Will The Recent Amendments In ‘Gujarat Solar Power Policy-2015’ Bring The Desired Benefit To MSME Sector

Mr. Yogendu Joshi, Principal Associate, Tatva Power Projects And Associates

Recently Government of Gujarat (GoG) have taken an industrial and environmental friendly decisions in order to ensure that the MSME sector is able to reap the benefits of solar energy.

  • MSME unit can set up Solar Generation Unit of any Capacity i.e. irrespective of Sanctioned Load or Contract Demand either on Roof Top on Net Metering or Ground Mounted for Wheeling of Solar Power for their own Captive use.
  • MSME can purchase Solar power from Third Party.
  • Any surplus Solar Power produced by MSME shall be purchased by Discom @ 1.75 Rs./ Unit.

These steps may bring big boost to encourage MSME sector to start producing their own Solar Plant. As a Consultant, we can anticipate a lot of upcoming Solar Projects from MSME sector due to their shift pattern, in general MSME sectors works on One or Two Shift and their peak demand always observed in day time. And hence generated Solar Power can be utilized straight away during the peak requirements. We can learn in simple example, How MSME sector can reduce their Electricity Burdon :

For example, if MSME pay Rs. 8.00 per unit during day time. Now if during day time and during peak working hours, direct use of Solar Power can give profit of Rs. 3.00 per unit. However to achieve maximum benefits, they have to understand combination of Demand & Solar Power Supply Curves. As per Policy, Accounting of Solar Generation will be carried out on 15 Minutes Time Block basis. That means, Consumption of Solar Energy must be within the same 15 Minutes required. To gain maximum benefits, MSME firm can identify following general steps :

  • Priority wise loading pattern can be identified as per gradual rise of solar power after the sun rise. Non-critical power can be controlled by the use of Demand Controller.
  • During peak Solar Power Generation, maximum operation of miscellaneous equipment or ancillaries can be done.
Mr. Eshan Cholia, Managing Partner, Sunfraa Renewables LLP

The recent amendment in MSME sector i.e. allowing installation of solar power plant of more than 100% of sanction load is according to me a huge boost for the industry. This shall act as a catalyst in achieving the central government’s target of 100 GW by 2022. Till now there was a restriction of 50% which was holding back industry owners to install a solar photovoltaic system to their maximum capacity even if they wanted to. Now, since the solar power plant installation has already become economically viable for the industries with an average ROI of 4 years, this move by the government will encourage more and more MSME’s to go solar. Also, since the amendment, I have experienced that industry owners have welcomed this move with open arms as almost all MSME’s that I meet intend to go solar in the near future.

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The other aspect I see in the current trend is that most of the industries are going towards cost cutting by many means. I see that installation of a solar power plant as an alternate source of power is the best possible means of cost cutting one can opt for. Since the government has restricted setting up new thermal power plants, this move will be beneficial for Discoms as well to achieve their renewable energy obligations. Having said that, the maximum power is consumed by large scale units where still there is a restriction of 50% of sanction load in Gujarat. I strongly urge that this should also be removed gradually to further boost the renewable energy generation.

Mr. Karan Dangayach, Director, Shashwat Cleantech

The Policy for Manufacturing Enterprises in the MSME Sector of Gujarat is a welcome boost for the sector. The policy has raised a lot of hope and interest for MSME’s who are looking to adopt solar energy to reduce power costs. There are currently more than 3,00,000 MSME registered units in Gujarat.

However, currently there are a number of points in the policy which are stopping its adoption. The biggest roadblock for swift adoption seems to be the 15-minute timeblock for the consumption of the energy produced. This is not possible for MSME’s as this timeblock does not account for weekly off-days and the very nature of MSME’s where predicting power consumption is not possible in such a coordinated manner.

The policymakers can certainly think of ways to counteract this concern of MSME sector. If this is done, then this policy can take Gujarat’s solar capacity to new heights.

Mr. Shobit Rai, Director, Prozeal Infra Engineering (P) Ltd.

The new amendment for MSME sector in the Gujarat Solar policy 2015 will be a big boost for the sector as they will be able to generate more solar power which will help them to reduce the overall power cost and in turn reduce their operating cost. Though there are certain additional charges that they will have to pay line the ED (15%) which was earlier exempted. But still the industries are going to get a set off at the rate of approx 6.30/Kwh in their bills which is substantial savings and makes sense. Though this changes does not favour the 3rd party sale to MSEMs as the policy mentions 100% CSS and ASC which makes the proposition unviable.

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Mr. Ankit Jain , Founder & Director, Lume Solar Energy Pvt. Ltd.

The Gujarat government has recently launched an incentive scheme for the micro, small and medium enterprises (MSMEs), this new initiative will offer a win-win situation to the MSME sector.

The cap on 50% load capacity has been removed for MSMEs in case of solar power generation. With this, MSME units would be able to install 100% or even more capacity of solar power plant.

Additional power generated by these units would be purchased by state-owned electricity companies at Rs 1.75 per unit.

Also, in case MSME units don’t have adequate own land to install solar panels, they would be allowed to generate solar power in rented land. However, the electricity duty and wheeling charges have to be paid by the MSME units as per the existing norms.

At present, MSMEs pay Rs 8 per unit for electricity consumption. The new decision will benefit the MSME sector and earn them a profit of Rs 3 per unit. The firms will make a profit of Rs 3.80 per unit if they produce solar energy on their own land, and in the case of leased land, they will make a profit of Rs 2.75 per unit.

The above changes in the solar power policy of 2015, will encourage 33 lakh MSME units towards production and use of green and clean energy.

There are 33 lakh MSME units with investment of up to Rs. 10 crore in the Gujarat state that are eligible for the relaxation.

We are now the leading Solar EPC Company across Gujarat and PAN India for every kind of MSME and Commercial units, with our prominent presence in almost all major sectors, among which few of them are categorized as follows:

  1. Oil & Gas- Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd.
  2. Automotive – Hero Motocorp, Force Motors
  3. Manufacturing – GYSCOAL Alloys Ltd., Achint Chemicals, Pegma Resources Pvt. Ltd.
  4. Textiles – Western Suitings Pvt. Ltd.
  5. Food processing – Jovial Foods Pvt. Ltd. (Aashirvaad Atta)
  6. Transport – Chartered Bus
  7. Renewable energy – Suzlon Energy Ltd.
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Mr. Manish Bagadia, Managing Director, Grace Renewable Energy Private Limited

To encourage micro, small, medium enterprise (MSME) units to switch towards clean energy, The Gujarat Government has amended its existing solar policy which allows MSME units to install solar power projects that are more than 100 % of their sanctioned load or contract demand. Before this announcement, commercial and industrial clients were allowed to install only 50 % of their sanctioned load.

The definition of MSME is considered as per the 2006 Act which should have been according to the latest amendment. In Spite of this fact MSME units would definitely be benefited from this decision as this policy change can help them to reduce their power costs. In addition, the policy has supported RESCO model which allows the MSME unit to buy power from third parties as well. This policy change is a welcome move to scale up solar power generation in the state.

Although, it’s unlikely to spur demand for implementation of solar power plants among the MSME units as they would be liable to pay transmission & wheeling charges, electrical duty and Cross Subsidy surcharge for captive or third party use.

This new initiative is indeed a boost for the commercial and industrial segment and may motivate clients to adopt solar power however Customer’s interest can fall succumbed to clause like Energy accounting where consumer is given a time block of 15 minute to consume electricity generated from solar power, failing to do so the unused surplus solar energy would be purchased by the Discom at 1.75/unit which is lower than the average power procurement cost (APPC) rate of Rs. 2.50/unit.

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