Bridge India

MP announces a progressive decentralised RE policy

Madhya Pradesh government has come out with a new decentralised renewable energy policy focusing primarily on rooftop solar systems. The policy’s target to install 2.2 GW of rooftop solar capacity by 2022, is consistent with the Government of India’s national rooftop plan of 40 GW by 2022. MP is ­­one of the first few states including Himachal Pradesh and Maharashtra to revise its decentralised renewable energy policy to align with national policy.

  • The policy provides flexibility to consumers willing to set up a project for complete captive consumption, on net metered basis or on gross metered basis with attractive open access incentives
  • The policy is applicable for projects up to a capacity of 2 MW
  • The policy also recognises and extends benefits to rooftop solar installations by Renewable Energy Service Companies (RESCOs)

As of September 2016, MP’s total rooftop capacity stood at a mere 13 MW. As per BRIDGE TO INDIA estimates, the state is likely to install total rooftop capacity of only about 650 MW by 2022 in the ‘business as usual’ scenario. The new policy has many consumer- and investor-friendly measures.

In our view, the policy has three key elements. First, it allows for both net- and gross-metering connection for rooftop systems with a capacity of up to 2 MW subject to certain limits depending upon local transformer capacity and consumer load. It is worth noting that most other states cap the system size for net metering at 1 MW. Second, the policy recognises the role of RESCOs in the rooftop solar sector and provides for an implementation framework for the same through BOOM/ BOOT models. This is expected to enhance consumer interest in the RESCO framework and in turn, increase rooftop installations in the state. Finally, the policy provides open access incentives, for a consumer/RESCO to sell surplus electricity to another consumer in the state, as detailed below.

Summary of key policy provisions


Already installed distributed power systems are allowed to migrate to the current policy. Another positive element of the policy is that it lays out the registration and application process clearly for consumers wishing to set up distributed power systems.

Overall, the policy is a strong positive signal for development of the sector. It is a useful template for other states planning to push decentralised energy.

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