Recent rooftop solar policies in India (Jan-Mar 2020)

rooftop solar

Various rooftop solar policies, regulations and notifications are released in last quarter in India (Q1 2020). Brief summary of the notifications along with our assessment are highlighted below:

Kerala Electricity Regulatory Commission Issues Renewable Energy and Net Metering Regulations, 2020

Under these regulations, KSERC provides the RPO trajectory for next 3 years and also notifies the net metering regulations from renewable energy sources:

Financial YearRPO % (Non-solar)RPO % (Solar)Total
2019-208.004.0012.00
2020-219.005.2514.25
2021-2210.256.7517.00
2022-23***
2023-24***

*Will be notified by the commission later

  • Discom shall provide net metering to the prosumer on first come first serve basis, within 10 days from the date of submission of the approval from the Electrical Inspector.
  • If the DISCOM is unable to provide a net meter within ten days, then the consumer can purchase the net meter at his own cost.
  • Regulatory commission will penalize distribution licensees Rs. 1000 per day for each day of delay if they fail to meet the timelines as specified in these regulations.
  • The penalty accrued during the year will be deducted from the Return on Equity of the Discom for that year.
  • Exemption from transmission and wheeling charges and cross-subsidy surcharges for the electricity generated and consumed under the net metering facility
  • Discom shall constitute an in-house renewable energy cell to promote renewable deployment in the state within one month.
  • Renewable energy systems installed by a prosumer at his premises should not be less than 1 kW or exceed 1 MW capacity.
  • The cumulative capacity of distributed energy systems allowed to be interconnected with the distribution network shall not exceed 75 % of the distribution transformer capacity.
  • Prosumer have the right of wheeling and consumption of excess electricity in the other premises owned by him within the area of supply of the distribution licensee irrespective of the category of tariff
  • Banking is allowed with the distribution licensee and to be carried forward to the subsequent billing periods of the settlement period.

Our assessment – Under these regulations KSERC provides the RPO trajectory for n ext 3 years and also notifies the net metering regulations from renewable energy sources.
These regulations are forward-looking and will encourage the installation of renewable energy especially the roof top sector in the state of Kerala. Contrary to the trend in a few states, KSERC has allowed net-metering and banking of energy for all consumer category including C&I. These regulations also have a provision to levy penalty to the Discoms if they fail to fulfill their duties.

Phase II of the Grid Connected Rooftop Solar (RTS) Programme_ Clarification

  • Phase – II of grid-connected rooftop solar program is only for the residential sector.
  • Central Financial Assistance (CFA) is provided @ 40% of the benchmark cost or the cost discovered through the transparent bidding by the implementing agency, whichever is lower for rooftop systems upto 3 kW capacity.
  • For system capacity beyond 3 kW and upto 10 kW CFA is provided at 20 % of benchmark cost or the cost discovered through transparent bidding.
  • For Group Housing Societies/Residential Welfare Associations (GHS/RA W), CFA will be limited to 20% for RTS plants for supply of power to common facilities.
  • The capacity eligible for CFA for GHS/RAW will be limited to 10 kW per house with maximum total capacity upto 500 kWp inclusive of RTS put in individual houses in the GHS/RWA.
  • Discoms or its authorised agency shall invite EOI for empanelment of agencies for supply, installation, testing & commissioning of RTS system in residential premises.
  • To ensure quality and post-installation services only manufacturers of solar panels and system integrators fulfilling pre-determined technical and financial criteria would be allowed to participate in the bidding process. The selected bidders shall follow the quality control orders and standards for all components of RTS system and its installation procedure, if any, issued by MNRE from time to time.
  • In this regard, it is clarified that all the bidders within the price bracket of (Ll + X% of LI) or LI + (X+5)% of LI, as the case may be, shall be empanelled, provided they agree to match LI.
  • That means all empanelled bidders will have to match LI of and should provide the services to the consumers at LI rate which they have agreed.

Our take: MNRE has notified this clarification in response to the feedback received from several stakeholders.
DISCOMs are made responsible for developing a dedicated online portal where a consumer can apply, and all the approvals for the rooftop solar applications can be given in a timely and transparent manner. They are also expected to carry out consumer awareness and publicity drive for the success of the program. The maximum time for the entire process of rooftop solar installation should be between 2.5 – 5 months after the consumer submits its request.
As per the Phase -II of the rooftop solar program, CFA is only applicable to the residential sector as their grid-tariffs are lower and they need incentives to strengthen the economics of the rooftop solar system.
Also, as per the clarification housing societies can claim CFA for only up to 500 kW system size irrespective of the size of the society. This clause is detrimental for rooftop installations in larger housing societies and should be revisited.
Further, we suggest that the Government should have more holistic approach towards the applicability of CFA. In our view, the CFA benefits should also be extended to MS MEs given their precarious financial health and the high share of electricity costs in their operations.

GERC, Second Amendment in Net Metering Rooftop Solar PV Grid Interactive Systems

  • New definition clause of Micro, Small and Medium (Manufacturing) Enterprise or MSME (Manufacturing) has been inserted.
  • In original regulation Discom can provide net metering to consumers only for 65% of the cumulative capacity at any distribution transformer. However now the provision of 65% has been removed and the cumulative capacity has been allowed equal to capacity of the distribution transformer.
  • The maximum Rooftop Solar PV System capacity to be installed at any Eligible Consumer’s premises shall be upto a maximum of 50% of consumer’s sanctioned load/contract demand.
  • In case of Residential and MSME Consumers the Rooftop Solar PV System capacity shall be irrespective of their sanctioned load/contract demand.
  • Surplus Energy generated shall be bought by Discom at Rs. 2.25 /unit for residential and government consumers. Rs. 1.75 /unit for C&I and MSME consumers not registered under REC mechanism and Rs. 1.50 /unit for C&I consumers registered under REC mechanism. Earlier this energy was bought by Discom at APPC, which is determined by Regulatory Commission from time to time.

Our assessment: The notification is progressive in nature and has several positives like including the definition of MSMEs as a separate entity, increasing net metering limits up to 100% of the cumulative capacity of distribution transformer (from the previous limit of 65%), and no cap on the rooftop solar installed capacity for residential and MSME sectors, among others. These amendments would support the rooftop sector installations in the two laggard sectors—residential and MSME sectors.

State subsidy of INR 15,000/ kW for residential rooftop solar systems of 1-10 kW capacity

  • Under the Rooftop Phase II program, UPNEDA has announced state and central subsidies for rooftop solar projects to be set up in the residential sector.
  • As per the department notification, for rooftop solar projects ranging between 1 kW and 10 kW will receive a state subsidy of Rs 15,000 per kW, with the maximum subsidy that can be availed by residential rooftop projects capped at Rs 30,000.
  • Central subsidies will vary depending on the size of the projects and the location of the projects. For systems ranging between 1 and 3 kW, central subsidies will cover 40% of the total cost. For 3-10 kW projects, there is a 20% percent central subsidy. For projects >10 kW capacity for group housing societies, the central subsidy will cover 20% of the total cost.

State subsidy for residential rooftop solar systems 1-10 kW in Punjab

  • Punjab has announced subsidies for grid-connected rooftop solar systems ranging between 1 and 10 kW only in the residential sectors.
  • The subsidy is not available for installations in the non-residential sectors like social, government, educational, public sector undertakings, statutory or autonomous bodies, private, commercial, and industrial sectors.
  • The government is providing an additional 40% subsidy for systems up to 3 kW.
  • In the recent tenders floated by the Punjab State Power Corporation Limited (PSPCL), the discovered rate for the installation of these systems (with state government subsidy) has come to about INR 37,000/kWh.

Our assessment: UP and Punjab have notified subsidies for the installation of rooftop solar for residential consumers. These subsidies in addition to the central subsidies would make rooftop solar affordable for residential consumers and will help the states in achieving their rooftop solar targets.

Refer our Q1 2020 India RE update for all policies and regulatory updates