Last week, Solar Energy Corporation of India (SECI) announced results for third phase of allocations under the rooftop PV projects scheme in select cities. A capacity of 8.75 MW has been allocated across 21 projects in nine cities: Chennai, Coimbatore, Delhi, Kolkata, Mumbai, Pune, Palatana, Chandigarh and Gwalior. Capacities allocated to individual project developers range between 250 kWp to 1.75 MWp with highest capacities allocated to TATA Power Solar (1.75 MW), Ravano Solar India (1.5 MW) and Waaree (1.25 MW).

• Rooftop PV projects scheme is different from the off-grid capital subsidy scheme since projects have to be connected to the grid
• In rooftop PV projects scheme, disbursement of subsidy is linked with plant performance
• If restriction on the city of installation is removed, this mechanism would be suited to take over the capital subsidy scheme

Under this scheme, SECI provides a capital subsidy of 30% to the bidders who are required to provide a turnkey solution including operation and maintenance (O&M) for a period of two years and sell the power at INR 6/kWh for private consumers. The scope of work for the bidder includes the identification and leasing of the buildings suitable for the rooftop plants. This model is different from the off-grid capital subsidy scheme of the Ministry of New and Renewable Energy (MNRE) in two important ways – 1) The projects have to be connected to the grid and sell power to a third-party; and 2) disbursement of the subsidy is linked to performance of the plants: 20% will be disbursed at the time of commissioning subject to minimum performance ratio of 75%; further 5% will be disbursed after 1 year, and another 5% after 2 years, if Capacity Utilization Factor (CUF) of the project exceeds 15% for the two years.

Phase two of the National Solar Mission (NSM) (2013-2017) has a target of installing 200 MW of rooftop based capacity. Earlier, this was envisaged to come through the capital subsidy mechanism. However, we know that the process for capital subsidies has been held up for some time now and we believe that MNRE is likely to altogether move away from this model. Currently, this bidding based rooftop scheme allows developers to also sell excess power to the distribution company at Annual Pooled Purchase Cost (APPC).

However, as net-metering becomes a reality across different locations, these projects are expected to be the first ones to transition into net-metering.

Given the higher transparency and competitive process followed and use of performance based criteria, we believe that this scheme is significantly better than the existing capital subsidy scheme. If the restriction on the city of installation can be removed, this mechanism would be ideally suited to take over the existing capital subsidy mechanism for good.

This post is an excerpt from this week’s INDIA SOLAR WEEKLY MARKET UPDATE. Sign up to our mailing list to receive these updates every week.

You can view our archive of INDIA SOLAR WEEKLY MARKET UPDATES here.

What are your thoughts? Leave a comment below.