Managing Director, Idam Infrastructure Advisory Pvt. Ltd.
In 2015, India increased target for renewable energy to 175 GW. While doing so, a target of 40GW was assigned to Rooftop Solar PV segment. Unfortunately, the rooftop solar sector has been shackled with sluggish growth, with total installations reaching to only about 6 GW as of June 2020.
The slow growth in the segment is attributed to various reasons, as identified by MNRE in its presentation before ‘Standing Committee for Energy on discussions during Demand for grants for 2019-20’. These reasons are regulatory hurdles, lack of uniform regulations, lack of mandatory notifications / state policies, high cost of financing, reluctance from DISCOMs to provide approvals, multiple approvals from multiple stakeholders, availability of net meters, no single window clearance, etc.
The major challenge lies in the variations in net-metering regulations and sometimes between DISCOMs in the same state. In Uttar Pradesh, Regulations allow net metering only for residential consumers and not for commercial & industrial consumers. Maharashtra allows net-metering to all categories of consumers subject to cap of 1MW. Some states have laid caps on generation from rooftop systems, e.g. Punjab and Haryana have capped generation from solar at 90% of the annual consumption for all consumer categories. On other hand, Rajasthan has put a cap on generation, i.e., 4.8 units per kW and in case of excess generation at the end of year, only residential consumers are given monetary compensation.
Second major challenge is frequent change in regulatory position by states In November 2019, Maharashtra Regulator published Draft Regulations in which it proposed to allow net-metering to only for residential consumer(s) of less than 10kW capacity. In the final regulations published, it reversed its position and allowed net-metering to all categories of consumers but proposed Grid Support Charges (GSC) for such net-metering systems. As against the MSEDCL’s proposed high GSC, the Commission waived off GSC till the time State achieves 2000MW of rooftop solar installed capacity, but decided to levy banking charges of 7.5% for HT consumers and 12% for LT consumers. Such decisions do adversely impact investor sentiments in the rooftop solar sector in the State.
Third major issue is with the definition of third party owned systems, popularly known as Opex or RESCO models. While Gujarat has not allowed third party owned system in its solar policy, Maharashtra has permitted such ownership to only leased systems. A few other states have their own interpretation of third party owned systems which limits penetration only to Capex mode of investment.
Recently, the Draft Electricity (Rights to Consumers), 2020 released by Ministry of Power proposed that the consumer has the right for Net metering only for loads less than 5 kW beyond which only gross metering is applicable. This would greatly reduce the flexibility available for consumers wishing to install rooftop solar systems. It is sincerely hoped that the Ministry will amend this provision to allow net-metering upto contract demand with reasonable limit such as 1MW.
Such non-uniformities and frequent (and major) regulatory changes bring significant uncertainty to the sector thereby hindering the progress of the grid connected rooftop solar segment and investment into the sector. Uniformity in policy and regulations shall attract more investment and help the country reach the target of 40 GW.
SUPRABHA TA program worked closely with the Forum of Regulators and supported them to finalize and release the Model Regulations for Grid Interactive Distributed Renewable Energy Sources (GDRES) during April 2019. The TA Program is currently striving to achieve uniform regulations which would help reduce uncertainty in the sector. SUPRABHA is also assisting MNRE in implementing utility driven business models in multiple states.
IDAM Infra is one of the leading implementing partner of the SUPRABHA TA Program along with EY and has made key contributions in supporting the Model Regulations for GDRES, rooftop solar policies and regulations for Sikkim, rooftop solar policies for Meghalaya, vendor empanelment manual and tender for Sikkim, and developing Unified Web Portals for several partners States (Rajasthan, Bihar, Haryana, Chandigarh, Meghalaya etc.,).