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India’s solar park power tariffs hit a record low of  ₹1.99 per unit at an auction conducted by Gujarat Urja Vikas Nigam Ltd and are expected to decline even further. Photo: Pradeep Gaur/Mint
India’s solar park power tariffs hit a record low of 1.99 per unit at an auction conducted by Gujarat Urja Vikas Nigam Ltd and are expected to decline even further. Photo: Pradeep Gaur/Mint

Gujarat announces new solar policy

  • The new policy offers incentives such as no restriction on contract demand, allowing leasing of roofs, net metering, and a banking facility

New Delhi: The new solar policy announced by the Gujarat government on Tuesday offers a slew of incentives such as no ceiling on capacity to be installed and allowing consumers to lease their roofs and premises for setting up plants.

In addition, residential and Micro, Small and Medium Enterprises (MSME) consumers can sell the surplus power generated after meeting their consumption needs at a tariff of 2.25 per unit.

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“For Residential Consumers (Surya Gujarat Yojana) and MSMEs (manufacturing) for captive usage, DISCOMs will purchase surplus energy after set off against their consumption at 2.25 per unit for initial 5 years and thereafter at 75% of latest tariff discovered and contracted by GUVNL through competitive bidding process for non-park based solar projects in preceding 6 months which shall remain fixed for remaining life of the project," the state government said in a statement.

This comes in the backdrop of India’s solar park power tariffs hitting a record low of Rs1.99 per unit at an auction conducted by Gujarat Urja Vikas Nigam Ltd and are expected to decline even further.

Solar power developers have welcomed the move.

“The policy is fairly progressive in terms of promoting distributed energy in terms of providing net metering, no restriction on contract demand and most importantly providing a banking facility for a fee, which is the right way to promote distributed solar," said Sanjeev Aggarwal, founder and managing director of Amplus, one of India’s largest rooftop solar power producers.

“Gujarat has also opened up setting up of plants by third party developers but the cross-subsidy surcharge issue still lingers on as the policy is still not allowing the Electricity Act mandated provision of captive with 26% equity participation by users. If this one more step is taken, this will be the most progressive policy for rooftop solar," he added.

India aims to have 175 gigawatt (GW) of clean energy capacity by 2022, including 100GW from solar projects. Of this, 40 GW is to come from solar rooftop projects. However, India’ solar rooftop projects haven’t taken off. The government on its part is trying to promote solar rooftop, with Prime Minister Narendra Modi recently calling for each state to have at least one "solar city" whose electricity needs would be met entirely through rooftop solar power.

“In order to encourage small scale solar projects, power Distribution Companies will now purchase power from these small-scale solar projects (up to 4 MW) at 20 paise / unit tariff higher than tariff discovered through competitive bidding while DISCOMs will purchase solar power from projects above 4 MW capacity through competitive bidding process," the statement said.

This comes at a time when India’s power demand has been rising. According to the union government. India’s electricity demand has risen on a yearly basis, with December’s daily consumption in excess of 5-10 GW when compared to last year.

“Any person/developer/consumer can set up solar projects without any capacity ceiling while the existing ceiling of 50% sanctioned load/contracted demand has been removed," the statement said and added, “The provision for security deposit to be submitted by developer to DISCOMs has been reduced from 25 lakh/ MW to 5 Lakh/ MW."

An investment of 4.7 trillion has been made in India’s renewable energy space over the past six years. That is likely to rise to 1 trillion annually till 2030, according to government estimates.

“Gujarat model is already proving to be very important in solar power sector. Moving forward in the same direction, Gujarat Government has made an important decision to make Gujarat a hub of green energy by expanding RE (renewable energy) generation base," said chief minister Vijay Rupani in the statement.

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