Uttar Pradesh Issues New Solar Policy, Targets 22 GW of Solar Power by 2026-27
On 16th November 2022, the Uttar Pradesh (UP) government approved the state’s new solar energy policy known as Uttar Pradesh Solar Energy Policy 2022. The policy supersedes the state’s 2017 solar policy which was cleared on 6th December 2017. The new policy will remain effective for a period of 5 years from the date of issuance. By the end of which, the policy targets to achieve 22 gigawatts (GW) of solar power across various segments in the state. The segment-wise breakup of the policy target capacity has been provided in the figure below.
Figure 1: Segment-wise Breakup (in GW) of UP Solar Policy 2022 Target
Source: UP Solar Energy Policy 2022, JMK Research
The 2022 policy lays down several attractive provisions. The table below highlights the salient ones included in the policy.
Table 1: UP Solar Energy Policy 2022 – Salient Provisions
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Serial No. |
Particular |
Description |
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1 |
Grid-connected Rooftop Solar (Residential) |
· ‘Saurya Uttar Pradesh Yojna’ have been proposed to be implemented during the policy period to achieve 4.5 GW target set. Under this, state government will provide subsidy of INR 15,000/kW to a maximum limit of subsidy INR 30,000 per consumer. · This subsidy will be provided in addition to the central financial assistance available from central government. |
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2 |
Solar City |
· Solar city (where minimum of 10% reduction in projected total demand of conventional energy at the end of five years is achieved from installation of renewable energy systems and through energy efficiency measures) will be developed in the state. · Ayodhya city will be developed as a model solar city. After assessing its success, 16 municipal corporations of the state and Noida city will be developed as solar cities. · 13,50,000 residential houses will be covered with solar rooftops in solar city during the operative period of policy. · In initial year of operation of policy, the 16 municipal corporations and Noida city will be provided with funds to the tune of INR 50 per person as per the census of year 2011 of municipal corporation area for solar city development. |
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|
3 |
PM KUSUM |
· Component C1: State government will give 70% subsidy to the Scheduled Tribe, Vantangia and Musahar caste farmers. This subsidy will be in addition to subsidy available from central government. State government will give additional 60% subsidy to other farmers. · Component C2: State government will provide maximum Viability Gap Funding (VGF) of INR 50 lakh per megawatt (MW) in addition to subsidy being provided by central government. |
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4 |
Utility-scale Projects with 5 MW or More Than 5 MW Capacity |
· For projects to be set up in Bundelkhand and Purvanchal region, state government will bear the cost for construction of transmission lines as described in the table below.
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5 |
Solar Power Projects Set Up for Sale of Solar Power to Third Party or Captive Use |
· Exemption of 50% on wheeling charges/transmission charges on intra-state sale of power to third party or in case of captive use. · Cross subsidy surcharge and wheeling charges/transmission charges will be exempted 100 % for Intrastate Transmission system on purchase of solar power. (Note: The above provisions, in essence, has been carried forward from the previous (2017) state solar policy) |
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|
6 |
Solar Park |
· The state government will provide revenue land for setting up solar park on lease for 30 years at INR 15000 per acre per year in order to promote investment in this sector. · Sale of 100% power to third party under open access is allowed for plant capacity above 1 MW. · To provide facilitation for evacuation of power from solar projects of 4,000 MW capacity, green energy corridor will be set up in Bundelkhand region of the state. |
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|
7 |
Solar Power Projects with Storage Systems |
· Capital state subsidy of INR 2.50 crore/MW will be provided to utility-scale solar power projects set up with 4-hour battery storage system of 5 MW capacity or above and standalone battery storage system (energized by solar energy only) for sale of power to distribution licensee. |
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|
8 |
Energy Banking |
· Banking of energy in every financial year shall be permitted up to 100% as per provisions of UPERC Captive and Renewable Energy (CRE) Regulations – 2019 and as amended from time-to-time. |
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|
9 |
Electricity Duty |
· In respect to all solar projects set up within the State, electricity duty shall be exempted for 10 years on sale of power to distribution licensee, third party, and for captive consumption. (Note: The above provision, in essence, have been carried forward from the previous (2017) state solar policy) |
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10 |
Stamp Duty |
· 100% exemption from Stamp duty on the land used for setting up solar power projects/solar park in entire State of UP. |
Source: UP Solar Energy Policy 2022, JMK Research
The latest policy seeks to remove all the bottlenecks that hindered setting up of solar plants and parks in the state. Various attractive incentives (in the form of exemptions of different duties and charges, subsidies, etc.) provided by the state is anticipated to bolster investments in the UP solar market. Also markedly, the inclusion of capital subsidy provision for setting up battery storage system (a first among all the states) is a good move by the state government. Albeit the implementation of all policy provisions is expected to lead to a burden of INR 7,700 crore to the state exchequer.[1]
As on 30th September 2022, the cumulative installed capacity of solar power in UP was 2.3 GW.[2] Thus, with the latest solar target of 22 GW in view, the state will need to add ~4 GW per annum for the next 5 years. This entails fervent joint efforts from all the relevant stakeholders.
[1] Hindustan Times, Uttar Pradesh Cabinet Tweaks Policies to Attract Investment, Create Jobs, November 2022
[2] MNRE, State-wise Installed Capacity of Renewable Power as on 30.09.2022