Weekly Update: Kerala announces draft solar policy to focus on decentralized solar

Weekly Update: Kerala announces draft solar policy to focus on decentralized solar

The south Indian state of Kerala has published a draft solar policy (refer). This makes it the ninth Indian state to release a solar specific policy document.

  • The Kerala solar policy has set a target of 500 MW by 2017 and 1,500 MW by 2030
  • Unlike the NSM, the state will incentivise distributed solar through Feed in Tariffs
  • Like Tamil Nadu, Kerala has also tried to pass on the financial burden of RPOs from the state-owned DISCOM to large power consumers. This may be the only viable option for implementing the RPO mechanism
Under the draft policy, Kerala has set itself a target of an installed capacity of 500 MW by
2017 and 1,500 MW by 2030. Earlier, the state had already initiated a 10,000 rooftop solar
power programme (refer).

 

Until now, all state and central solar policies have emphasised utility scale projects. Kerala’s policy is unique in its focus on distributed power generation. Unlike the off-grid capital subsidy scheme under the National Solar Mission (NSM), the state will incentivise distributed solar through Feed in Tariffs (FiTs). Net-metering and a focus on protocols to improve the quality of the grid (especially community grids that would be integrated with the state’s “no load-shedding”-campaign) will help the implementation. This policy is a further step in a significant development in India towards the implementation of net-metering and community grids to unlock the immense distributed generation potential of India. See also the net-metering initiative under the Tamil Nadu policy (refer).

Like Tamil Nadu, Kerala has also tried to pass on the financial burden of Renewable Purchase Obligations (RPOs) from the state-owned distribution company (DISCOM) to large power consumers. Solar Procurement Obligations (SPOs) will be mandated for commercial consumers with a connected load of more than 20 kVA and industrial consumers with more than 50 kVA on the low tension (LT) transmission network (up to 415 V). Also, SPOs will be applicable to all consumers connected to the high tension (HT) transmission network (up to 11 kV) and Extra High Tension (EHT) transmission network (up to 66 kV). All HT and EHT consumers have to procure 3% of their power from solar until March 2014 and 6% from April 2014 onwards. In future, the SPO requirement will also be applicable for high consuming domestic consumers, i.e., consumers with more than 500 kWh per month. Open access, wheeling and transmission & distribution charges for captive consumers have been waived off in the state. An exemption on electricity duty and conditional banking of power has also been provided.

Given the poor financial health of most state DISCOMs, passing on RPO requirements as SPOs directly to consumers seems to be the most viable option for implementing the RPO mechanism and encouraging solar without burdening public funds. In India, roughly 70% of all RPOs have to be met by Discoms that are in bad financial health. If more states implement such an SPO mechanism, it can revitalise the Renewable Energy Certificate (REC) market that is currently written off by many stakeholders due the lack of RPO implementation.

Jasmeet Khurana works on project performance benchmarking, success factors for module sales, financing and bankability of projects in India.

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