THE BRIDGE TO INDIA BLOG

Madhya Pradesh: The preferred new investment destination for solar in India

Madhya Pradesh has emerged as the preferred state for new solar investments, overtaking earlier favorites Gujarat and Rajasthan. With close to 322 MW[1] of solar capacity installed, MP is now ranked third after Gujarat and Rajasthan in cumulative terms. Interestingly, about 96% of this was added only in the last two years (2013 and 2014), the highest among all states. Key drivers for this growth are:

  •  The transmission and losses charges in Madhya Pradesh (about INR 0.62 / USD 0.01), are lower than in most other states
  • The state government is offering land at almost free of cost to solar power developers and has introduced a “right to use” concept for government land to reduce the time and cost of land allotment
  • To avoid delays, the state government has also simplified the process of clearances, approvals and inspections for setting up solar plants
 
October 24, 2014
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Weekly Update: Is India working on a comprehensive “Renewable Energy Act 2015″?

Statements by Mr. Upendra Tripathy, Secretary, Ministry of New and Renewable Energy (MNRE), suggest that the government is thinking about a “Renewable Energy Act 2015” to create a comprehensive framework for investment in the sector (refer). Such an act would be a part of the build-up towards the Renewable Energy Global Investors Meet and Expo (RE-INVEST) hosted by the MNRE in February 2015 in Delhi (refer). Preparations for RE-INVEST have already begun. Road shows in London and Hyderabad have informed the investors about the sector and the event; the next roadshow is planned for Singapore on the 27th of October’14. A “Renewable Energy Act 2015” could focus on reducing the risks and transaction costs in the Indian renewables market, creating a framework that makes India an attractive option for professional and for global investors.

  •  To keep pace with the ambitious NSM, it’s about time for a comprehensive new arrangement that gives clarity on grid rules to consumers, investors, utilities and grid operators
  • The MNRE has in the past stated that reducing the cost of capital for renewables would be one of its key tasks
  • BRIDGE TO INDIA assumes that, Renewable Energy Act 2015 – if really in the works – is still in the conceptualization phase
 
October 20, 2014
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MNRE releases draft guidelines for 3,000 MW solar under NSM

India’s new government is revamping the National Solar Mission (NSM). The planned allocation of 1,500 MW under batch II of phase II has been cancelled. Instead, the Ministry of New and Renewable Energy (MNRE) has now issued draft guidelines for a more ambitious 3,000 MW for tranche-I. The guidelines clarify the allotment for part-I of this tranche, for 1,000 MW, located at a solar park in Kurnool district in Andhra Pradesh. We expect the allocation process will begin in December (“December tranche”). The guideline document for this can be accessed here.

  • Out of 1,000 MW, 250 MW is reserved for domestic content requirement (DCR)
  • The individual project size is set as 50 MW; a company can apply for a maximum of five projects
  • The objective is to make life as easy as possible for developers. However, the draft guidelines leave crucial questions unanswered
 

Weekly Update: Can the proposed change in REC pricing revive a dysfunctional market?

The Renewable Energy Certificate (REC) mechanism was introduced three years ago as a market tool to support the policy of Renewable Purchase Obligation (RPO). However, since then, the mechanism has attracted little interest from investors. Projects that counted on REC income have made losses as there were not enough takers for RECs. The Central Electricity Regulatory Commission (CERC) has now proposed a revision for the mechanism. Will the changes finally revive the dysfunctional solar REC market?

  • So far the REC market has failed to deliver because of non-implementation of the RPO mechanism and a high minimum price of RECs (set by CERC)
  • Despite CERC’s step towards reducing the price per REC, the market not fly unless RPOs are enforced
  • The long term demand for RECs looks bleak considering that parity is fast approaching
 

DERC releases implementation guidelines for rooftop solar

Last week, the Delhi Electricity Regulator Commission (DERC) released the guidelines for implementation of solar energy systems on rooftops in the city. The document details the procedure for application, registration and connectivity. These guidelines bring clarity to the nitty-gritties of installing solar on rooftops and greatly simplifies the approach for people looking to go solar. The key takeaways:

  • The registration process has been divided into 3 tiers: feasibility analysis, registration and connection agreement
  • The rooftop solar plant must get connected to the grid within one year of registration
  • If more power is fed into the grid than taken out, the distribution company will, at the end of the year, reimburse the system owner at the Average Power Purchase Cost (APPC) for that year (currently around INR 4.75-5/unit)
 

How uniform net-metering regulations will help the distributed solar PV market accelerate

There are currently nine states (Gujarat, Andhra Pradesh, Uttarakhand, Tamil Nadu, West Bengal, Karnataka, Kerala, Delhi and Punjab) that have announced net-metering policies in India. These policies are aimed at encouraging the adoption of distributed solar PV generation in the country. A careful examination of the policies, indicate that the technical pre-requisites of the solar system components in each of these policies vary significantly and are in some case, not aligned to the central guidelines on distributed generation tabulated by the Central Electricity Authority (CEA). Should there be uniformity in distributed regulations?

  • Most states in India that have announced net-metering policies have not adhered to the CEA regulations of distributed solar generation. These discrepancies can hinder the overall solar market in India.
  • There is a large variation is metering regulations. Andhra Pradesh for instance has very stringent metering requirements that can push meter costs to well over 15% of overall systems costs.
  • Grid penetration limits are yet another important requirement that is completely missing from the CEA as well as many other states (ex: Uttarakhand, Andhra Pradesh, etc.). Among the states that have announced limits (Example: Delhi), they need to be reviewed and perhaps upgraded to allow for greater deployment of solar
 

“Surya Ganga”, a great movie idea on the power of solar in India – can become a reality with your support

Solar energy in India has a great, intuitive appeal: everyone knows that there is a lack of power and sees the sun shine almost every day. In fact, the more the sun shines, the more people consume or yearn for electricity to provide relief. However, when it comes to the “how?”, there is a vast lack of knowledge and understanding. The more people in India can learn about how solar works, the faster the solar transformation will be. A great, but so far underutilized, medium to explain this is film. This is exactly the opportunity that the filmmakers Valli and Martand Bindana are now addressing with India’s first pan optic film on solar (see details here). We, the solar savvy community of India, have every reason to support this project.

  •  It will take users on a journey through India’s energy landscape and show how distributed solar can empower people
  • The film seeks to spread awareness on the true potential of solar to transform the country
  • It is narrated by famous actor Naseeruddin Shah
  • To make this movie a reality, the producers need support from the solar community (see details here)
 
October 10, 2014
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India’s residential solar market could create around 325,000 jobs in the next ten years

The residential rooftop solar market is still at a nascent stage in India. However, as grid-parity nears and net-metering is offered in more and more states, the segment is poised for fast growth. Residential rooftop installations would be on average small and geographically dispersed. Both are good things. BRIDGE TO INDIA estimates refer that around 325,000 jobs will be created, if India installs 25 GW in ten years. While this target sounds large in today’s context, we believe that it is quite achievable. For details, please refer to our ‘India Solar Decision Brief’ on “India’s Solar Transformation: Beehives vs Elephants” (online downloadable version available here).

  • A capacity addition of 25 GW in residential solar would create around 325,000 jobs over ten years
  • Parity and net-metering will be the prime drivers for adoption in residential rooftop systems after 2021
  • Jobs in manufacturing, business development, supply chain, logistics, installation & commissioning and operation & maintenance are “sticky” whereas jobs in the supply chain, logistics and installation and commissioning are not “sticky”
 
October 8, 2014
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