 2017

Posted on Posted in Knowledge Center, Solar Facts

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.

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