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Election Results Special - New Term, New Expectations: What Does The Solar Industry Have To Say?

Mr Simarpreet Singh, Founder-Director, Hartek Solar Pvt. Ltd 

With the NDA government back in power, the continuity in policy is expected to keep the growth momentum of the solar sector going. Battery storage technologies and adoption of solar solutions through electric vehicles, the thrust areas identified by the government in its previous tenure, are likely to get a major boost.

The government should now give a decisive push to renewable energy in general and solar power in particular by amending the Electricity Act so as to ensure the greater participation of private companies in the power sector. Apart from addressing issues pertaining to availability of land, access to finance and transmission infrastructure, it should push for reforms under Uday II to improve the financial health of discoms and enable them to fulfil their renewable purchase obligations. Alternatively, the government should open retail supply to competition through private sector participation. This will bring down the rates and enhance efficiency. The single-supplier model has outlived its purpose and become a financial liability.

The amendments to the Electricity Act should address issues like direct benefit transfers, power supply obligations and penalties for violations of power purchase agreements and renewable purchase obligations. The government should also address the problem of delay in payments to developers by deliberating on a new payment security mechanism. The committee constituted for the purpose in February should suggest the way forward. The Solar Energy Corporation of India, for instance, can devise a risk mitigation mechanism to ensure assured payments to developers in the event of defaults by discoms owing to lack of funds.

Last but not the least, the government should tread with caution and desist from setting excessively aggressive caps for solar tenders as it could hamper the confidence of investors and interfere with the high-trajectory growth registered by the solar sector over the years.

Mr Guru-Inder-Mohan-Singh, Director & COO, Amplus Solar

India has set itself ambitious targets for adding renewable capacity by 2030. Out of the 100 GW target for solar for 2022, 40 GW is proposed to be installed on rooftops. The rooftop solar segment seems to be lagging behind as compared to the utility scale segment – we have achieved only about 4 GW nationally. Though the segment has doubled in capacity in the last year itself, its growth is being held back due to certain issues.

Listed below are the major issues and the recommendations, if implemented by the government will aid in the growth of the sector:

Aligning the DISCOMs and the Developers
DISCOMs have a fear that if rooftop solar is allowed to grow without restrictions, they will lose some of their largest and best paying Customers.
A comprehensive Gross Metering policy can help resolve this issue in its entirety. It is recommended that the DISCOM purchases the entire energy generated by rooftop plants. The entire electricity produced should be metered and exported to the grid.

The DISCOM should buy the rooftop solar power at their actual Cost of Supply (ACOS = APPC + T&D costs) and continue to supply electricity as usual to the customer at its regular tariff. Therefore, the DISCOM would not suffer any loss of revenue on account of rooftop solar. Unlike the current scenario where the entire benefit of rooftop solar was going to the rooftop owner at the cost of the DISCOM, this will ensure an equitable distribution of the savings between the DISCOM and the rooftop owner.

Removing restrictions on RESCO model and capacity caps by states
Some states have restricted RESCO model in rooftop, while some have put a restriction on the size of plant that can be installed at a consumer’s facility. The rationale varies from state to state.
It is recommended that all caps and restrictions on rooftop solar be based purely on technical issues. Individual consumers should be allowed to set up rooftop solar plants up to their contract demand, and the total capacity in a distribution area should be capped basis the substation technical capacity.

All restrictions on Rooftop solar plants on the basis of ownership should be removed. Performance measurement data suggests that RESCO plants show better continued performance in the long run. Thus, the policy should encourage the growth of the RESCO model in the rooftop segment, just as it has in the case if the utility segment. Moreover, RESCOs will be able to provide better capital efficiency owing to their expertise in the solar domain.

Bringing a uniformity in statutory approvals 
Statutory approvals vary from state to state. Even within a state, the process of obtaining these approvals is not standardized. Nodal agencies also impose additional clearances not specified in the state’s solar policy. Finally, there are no defined timelines for the granting of approval by the various agencies involved, leading to delays and losses, especially where net metering is involved.

Approvals should be standardised, clear timelines should be defined and adhered to.

Aiding Financing for rooftop solar projects
Financing continues to be a challenge, especially for smaller consumers or those with lower credit credentials. Also, a large portion of the credit facility for rooftop solar lies undeployed with the banks.
A credit guarantee scheme should be created to mitigate risk for customers with lower credit rating. This will enable such consumers to avail of bank financing for their rooftop solar projects, and also enable developers to offer such consumers the Resco model, as the inherent credit risk issue will be taken care of.

Avoiding frequent policy revisions
The Solar Policy issued by the SERCs undergo extremely frequent changes and revisions. Such frequent revisions de-stabilise the sector and hinder its growth. It is recommended that revisions are not done so frequently. More importantly, all changes to existing policy should be applicable only prospectively and should not apply to existing projects.

The government has renewed its focus on the rooftop solar sector. We believe that with the above recommendations in place, there will be accelerated growth in the industry. There is no reason why India’s rooftop solar energy sector cannot achieve, or even surpass the target set by the government.

Mr Pinaki Bhattacharyya, CEO, AMP India

Before the election results, progress in the solar sector was sluggish due to slowdown in tender and auction activity. Now post results, the same party being re-elected has its own merits and drawbacks.
The NDA government has always been pro-renewables and has implemented several reforms/ policies to encourage growth of the sector. It even increased the solar target by 5 times from 20GW to 100GW by 2022 when it came to power in the first term. Additionally, introduced transformational policies such as GST, UDAY scheme to improve discom health etc. As a result, in the last few years, the industry has been able to achieve tremendous growth and is now being considered amongst the largest markets in the world after China and US.

Now, NDA coming back for a second term would mean policy continuity, timely implementation of previously set targets and renewed focus on execution. New policies such as domestic manufacturing etc would continue to be endorsed.

However, the same government would also bring the same shortcomings with it. The second term of the NDA government would be expected to bridge the gaps needed to accelerate the development of the sector and achieve the ambitious target of 100GW by 2022.

Some of the immediate efforts needed are- Ease of private sector participation, National level policy to harness rooftop solar potential optimally and accelerate deployment, better clarity on wind solar hybrids, issue reforms to make discoms amicable to private sector adoption of solar, clarity on regulatory & policy framework to attract more investment into the sector, removing caps on tariffs if there are no floors, augmentation of evacuation infrastructure to accommodate new RE capacity by earmarking transmission projects and more consistent state level policies to operationalize open access so that the industry has the freedom to choose lower cost sources of power.

 

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