Is It A High Time That A Nation Needs A Consistent And Uniform Policy Framework For The Rooftop Sector To Achieve Its Full Potential?

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Solar photovoltaic rooftop has emerged as a potential green technology to address climate change issues by reducing reliance on conventional fossil fuel based energy. With a strong commitment to increase the renewable sources based energy capacity to 175 GW by 2022, India has a target to install 100 GW of solar energy capacity. Of this 40 GW would be the share of grid connected solar PV rooftop. This ambitious target comes with its own challenges and needs a policy framework to guide the industry. Currently, India has around 6 GW of installed rooftop solar capacity, the majority of which has been developed by C&I consumers. Each state in India has come up with its own individual solar policies and net metering regulations. Research & Analytics says a provision in the Ministry of Power’s new rules for electricity consumers which mandates net metering for rooftop solar projects up to 10 kW and gross metering for systems with loads above 10 kW will likely make rooftop solar commercially viable for big residential and commercial and industrial (C&I) consumers. 

Let’s see what experts have to say:

The answer obviously is a strong YES! Each state seems to have its own solar policy, which not only causes a lot of confusion about the different sections such as third-party investment, net-metering, permissible capacity, technical specifications and other criteria but also delays as a result of unnecessary bureaucracy. For example, in Karnataka each inverter needs to be registered and approved every year while there is no reason to do this if at a national level MNRE or a central body is placing acceptable standards and registering them for each state to follow or how in Gujarat third-party investment was not allowed previously and now it is allowed. 

This constant shift in the policy of each state every year gives an impression of an unstable market condition. It is clear that the biggest challenge in rooftop solar is the bad policy and regulatory landscape – and if done with a systematic manner the decentralised solar sector in India will have the potential to attract investors and boost the economy with more jobs. Therefore a central policy for solar rooftop will be most welcome and also extremely beneficial to the states of India as they have a standard to follow. 

K. R. Harinarayan, Founder and CEO, U-Solar Clean Energy

Despite these initiatives, there are multiple challenges on institutional, regulatory, financing, and consumer awareness aspects which hinder uptake of rooftop solar in India. One of the major issues has been large variations in the regulations issued by states for rooftop solar. It has been observed that the regulations vary in terms of the limit on individual rooftop solar capacities, distribution transformer capacities, process for applying for metering connection, voltage connection levels, integrated billing, settlement tariffs and exemption limits for inspection by Chief Electrical Inspector to Government (CEIG). In addition, it is observed that there are variations in processing net metering applications within the various electricity distribution companies in a State. These large variations in regulations, interconnections and metering application processes increase the implementation time and administrative costs of compliance for the solar project developers. Furthermore, the non-uniformity creates confusion amongst the consumers who are already less aware of rooftop solar.

Implementing uniform policy & regulation for rooftop solar across the country with minor adaptations to states’ situations offers great potential to reduce the ambiguity in the market, leading to an increase in uptake of rooftop solar. Adoption of the draft model regulations approved by the Forum of Regulators during 2019 for grid interactive distributed renewable energy systems by the states will provide this uniformity and market certainty for investments. Regulators may follow a standard methodology, nationwide for assessing the overall impact of rooftop solar on DISCOMs’ revenues and allow DISCOMs to charge additional levy on rooftop solar after the state has achieved its target.

MNRE had also launched State Rooftop Solar Attractiveness Index (SARAL) in August 2019 and the regulatory best practices identified in the index may be utilized in developing uniform policy & regulation as well.

Shreyas Gaur, Manager, Strategy and Transformation, Ernst & Young LLPNithyanandam Yuvaraj Dinesh Babu, Executive Director, E&Y

At the top level, POLICY should provide the guiding framework to achieve the target. But POLICY guidance in case of RTS failed because the focus was lost and we tried achieving multiple goals. When the Solar Power installation target was set, the Solar PhotoVoltaic (PV) manufacturing was caught off-guard; it was a miniscule percentage of what was required. Solar PV cell manufacturing was almost non-existent. We were nowhere close to achieve the target through in-country manufacturing. Hence, ZERO Customs duty imports were allowed. But suddenly, the huge Chinese imports swelled the Indian market. Indian PV manufacturers were unable to compete and in order to protect them, FOCUS was shifted to achieving self reliance in Solar PV module manufacturing; terms like Domestic Content Requirement (DCR) were introduced and Basic Customs Duty (BCD) of 25% was slapped overnight on Solar PV Module imports. How much this Duty helped local manufacturing and how much it dented our original target is a topic for another article.‘Electricity’ is placed in the Concurrent list in our constitution meaning both Centre and the State can make & implement Regulations on this subject. But this meant that all the SERCs acted independently (and framed their own regulations). There was a clear direction for State Electricity Distribution companies (Discoms) (who were bleeding financially and constrained for resources) to develop and maintain independent Net metering processes/ web-portals. We lost the opportunity to set up a unified portal which could feed data to state Discoms. Policy was made to promote solar. However, Regulation was made too complicated for Execution. At least for smaller projects, Net metering should have been as simple at getting an electricity connection. Multiple approval points/processes created by the Regulation increased the compliance costs and hampered the confidence of the RTS system owners/potential owners.

Prashant Jain, Director, Advit Ventures Pvt. Ltd.

Solar photovoltaic rooftops have emerged as potential green technologies to address climate change issues by reducing dependence on conventional fossil fuel-based energy. With a strong commitment to increasing renewable energy-based capacity to 175 GW by 2022, India’s goal is to install 100 GW of solar energy capacity.

The current Indian objectives, issues & challenges in achieving them and trends in further developments are discussed. The centre can help accelerate the growth of the industry in 2021 and beyond by incorporating positive regulatory, fiscal, tax, and financing policies and incentives for the renewable energy industry.

The Government of India has set an ambitious target of installing 175 GW of renewable energy capacity by 2022, which has been increased to 450 GW by 2030, as committed by the Prime Minister at the United Nations Climate Action Summit. It is a marathon target and the total investment required to meet the initial target of 175 GW has been estimated at just over $150-200 billion.

The performance of the industry was adversely affected by COVID-19 and related issues in  2020. The current level of installed renewable capacity in the country is only about 90 GW and there is a pipeline of more than 50 GW for implementation.

The industry is struggling with the lack of a clear regulatory framework in the sector at both central and state level, rapidly declining tariffs, and the lack of long-term competitive financing options with high and ambiguous tax structures.

Nikhil Gupta, Business Head, Delta Solar Inverter Solutions, Delta Electronics India

It is essential that there should be a consistent and uniform policy for solar rooftops to convert major towns and cities as solar cities in the country. When solar rooftops are becoming more and more popular, the Government of India rose to the occasion and set an ambitious target of achieving 40 GW by 2022 for rooftop installations. We are far behind the target as of now  mainly because of the  inconsistent policy and guidelines and tardy implementation of the programme which is against the principles of the Government itself.

The recent decision of the Government made this sector weekend especially in the MSME Segment. In case this is not practically possible and viable, the policy can be varied to suit the financial conditions of DISCOMS of that particular state. However the customisation of policy should not impact the existing policy of Net Metering. The Government of India is slowly removing or restricting the incentives to the rooftop plants, arguably to reduce the burden on the exchequer but that will not serve the purpose for which targets were fixed with all hopes. In fact, these incentives could have been continued  for certain non-profit institutions like Schools, Temples and Trusts etc.

M. Venkateshwarlu, President, Telangana Chambers of Commerce and Industry

To read complete story please refer SolarQuarter India February 2021 issue

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