study of business environment for solar power project by new

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1 Summer Internship Report on Study of Business Environment for Solar Power Project by New Market Entrants under the guidance of Mr. S K Choudhary, Principal Director, CAMPS, NPTI & Mr Dipanshu Gupta, Senior Manager, Global energy Pvt Ltd AT Submitted by: Ajay Pratap Singh Registrration No.12 NPTI0031 MBA-Power Management

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Page 1: Study of Business Environment for Solar Power Project by New

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Summer Internship Report on

Study of Business Environment for

Solar Power Project

by New Market Entrants

under the guidance of

Mr. S K Choudhary, Principal Director, CAMPS, NPTI

&

Mr Dipanshu Gupta, Senior Manager, Global energy Pvt Ltd

AT

Submitted by:

Ajay Pratap Singh

Registrration No.12 NPTI0031

MBA-Power Management

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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

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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.

Ajay Pratap Singh

(MBA – Power Management)

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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

company‘s 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

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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

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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 non-

conventional 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.

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In the report I have tried to explore and analyze the solar PV market’s complete value chain.

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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

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located in isolated areas is a potential challenge. It may require development of new

transmission lines, which are often controversial, both because of their expense and the

potential of damage to property and environment.

The risks identified and classified as per their impact, probability and time horizon indicates

the overall nature of the risk on the solar sector as a whole. However, these risks are an

even greater concern at a project specific level, where risk avoidance and mitigation

measures tend to be limited and expensive. It is important to determine which of these risks

directly impact project viability, and to what extent. As can be discerned from the analysis

above, certain risks have a direct impact on interest rates and capital costs, which are among

the two most important factors affecting project viability. This report analyses the extent of

impact that these specific risks and their mitigation measures can have on interest rates.

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Abbreviation

APPC Average Power Purchase Cost

CEA Central Electricity Authority

CERC Central Electricity Regulatory

Commission

CPP Captive Power Plant

CSP Concentrating Solar Power

DTC Direct Tax Code

FDI Foreign Direct Investment

FI Financial Institutions

GDP Gross Domestic Product

GOI Government of India

IDC Interest During Construction

IEA International Energy Agency

IFC Infrastructure Finance

Company

IREDA Indian Renewable Energy

Development Agency

IRR Internal Rate of Return

JNNSM Jawaharlal Nehru National

Solar Mission

KV Kilo Volt

kWh Kilo Watt Hour

MNRE Ministry of New and

Renewable Energy

MOP Ministry of Power

NAPCC National Action Plan on

Climate Change

NBFC Non-Banking Financial

Company

NTPC National Thermal Power

Corporation

NVVN NTPC Vidyut Vyapar Nigam

Ltd

O & M Operation and Maintenance

PE Private Equity

PFC Power Finance Corporation

PLF Plant Load Factor

PPA Power Purchase Agreement

PSA Power Sale Agreements

PTC Parabolic Trough Collector

PV Photo-Voltaic

REC Renewable Energy Certificate

REC Rural Electrification

Corporation

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RES Renewable Energy Sources

RPO Renewable Purchase

Obligation

SPD Solar Project Developer

STU State Transmission Utility

WtE Waste to Energy

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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

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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

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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

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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

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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.

Figure 1: SOLAR PV TECHNOLOGIES

SOLAR ENERGY TECHNOLOGIES

SOLAR PV

CRYSTALLINE THIN FILM

SOLAR THERMAL

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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-by-

day. 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. India‘s 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 Sun‘s 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.

The second is the semiconductor junction, which separates the photo-

generated carriers (electrons and holes), and

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The third is the contacts on the front and back of the cell that allow the current

to flow to the external circuit.

The two main categories of technology are defined by the choice of the semiconductor:

Crystalline Silicon is in wafer form and thin films is composed of other materials.

Figure 2: types of basic PV techniques

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

Solar PV Technology

Crystalline Silicon

Mono Crystalline Poly Crystalline

Thin film

Amorphous Silicon a-si

Cadmium Telluride

Copper Indium(Gallium)

Diselenide

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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.

Thin film Technology

The materials costs are significantly reduced. The thin film semiconductor layers are

deposited on to either coated glass or stainless steel sheet.

Amorphous silicon

It is the well-developed of the thin film technologies. Disadvantage is such cells

suffer from significant degradation in their power output (in the range 15-35%) when

exposed to the sun. Better stability requires the use of thinner layers in order to

increase the electric field strength across the material. However, this reduces light

absorption and hence cell efficiency.

This has led the industry to develop tandem and even triple layer devices that contain

cells stacked one on top of the other. Thin film cells are laminated to produce a

weather resistant and environmentally robust module. Although they are less

efficient thin films are potentially cheaper than C-Si because of their lower materials

costs and larger substrate size. They can reduce the cost by as much as 60% of C-Si.

But some thin film materials have shown degradation of performance over time and

stabilized efficiencies can be 15-35% lower than initial values. Many thin film

technologies have demonstrated best cell efficiencies at research scale above 13%,

and best prototype module efficiencies around 10%. Amorphous silicon has an

interesting avenue of further development through the use of "microcrystalline"

silicon which seeks to combine the stable high efficiencies of crystalline Si

technology with the simpler and cheaper large area deposition technology of

amorphous silicon.

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However, conventional C-Si manufacturing technology has continued its steady

improvement year by year and its production costs are still falling too. Thin films

have long held a niche position in low power (<50W) and consumer electronics

applications, and may offer particular design options for building integrated

applications.

Technology pattern for solar power projects

Information as available from various developers indicate the following pattern of

technology which will be adopted for setting up solar PV and solar thermal power projects

of 802 MW capacity under JNNSM.

Figure 3: CSP techniques in use

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Figure 4: various technology utilization under various schemes

C-Si

Thin film

0

20

40

60

80

100

120

Total RPSSGP NVVN

Chart Title

C-Si Thin film

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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 non-

conventional 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.

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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

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SIGNIFICANCE OF THE STUDY:

This report gives a comprehensive account of all aspects Indian Solar PV markets the

potential, the actual opportunities and threats to be faced by it. The various off-takes

available in the Indian solar market and manufacturing capacities required. The report act as

guide for new developers who wants to enter into the market.

Overview and installed capacity:

Until a few years ago solar power played an almost non-existent role in the energy mix of

this country, the total installed capacity before the announcement of JNNSM was a mere

17.8 MWs which now stands above 1.69 GWs in just over 3 years backed by a rising RPO

and conducive environment created by JNNSM and various other state level policies.

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Figure 5:

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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

Factors Favouring Solar Energy in India

Equivalent energy through

solar radiation

5,000 trillion kWh/year

Clear sunny weather

250 to 300 days a year

Annual global radiation

1600 to 2200 kWh/m2

Geographical alignment tropical and subtropical

region

Average solar insolation

incident

about 5.5 kWh/m2 per day

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India's land area required to

meet electricity

requirements till 2030

1%

Power generation potential

Using solar PV technology

Estimated to be around

20MW/sq. km

Using solar thermal Estimated to be around

35MW/sq. km.

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Review of existing literature Electricity Act 2003 Section 3. (1) says…..”The Central Government shall, from time to time, prepare the

national electricity policy and tariff policy, in consultation with the State Governments and

the Authority for development of the power system based on optimal utilisation of resources

such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of

energy.”

Section 4. Stipulates …..”The Central Government shall, after consultation with the State

Governments, prepare and notify a national policy, permitting stand-alone systems

(including those based on renewable sources of energy and non-conventional sources of

energy) for rural areas.”

Under section 6 of the act it is given as “The Appropriate Commission shall, subject to the

provisions of this Act, specify the terms and conditions for the determination of tariff, for

the promotion of co-generation and generation of electricity from renewable sources of

energy”

Under section 86 “The State Commission shall promote cogeneration and generation of

electricity from renewable sources of energy by providing suitable measures for

connectivity with the grid and sale of electricity to any person, and also specify, for

purchase of electricity from such sources, a percentage of the total consumption of

electricity in the area of a distribution licensee”

National Tariff Policy Para 6.4 of National Tariff Policy on Non-conventional sources of energy generation

including Co-generation: 1. Pursuant to provisions of section 86 (1) (e) of the Act, the Appropriate Commission shall

fix a minimum percentage for purchase of energy from such sources taking into account

availability 15 of such resources in the region and its impact on retail tariffs. Such

percentage for purchase of energy should be made applicable for the tariffs to be

determined by the SERCs latest by April 1, 2006.

It will take some time before non-conventional technologies can compete with conventional

sources in terms of cost of electricity. Therefore, procurement by distribution companies

shall be done at preferential tariffs determined by the Appropriate Commission.

2. Such procurement by Distribution Licensees for future requirements shall be done, as far

as possible, through competitive bidding process under Section 63 of the Act within

suppliers offering energy from same type of non- conventional sources. In the long-term,

these technologies would need to compete with other sources in terms of full costs.

3. The Central Commission should lay down guidelines within three months for pricing

non-firm power, especially from non–conventional sources, to be followed in cases where

such procurement is not through competitive bidding.

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GENERATION BASED INCENTIVE UNDER RPSSGP SCHEME OF

MNRE 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.

Classification of Project Scheme(s) and Eligibility Conditions:

The Projects under these guidelines fall within two broad categories:

The projects connected to HT voltage at distribution network (i.e. below 33 kV)

The projects connected to LT voltage i.e. 400 volts (3-phase) or 230 volts (1-

phase).

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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.

Renewable Energy Scenario in India India has one of the largest and fastest growing economies in the world, as well as an

expansive population of above 1.1 billion people. There is a very high demand for

energy, which is currently satisfied mainly by coal, foreign oil and petroleum, which

apart from being a non-renewable, and therefore non-permanent solution to the energy

crisis, it is also detrimental to the environment. India is blessed with an abundance of

sunlight, water and biomass. Vigorous efforts during the past two decades are now

bearing fruit as people in all walks of life are more aware of the benefits of renewable

energy, especially decentralized energy where required in villages and in urban or semi-

urban centres. India has the world’s largest programme for renewable energy.

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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 world’s 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.

India’s 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.

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Historical Growth of the Solar Market in India

The Rural Electrification Program of 2006 was the first step by the Indian Government in

recognizing the importance of solar power. It gave guidelines for the implementation of off-

grid solar applications. However, at this early stage, only a mere 2MW of capacity was

installed through this policy. This primarily included solar lanterns, solar pumps, home

lighting systems, street lighting systems and solar home systems. In 2007, as a next step,

India introduced the Semiconductor Policy to encourage the electronic and IT industries.

This included the Silicon and PV manufacturing industry as well. New manufacturers like

Titan Energy Systems, Indo Solar Limited and KSK Surya Photovoltaic Venture Private

Limited took advantage of the Special Incentive Scheme included in this policy and

constructed plants for PV modules. This move helped the manufacturing industry to grow,

but a majority of the production was still being exported. There were no PV projects being

developed in India at this stage. There was also a need for a policy to incorporate solar

power onto the grid. The Generation Based Incentive (GBI) scheme, announced in January

2008 was the first step by the government to promote grid connected solar power plants.

The scheme for the first time defined a feed-in tariff (FIT) for solar power (a maximum of

INR 15 or $0.37per KWh). Since the generation cost of solar power was then still around

INR 18 ($0.45) per KWh, the tariff offered was unviable. Also, under the GBI scheme, a

developer could not install more than 5MW of solar power in India, which limited returns

from scale. One of the main drawbacks of the GBI scheme was that it failed to incorporate

the state utilities and the government in the project development, leaving problems like land

acquisitions and grid availability unaddressed. As a result, despite the GBI scheme, installed

capacity in India grew only marginally to 6MW by 2009. In June 2008, the Indian

government announced the National Action Plan for Climate Change (NAPCC). A part of

the plan was the National Solar Mission (NSM). It was announced in December 2009 with

the aim of finally initiating the solar industry in India. 21

The NSM guidelines indicated that the government had improved on the shortcomings of

the GBI scheme. It aimed to develop a solar industry, which was commercially driven and

based on a strong domestic industry. The extra cost of generation of solar power was being

borne by the federal government under the GBI scheme. Even before the NSM, Gujarat was

the first state to come up with its own solar policy in January 2009. The Gujarat solar policy

initiated a process of the states formulating their own policy frameworks independent of the

federal guidelines. The renewable purchase obligations for state distribution companies, a

demand-driven scheme, further accelerated the formulation of solar policies at the state

level. These policies exist independent of each other as well as the NSM. One of the key

novelties of the Gujarat policy was that it introduced the concept of solar parks. These parks

offered a comprehensive solution to concerns over land acquisition, grid connectivity, and

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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.

Table 2: capacity target in NSM

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Important market development:

NSM Application Segment Target for phase

I(2010-2014)

Target for phase

II(2013-2017)

Target for phase

III(2017-2022)

Utility grade including

roof top

1000-2000MWs 4000-10,000MWs 20,000Mws

Off grid solar

application

200MWs 1000MWs 2000MWs

Solar collectors 7 million sq. meters 15 million sq meters 20 million sq. meter

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.

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Figure 6: Discount offered in batch I Phase I

Table 3: Bidding results batch i phase i

Solar PV Solar Thermal

CERC Approved tariff for solar PV

(Normal Depreciation)

CERC Approved tariff for solar Thermal

(Normal Depreciation

1791 Paise/ Kwh 1531 Paise / Kwh

Max discount

offered

(Paise)

Min. discount

Offered

(Paise)

Max discount

offered

(Paise)

Min. discount

Offered

(Paise)

696 515 482 307

Final tariff discount for Solar PV (Paise /

Kwh)

Final tariff discount for Solar Thermal (Paise

/ Kwh)

1095 1276 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

0

50

100

150

200

250

300

350

400

0

10

20

30

40

50

60

70

80

601-700 501-600 401-500 301-400 201-300 101-200 zero

Discount offered in Paisa/Unit

No. of Bids (Primary axis) capacity(MW) (Secondary Axis)

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projects was 1141 Paise/kWh which was 25% lower than the CERC approved benchmark

tariff of 1531 Paise/kWh for solar thermal plants.

Batch II, Phase I

Under Batch II of Phase I, the total aggregate capacity of grid connected Solar Projects was

350 MW for the deployment of Solar PV Power Projects. NVVN had been designated as

the nodal agency for procurement of solar power and for carrying out the bidding process.

On August 24, 2011, NVVN invited Request for Selection (RfS) from interested developers

to develop 350 MW solar PV projects with a capacity in multiple of 5 MW, Minimum

capacity 5 MW & Maximum Capacity 20 MW for each project. Total Capacity for each

bidder was limited to 50 MW. NVVN received 183 bids from project developers indicating

discounts offered by each on CERC approved benchmark tariff of 1539 paisa/kWh.

Discount offered by the bidders was in the range of zero paisa to 790 paisa per unit.

Figure 7: discount offered phase i batch ii

0

200

400

600

800

1000

1200

0

10

20

30

40

50

60

70

701-790 601-700 501-600 401-500 301-400 201-300 101-200 zero

Discount offered in Paisa/Unit

No. of Bids (Primary axis) capacity(MW) (Secondary Axis)

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Table 4: bidding results Phase i batch ii

Solar PV

CERC Approved tariff for solar PV (Normal Depreciation)

1531 Paise / Kwh

Max discount offered (Paise) Min. discount Offered (Paise)

790 595

Final tariff discount for Solar PV (Paise / Kwh)

749 944

GUJARAT SOLAR POLICY

The state of Gujarat was the first Indian state to launch its own solar policy in 2009 even

before the NSM. The current policy is operative until 2014 but a new policy is expected

before it ends. The initial target was to achieve an installed capacity of 500 MW. Given the

interest from a large number of developers and an assumption that some projects may not be

implemented, the government allocated projects worth 958.5 MW of PV. Unlike the NSM,

Gujarat has not opted for reverse bidding as a means to allocate projects, nor does the policy

have a Domestic Content Requirement (DCR). The tariff was fixed as shown in Table 3.

From Table 1, no project allocations are expected from Gujarat since the state’s RPOs have

been fulfilled. Future project allocations are likely to be through the REC mechanism.

KARNATAKA SOLAR POLICY

Karnataka announced its solar policy in July 2011. 80 MW was auctioned through a reverse

bidding process held in November 2011 out of which 70 MW was allocated to PV. These

projectsare expected to be commissioned by the end of 2013. The lowest bid received was

at ` 7.94 (€0.12)/ kWh while the highest winning bid received was at ` 8.50 (€0.13)/kWh.

Karnataka has abolished all wheeling and transmission charges in order to promote

investment in solar energy. The solar policy does not mandate a DCR. The policy aims to

add another 120 MW over the next five years.

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RAJASTHAN SOLAR POLICY

The Rajasthan solar policy was expected to be announced in early 2012. Due to delays, the

Request for Proposal (RfP) of the policy was announced only in November 2012. The

policy expects an allocation of 150 MW (100 MW of utility-scale projects and 50 MW of

rooftop projects). The policy aims at achieving an additional 200MW of capacity addition

until 2017.

MADHYA PRADESH SOLAR POLICY

The Madhya Pradesh solar policy was approved by the state cabinet in July

2012. It is expected that the state will allocate 800MW of solar power under the

policy. The projects will be divided into four solar parks of 200MW each.

However the policy document does notoffer any clarity on the total targeted

capacity addition, the time frame for the execution of the policy, eligible entities

and the method of allocating projects or the incentives under the policy. As the

policy does not clarify the allocations, Table 1 assumes that one solar park of

capacity 200MW will be available each year between the period 2013 to 2016.

ANDHRA PRADESH SOLAR POLICY

The Andhra Pradesh Solar Policy abstract was announced on September 26th 2012. It is the

first solar policy to be based entirely on the REC mechanism. The policy waives wheeling

and transmission charges. The policy also includes exemption from Cross Subsidy

Surcharges (CSS) and Electricity Duty, and a refund on Value Added Taxes (VAT) on all

components of the plant and on stamp duty and registration charges on the purchase of land.

These concessions are against the Central Electricity Regulatory Commission (CERC)

ruling, which states that REC based projects cannot avail any other benefits. Clarification is

awaited from the Andhra Pradesh government on this matter. A more detailed policy

announcement is expected by early 2013.

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TAMIL NADU SOLAR POLICY

The Tamil Nadu solar policy was announced in October 2012 and aims to achieve 3 GW by

2015. The table below lists the allocation of the policy by segments.

The policy is the first policy to include net-metering, which will allow rooftop connection at

the LT distribution network. The Tamil Nadu policy lays a strong emphasis on the

fulfillment of Solar Purchase Obligations (SPOs). SPOs are mandated on the following

entities: Special Economic Zones (SEZs), IT parks, industrial consumersguaranteed with

24/7 power supply, colleges, telecom towers, residential schools and all buildings with a

built up area of more than 20,000 square meters. For the REC projects, there are no

concessions unlike the Andhra Pradesh solar policy. The guidelines are expected to be in

line with the national policy on RECs.There is no Domestic Content Requirement (DCR)

under this state policy. For a detailed analysis on the Tamil Nadu state policy please

download our free INDIA SOLAR POLICY BRIEF on the Tamil Nadu Solar Policy.

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Potential establishment for solar market in India

Table 5: established potential of solar market in india

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

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

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

Incentive of

upto 12Rs per

KWh for

solar PV and

10Rs per

KWh for

solar thermal

Each year only

40 MW is

allowed

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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

Exemption

from

electricity

duty and

CESS for 10

year also 4%

grant for

wheeling

charges

Equipment

free from

VAT

Tamil Nadu 3000 MW by

year 2015

Atleast a park

0f 50MW

capacity in 24

districts

Various other

sizes of solar

park defined

100%

exemption

from various

duties for 5

years

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

Gujrat 3000MW by

2014

Power

purchase upto

15Rs/KWh

PPAs for

nearly 972

MWs already

signed

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

various land

conversion

charges also

various other

benefits

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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

Exemption

from octroi

Captive

generation

exempt from

electricity

duty, 100%

exemption

from payment

of stamp duty

also

Policy in draft

state

Uttar

Pradesh

500 MWs by

2017

Land yet to

be identified

No special

privileges as

such.

Privileges

under the sate

industrial

policy 2012

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

No special

privileges

other than

ease in land

allotment

O

Kerela 500 MWs by

2017 and

1500 by

2030

Policy in draft

state

Also there is

going to be a

obligation on

everyone

including

domestic

consumer

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Maharashtra Not defined Not allocated None 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

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

SPO is 4%

Chhattisgarh 500 to 1000

MWs by

2017

Exemption

from

electricity

duty and

relief in vat

and other

associated

West Bengal 2000 MWs

by 2020

Comprehensive

policy yet to be

declared

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44

Himachal

Pradesh

10 MWs by

2017

J&k 4000 MWs

by 2017

Land bank

are being

identified

Exemptions

in line with

pioneering

states

A high SPO is

likely to be

declared soon

North

eastern

states

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.

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Solar Irradiation in 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.

Table 6: Month wise solar insolation in rajasthan (Kwh/m2/day))

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Ajmer 3.9 4.58 5.42 6.08 6.64 6.43 5.3 5.04 5.1 4.76 4.04 3.64 5.08

Alwar 3.75 4.5 5.32 5.82 6.26 6.06 4.99 4.66 4.93 4.59 3.92 3.47 4.86

Bali 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

Bharatpur 3.67 4.6 5.43 5.9 6.23 5.95 4.95 4.54 4.76 4.62 3.93 3.46 4.84

Bhilwara 4.1 4.89 5.62 6.06 6.36 6.08 4.87 4.53 5.11 4.9 4.2 3.83 5.05

Bikaner 3.51 4.11 4.9 5.85 6.52 6.44 5.77 5.36 4.95 4.38 3.66 3.19 4.89

Jaipur 3.9 4.67 5.4 5.99 6.35 6.21 5.08 4.68 5.05 4.75 4.04 3.66 4.98

Jodhpur 3.84 4.54 5.48 6.27 6.79 6.6 5.57 5.27 5.23 4.64 3.96 3.52 5.14

Kota 4.01 4.87 5.55 6.11 6.31 6.01 4.83 4.36 5.12 4.92 4.19 3.81 5.01

Pali 4.03 4.75 5.55 6.18 6.65 6.38 5.22 4.89 5.18 4.79 4.18 3.7 5.13

Solar irradiation measured in kwh/m2/day onto a horizontal surface

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,

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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 state‟s 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.

Objectives to be achieved in a phased manner by creating the policy framework for

promoting use of solar energy in various applications and move towards achieving

following objectives:

1. Developing a global hub of solar power of 10000-12000 MW capacity in next 10-12 years

to meet energy requirements of Rajasthan and India.

2. Contributing to long term energy security of Rajasthan as well as ecological security by

reduction in carbon emissions

3. Providing a long term sustainable solution for meeting energy needs and considerably

reducing dependence on depleting fossil fuel resources like coal, oil and gas.

4. Productive use of abundant wastelands, thereby utilizing the non-industrialized desert area

for creation of an industrial hub.

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5. Creating favorable conditions to solar manufacturing capabilities by providing fiscal

incentives.

6. Generating large direct and indirect employment opportunities in solar and allied industries

like glass, metals, heavy industrial equipments etc.

7. Creation of skilled and semi-skilled man power resources through promotion of technical

and other related training facilities.

8. Creating an R&D hub for deployment of various combinations of solar power technologies

and solar based hybrid co-generation technologies which will focus on improving

efficiency in existing applications, reducing cost of balance of system.

9. To achieve the grid parity in next 7-8 years, the State will encourage the Solar Power

Developers to establish manufacturing plant of their technology in Rajasthan.

10. Establishment of an industrial set-up involving both domestic and foreign manpower

participation which will promote Rajasthan as a global tourist destination.

11. Create a solar centre of excellence which would work towards applied research and

commercialization of nascent technologies to accelerate the march to grid parity.

Incentives

1. Exemption from Electricity Duty: - Consumption of electricity generated by Eligible

Power Producers for its captive use or for sale to a nominated third party will be exempted

from Electricity Duty @ 50% for a period of 7 years from COD

2. Grant of incentives available to industries: - Generation of electricity from Non-

conventional Energy Sources shall be treated as eligible industry under the schemes

administered by Industries Department and incentives available to industrial units under

such schemes shall also be available to the Power Producers.

3. Single Window Clearance: A State Level Empowered Committee consisting of following

will provide single window clearance on proposals received for developing the power

plants based on Non-Conventional Energy Sources.

4. The Government land required for power projects based on non-conventional sources of

energy shall be allotted to Power Producer at concessional rates viz, 10% of DLC rates

Rajasthan is likely to emerge as the power house of the country with the possibilities of

setting up installed capacity exceeding 100,000 MW.

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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 India‟s 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 state‟s solar market. The

policy allows developers to inject power at 11kV and above, while under the NSM the

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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.

Figure 8 insolation on karnataka

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

Table 7 Solar irradiation measured in kwh/m2/day onto a horizontal surface karnataka

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg.

Belgaum 5.32 5.99 6.46 6.5 6.03 3.85 3.35 3.65 4.6 4.82 5.08 4.96 5.05

Bellary 5.21 5.88 6.34 6.29 6.1 4.95 4.37 4.43 4.92 4.86 4.89 4.87 5.26

Bengaluru 5.31 6.07 6.53 6.43 6 4.92 4.45 4.53 4.89 4.57 4.49 4.72 5.24

Bidar 5.11 5.91 6.39 6.44 6.29 4.88 4.25 4.16 4.6 4.92 4.96 4.81 5.23

Bijapur 5.23 5.86 6.38 6.37 6.26 4.98 4.49 4.44 4.88 4.93 4.98 4.84 5.30

Gulbarga 5.14 5.82 6.28 6.3 6.3 5.13 4.51 4.39 4.85 5.03 4.98 4.81 5.30

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Karnataka with the higher global solar radiation are ideally suited for harvesting solar

energy.

Solar irradiation measured in kwh/m2/day onto a horizontal surface

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.

Mangalore 5.65 6.33 6.81 6.84 5.85 4.37 4.25 4.87 5.44 5.19 5.21 5.44 5.52

Mysore 5.39 5.89 6.31 6.01 5.54 4.15 3.8 4.01 4.82 4.71 4.77 4.95 5.03

Raichur 5.14 5.88 6.33 6.4 6.09 5.04 4.28 4.34 4.71 4.81 4.87 4.78 5.22

Shimoga 5.38 6 6.38 6.21 5.58 3.62 3.26 3.53 4.58 4.66 4.94 5.11 4.94

Tumkur 5.31 6.07 6.53 6.43 6 4.92 4.45 4.53 4.89 4.57 4.49 4.72 5.24

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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.

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Madhya Pradesh

Solar irradiation in Madhya Pradesh:

Figure 9:solar insolation 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.

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Solar irradiation data of cities in Madhya Pradesh monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Bhopal 4.36 5.21 6 6.46 6.49 5.43 4.09 3.62 4.7 5.1 4.6 4.08 5.01

Burhan

pur

4.6 5.4 6.18 6.54 6.64 5.36 4.22 3.75 4.64 5.21 4.72 4.32 5.13

Dewas 4.33 5.2 6.02 6.47 6.59 5.61 4.23 3.72 4.77 5.07 4.59 4.06 5.06

Gwalio

r

3.76 4.71 5.54 6.01 6.3 5.86 4.76 4.42 4.71 4.73 4.02 3.57 4.87

Indore 4.46 5.31 6.13 6.52 6.72 5.51 4.25 3.74 4.65 5.12 4.65 4.2 5.11

Jabalp

ur

4.18 5.18 5.98 6.61 6.56 5.25 4.1 3.55 4.34 5.06 4.62 4.1 4.96

Punasa 4.48 5.34 6.11 6.53 6.63 5.48 4.25 3.71 4.64 5.18 4.67 4.2 5.10

Ratlam 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

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: Solar irradiation measured in kwh/m2/day onto a horizontal surface Madhya Pradesh

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.

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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

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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 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Avg

Rajkot 4.49 5.3 6.1 6.57 6.64 5.77 4.75 4.48 5.13 5.17 4.62 4.18 63.2 5.26

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 5.3 6.11 6.43 6.51 5.42 4.4 4.29 5 5.18 4.65 4.13 61.92 5.16

Ahmedabad 4.36 5.08 5.89 6.29 6.56 5.9 4.71 4.39 5.07 5.07 4.52 4.03 61.87 5.15

Bhavnagar 4.5 5.3 6.11 6.43 6.51 5.42 4.4 4.28 5 5.18 4.65 4.13 61.91 5.15 Table 9 Solar irradiation measured in kwh/m2/day onto a horizontal surface Gujarat

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.

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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.

Figure 10:solar irradiation in Harayana

Solar irradiation data of Haryana cities monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Faridabad 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

Hisar 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

Karnal 3.6 4.53 5.73 6.69 7.28 6.68 5.54 4.9 5.17 5.01 4.15 3.48 5.23

Panipat 3.6 4.53 5.73 6.69 7.28 6.68 5.54 4.9 5.17 5.01 4.15 3.48 5.23

Rohtak 3.64 4.48 5.42 5.92 6.42 6.22 5.36 5.02 5 4.65 3.93 3.4 4.96

Yamunanagar 3.58 4.52 5.69 6.77 7.5 6.89 5.62 5.05 5.35 5.36 4.33 3.51 5.35

Sonipat 3.6 4.53 5.73 6.7 7.28 6.68 5.54 4.9 5.17 5.01 4.15 3.47 5.23 Table 10: Solar irradiation measured in kwh/m2/day onto a horizontal surface Haryana

Solar irradiation measured in kwh/m2/day onto a horizontal surface

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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.

Figure 11: solar irradiation on Punjab

Solar irradiation of Punjab cities monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Amritsar 3.25 4.28 5.35 6.39 7.31 7.22 6.11 5.66 5.5 5 3.92 3.19 5.27

Bhatinda 3.43 4.39 5.55 6.46 6.45 6.33 5.92 5.7 5.59 4.88 4.08 3.32 5.18

Chandigarh 3.5 4.58 5.65 6.66 7.39 7.08 5.86 5.43 5.54 5.25 4.22 3.4 5.38

Ganganagar 3.44 4.21 4.97 5.66 6.14 6.25 5.57 5.35 5.04 4.53 3.71 3.16 4.84

Jalandhar 3.3 4.33 5.38 6.6 7.39 7.28 5.99 5.56 5.59 5.23 4.09 3.25 5.33

Ludhiana 3.43 4.39 5.55 6.46 6.45 6.33 5.92 5.7 5.59 4.88 4.08 3.33 5.18

Patiala 3.5 4.58 5.65 6.66 7.39 7.08 5.86 5.43 5.54 5.25 4.21 3.39 5.38 Table 11: Solar irradiation measured in kwh/m2/day onto a horizontal surface Punjab

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.

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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.

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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.

Figure 12:solar irradiation in uttar pradesh

Solar irradiation of Uttar Pradesh cities monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Agra 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

Aligarh 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

Allahabad 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

Bareilly 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

Benares 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

Delhi 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

Etawah 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

Farrukhabad 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

Firozabad 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

Ghaziabad 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

Gorakhpur 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

Hapur 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

Jhansi 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

Kanpur 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

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Lucknow 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

Mathura 3.68 4.6 5.43 5.9 6.23 5.95 4.95 4.54 4.76 4.62 3.93 3.47 4.84

Meerut 3.6 4.53 5.73 6.7 7.28 6.68 5.54 4.9 5.17 5.01 4.15 3.47 5.23

Mirzapur 3.78 4.86 6.01 6.44 6.48 5.68 4.53 4.31 4.47 4.69 4.24 3.71 4.93

Moradabad 3.74 4.82 5.9 6.47 6.62 6.12 5.2 4.74 4.94 4.97 4.13 3.49 5.10

Muzaffarnagar 3.6 4.53 5.73 6.69 7.28 6.68 5.54 4.9 5.17 5.01 4.15 3.48 5.23

Saharanpur 3.58 4.52 5.69 6.77 7.5 6.89 5.62 5.05 5.35 5.36 4.33 3.51 5.35

Shahjahanpur 3.73 4.75 5.71 6.64 6.39 5.98 5.01 4.49 4.78 4.93 4.05 3.51 5.00 Table 12 Solar irradiation measured in kwh/m2/day onto a horizontal surface Uttar Pradesh

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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 2011—the state government has

allowed many concessions to the investors on this score.

Solar irradiation in Bihar:

Figure 13: solar irradiation in bihar

Solar irradiation data of Bihar cities monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Bhagalpur 4.13 5.26 6.2 6.57 6.48 5.36 4.37 4.33 4.06 4.82 4.57 4.07 5.02

Bihar Sharif 4.06 5.21 6.19 6.81 6.87 5.71 4.55 4.54 4.37 4.92 4.57 3.97 5.15

Darbhanga 3.95 5.21 6.32 6.84 7.04 5.85 4.61 4.7 4.45 5.03 4.61 3.93 5.21

Gaya 4.04 5.01 5.69 6.21 6.29 5.19 4.36 4.21 4.2 4.53 4.27 3.87 4.82

Munger 4.08 5.25 6.2 6.71 6.71 5.55 4.47 4.44 4.18 4.86 4.56 3.97 5.08

Muzaffarpur 3.95 5.21 6.32 6.84 7.04 5.85 4.61 4.7 4.45 5.03 4.61 3.93 5.21

Patna 4.06 5.21 6.19 6.81 6.87 5.71 4.55 4.54 4.37 4.92 4.57 3.97 5.15

Table 13: Solar irradiation measured in kwh/m2/day onto a horizontal surface Bihar

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Kerala

Solar irradiation in Kerala:

Figure 14: solar irradiation in kerala

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg.

Cochin 5.63 6.18 6.58 6.03 5.39 3.96 4.17 4.64 5.29 4.8 4.87 5.17 5.23

Kollam 5.75 6.39 6.75 6.15 5.47 4.74 4.82 5.18 5.66 5.18 4.89 5.25 5.52

Thrissur 5.63 6.18 6.58 6.03 5.39 3.96 4.17 4.64 5.29 4.8 4.87 5.18 5.23

Thiruvananthapuram 5.75 6.39 6.75 6.15 5.47 4.74 4.82 5.18 5.66 5.18 4.89 5.25 5.52 Table 14: Solar irradiation measured in kwh/m2/day onto a horizontal surface Kerala

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.

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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.

Figure 15: solar irradiation in orissa

Solar irradiation in Orissa cities monthwise:

City Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Avg

Bhubaneswar 4.5 5.22 5.75 6.23 6.15 4.48 3.86 3.72 4.09 4.53 4.4 4.24 4.76

Brahmapur 4.69 5.38 5.9 6.25 6.12 4.28 3.73 3.6 4.04 4.45 4.41 4.33 4.77

Cuttack 4.5 5.22 5.75 6.22 6.15 4.48 3.86 3.72 4.09 4.53 4.4 4.24 4.76 Table 15: Solar irradiation measured in kwh/m2/day onto a horizontal surface Orissa

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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

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Imp Policy comparision

Policy

framework

Gujarat Policy JNNSM Rajasthan

Policy

Karnataka

Policy

FIT PV INR 15 for 12

years, INR 5 for

the next 13

years levelised

tariff for 25

years INR 13.30

Median bid Competitive

bidding on

benchmark

tariff INR 15.32

Competitive

bidding on

benchmark

tariff INR 14.50

Bank

Guarantee

INR 5 Million

per MW

INR 3 million

per MW

INR 2 Million

per MW

INR 2 Million

per MW

Time available

to sign PPA

45 days from

issue of letter of

intent

30 days from

issue of letter of

intent

30 days from

the issue of

letter of intent

30 days from

the issue of

letter of intent

Time available

for

commissioning

Fixed by

committee in

consultation

with developer

12 after signing

PPA

12 months after

signing PPA for

project upto 5

MW and 18 for

a larger size

18 months after

signing the PPA

Financial

closure

required

180 days after

signing the PPA

180 days after

signing the

PPA

180 days after

signing the PPA

180 days after

signing the PPA

Financial

criteria to be

met

Internal

resource

generation: INR

12 Million per

MW annual

turnover INR 48

million per MW

Net worth INR

30 Million per

MW for PV

Net worth INR

30 million per

MW

Net worth INR

30 Million per

MW

Technical

criteria to be

met

No restriction

on use of

foreign

Modules

A mandatory

domestic

content and use

of specific IEC

standards of

modules

No restriction

on foreign use

but specific IEC

standards to be

met

No restriction

on foreign use

but specific IEC

standards to be

met

Table 17: Comparative analysis of various imp policies

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Status of states

Top Performers

State Solar Policy status Status of solar in the state

Gujarat Existing solar Policy under

execution

Nearly 860 MWs installed

till date including the

Charanaka Solar park

Rajasthan Existing solar policy A total of 608.5 Mws

Maharashtra No exclusive policy Total of 34.5MWs

Karnataka Existing Policy under

execution

Total of 14 MWs

Tamil Nadu Existing Policy under

execution

Total of 17.055MWs

Madhya Pradesh Existing Policy under

execution

Total of 11.75MWs

Table 18: Top performing states

Potential Risers

Orissa No Policy Total of 13 MWs

Andhra Pradesh Total of 23.15MWs

Punjab Policy in draft status Total of 9.325MWs

Haryana Lacking Total of 7.8MWs

Uttar Pradesh Existing Policy Total of 12.4MWs

Bihar Existing Policy

Kerala Policy in draft status Total of 0.025 installed

J&K Existing Policy

Jharkhand Existing Policy Total of 16 MWs Table 19: Potential Riser

Slow movers

Himachal Pradesh Lacking

North eastern states Lacking

West Bengal Lacking Total 2 MWs

Chhattisgarh Lacking Table 20: Slow moving states

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RPO Demand analysis

Figure 16: Rising RPO demand in future

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

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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

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Figure 17: Solar demand drivers

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Figure 18: factor affecting solar demands

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Off take options in India

The Indian market offers two major off-take options for solar power providers. The first is

to sell power to the grid at preferential feed-in-tariffs (FiTs). The second option is to sell

power to the grid at a non-preferential price and additionally generate Renewable Energy

Certificates (REC) for sale. FiTs are a fixed return mechanism while the RECs depend on

market conditions. Apart from these two major off-takes the captive solar plants

development also provides market opportunities mainly to EPC and EPCM players

Typically, a FiT is the tariff offered to developers, based on the actual cost of generation

including a fixed Return on Equity (ROE) as decided by the State Electricity Boards

(SERCs). The tariffs are calculated by the „frontloaded cost plus‟ method and then

levelized for a period of 20-25 years. The cost plus method determines the price of solar

power using direct costs, indirect costs and fixed costs, related to the production and sale or

not. These costs are converted to per unit costs after which a predetermined percentage of

the costs is added to provide defined profit margins. It is frontloaded because the 10-12

years are the debt repayment period faced by the developers19. The tariff is then levelized

taking a discount factor, which typically is the weighted average cost of capital (WACC.

The average discount rate is between 11% and 13% depending on the WACC.

In India, there are three primary methods of availing a FiT as an off-take. First is through a

fixed FiT under a solar policy in which the federal or state governments provide a FiT for

projects and the state DISCOMS buy the generated power. Gujarat is the only state

following this methodology. This method offers fixed returns to all developers as the ROE

is fixed for every project. The profitability of projects depends on the developers ability to

execute the projects within the given time lines, assess and mitigate project execution risks.

There is criticism of the fixed FiT method as the project allocation is completely at the

discretion of the state government and the method does little to increase competition and

bring down the cost of generation.

A second method is through a FiT offered through a competitive bidding process that

discounts the benchmark FiT offered by a policy. After the NSM, states like Rajasthan and

Karnataka are following this method. This gives an equal opportunity for players to

participate and project allocations take place through transparent process. Competitive

bidding allows the market to decide the price of solar power. The drawback of this method

is that it can lead to aggressive bidding by developers that are willing to compromise on

economic viability in order to obtain projects to meet their strategic objectives.

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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 Maharashtra‟s 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

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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.

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Terms and conditions of financing

Recently Sunborne succeeds to get 12-year loan for a 15MW plant in Gujarat. The

company get loan from multiple banks including State Bank of Patiala, Canara Bank, EXIM

bank of India. Other banks like Bank of Boarda and State bank of India is lending to

projects under Gujarat and NSM. The developers are looking to get loan from multiple

banks as it reduces banks exposure to particular project failure and they readily lends to

the developers.

Banks are also looking to solar sector as an equity financing opportunity. Yes Bank and

State Bank of India are among the few banks which have shown interest in equity

financing. Though they have not made clear that what IRR they are looking for these

investments. Financial institutes investments like IDFC private equity which has investing

INR 800mn in Green Infra Ltd are also increasing.

The terms and conditions for both equity and debt financing depend of financial institution

decision regarding risk, creditability of developer and bankability of projects. The interest

rates charged by domestic banks vary from 300-400 basis points above State Bank of

India‟s base rate, which is 10% in August 2011. The period of loan is generally according to

the tariff guidelines which are from 12-13 years with grace period of 9-12 months. The

mortgage required by lender also varies from project to project. Banks generally ask full

mortgage of the land, all fixed assets and hypothecation of moveable. As an equity

investors banks and other financial institutes expect IRR which varies from 15-17% as

under competitive bidding higher IRR are not possible. The leveraging capabilities of the

developer plays important role while arranging funds for project development.

As non-Recourse financing is not popular in Indian solar sector yet, project developers are

looking for limited recourse financing to decrease their liability and financers risk. Though

no project is able to achieve it yet, but with good number of projects to be awarded by

end 2012, the limited recourse financing can emerge as new option in Indian solar market.

International Players like Asian development bank and KfW of Germany has shown keen

interest in Indian solar market and has long term portfolio plans. EXIM bank of US and IFC

are also investing in Indian solar market as a strategy move to enter Indian solar market.

IFC plans to invest $50mn in India recently, while EXIM bank of US has long term plan of

investing $1 billion in emerging Indian renewable sector with solar as an important part of

portfolio.

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Project Viability in India

Developers have offered aggressive discounts in the competitive bidding of

projects under phase 1 of the NSM. This has given the industry a tariff that is

likely to be seen as the benchmark in the industry. The low tariffs of INR12-12.5

($0.3)per kWh for PV appear viable under ideal conditions of project

development and plant performance, given project costs of around INR125

million per MW ($ 3.1 million) for thin film and INR130 million per MW ($3.3

million) for polycrystalline. Under actual on-ground conditions, these tariffs do

not provide a commercially attractive return, given the risks involved (see

graph 1). This suggests that many developers are taking a long term, strategic

view on entering the market, than a project based approach focusing on

maximizing profits.

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

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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.

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Security of the modules against theft is also a concern in India. Most of the developers have

miscalculated the costs associated with these risks.

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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.

Indian Commercial Banks The majority of solar projects in India have been financed by Indian commercial banks. Some of the first

banks to finance solar projects in India have been the Bank of Baroda, Axis Bank, ICICI Bank, State Bank

of India, IDBI Bank and Yes Bank. Almost all of the disbursed loans in India so far have been backed by

the promoters’ balance sheets.

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

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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 India’s 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.

Export credit Agency An export credit agency (ECA) or investment insurance agency is usually a government-backed institution

that supports exporters of a given country by reducing the cost of risk/ debt associated with cross-border

transactions. The financing can take the form of direct debt support and/ or credit insurance and guarantees.

A primary objective of ECAs is to further the exports (modules, inverters, EPC) from the host country for

solar projects in India.

The US EXIM bank has been the most active ECA in the Indian solar market