Industries constitute more than 45% of the electricity consumption in India. The landed electricity tariff for industries on an average is 6 Rs./unit. (Industries have two types of customers, viz., LT and HT. LT is 400 V and below and HT is 11 kV and above. Bulk of the industry buyers of electricity are in HT segment. The highest tariff is in Maharashtra at Rs.7.48/kWh. At second spot is Delhi where the tariff for HT customers is Rs.7.25/kWh. The tariff for LT customers is higher but their share in the overall consumption is only 6% in India as compared to 21% for HT. In LT segment as well the highest tariff is in Delhi (Rs.9/kWh) followed by Maharashtra at Rs.7.60/kWh and UP at Rs.7.30/kWh). Bulk of electricity in India is generated from power plants based on coal. As the cost of coal, transportation, labour and disposal of ash increases y-o-y, an annual increase of 4% in electricity tariff is expected and the same has been the trend historically too. Industrial and Commercial consumers will continue to cross-subsidize domestic and agricultural sectors.

Most industrial consumers have large connected loads and many of them partially or fully use their power requirement through diesel generators. These industries have big enough rooftops suitable for 100-300-500 KWp solar installation. They also have a variety of loads, some of which cater to the process requirement which cannot be compromised and others are office and building loads. A rooftop solar plant can be connected to the LT side or through a smart controller to diesel generator which either reduces the total import of electricity or reduces consumption of diesel or both.

If the industry has larger roof-top then even more than 1 MWp capacity can also be installed either under net metering policy or as a captive power plant. As captive power producer, the industry can also claim accelerated depreciation if it is a profit earning entity, which further increases the viability and savings from solar. They can also earn some Solar RECs which can be traded in power exchange at the market rate. In case, the industry is one of the obligated entities the units consumed by it can be offset from its total obligation. Thus, solar shall not be regarded just as a clean and green energy but as a viable energy alternative which provides a good hedging to the certainty in electricity rate increase in future and saves energy cost for the industries. As far as exact savings from solar is concerned, the situation is no-size-fits-all. Each state has its solar policy and as per their solar policy they stipulate following things:

• Wheeling charges
• Wheeling losses
• Cross Subsidy Surcharge
• Banking charge
• Time of day charge
• Electricity duty
• What percentage of solar capacity is allowed for an existing customer
• Metering point and metering details
• SLDC charges

On top of above, it is the location of the consumer which will decide the solar yield and hence the economics. Besides economics, it also helps in energy security and sends a message to the customers of industry on its readiness to adopt environment-friendly technologies.

Three key things, that I would suggest to take note when deciding upon going with a rooftop solar PV plant for your industry or commercial building are:

1. While deciding on the capacity to be installed, 25-30% of the overall average load is the safe bet.
2. Some industries are reluctant to spend capex and often want solar power under open access. This alternative shall be evaluated in totality as the open access charges are normally to be paid by the consumer and may upset the economics of solar vs. grid power. Also, some discoms are reluctant to grant permission for solar installation as they do not want to lose prized customers.
3. Electricity Duty has to be considered while evaluating the financial proposal as despite not using the state grid this charge is payable on each unit of solar electricity consumed by industry. Some states have waived it for solar under their policy for a definite period though.

This article has been contributed by Dr Amitabh Verma, CTO at Solar Power Aditya Birla. He has lead projects in Gujarat, Rajasthan, Telangana etc adding up to a capacity of 80 MW in total. He is a dear contributor at MYSUN as a guest author.

Image source: RMI Outlet

Just days after it was reported that the Central Government will be providing customs and excise duty exemptions for rooftop solar projects, there is more good news for those who are exploring the idea of going solar in Haryana. The Haryana Government has decided to exempt VAT on equipment and parts used in the installation of a solar plant in Haryana. This would bring the cost down of the solar plant a fair bit. Haryana is not the first state though to exempt VAT from solar equipment with the states like Punjab, Uttar Pradesh, Delhi, Maharashtra and Madhya Pradesh already taking the stand(link all the solar policies of these states).

The decision to exempt VAT was taken jointly by the Haryana Cabinet in Chandigarh. Chasing a target of 4200MW of solar power by 2022, a move like this will invite and encourage more developers and installers to set up projects in the state. It has been estimated that this move would cost the state an approximate Rs 2.30 crore, which is a small price to pay to help encourage the adoption of solar. While the obvious components used in a solar plant are exempted, it has also been notified that readily available solar products such as the solar lantern, pumping system as well as spare parts will be exempted from VAT. Some of the other products that have been exempted from VAT of 5% include alternators, inverters, solar chargers, electricity meters, street lighting systems, solar home system etc.

MYSUN's view: We believe that this is indeed a positive step, especially on the back of announcements like last year where a 90% subsidy was given to promote equipment like the solar water pumps to encourage people to install solar in Haryana. Instead of providing subsidies which may not be always very easy to avail, the Government has decided to make the system more affordable right at the point of buying which is much simpler and useful. We hope that more states would follow the lead of the likes of Haryana and exempt VAT from solar equipment. However, with GST just around the corner and expected to be brought mainstream in July, it would be worth watching how that would play out.

Image Source: Drink Blue Save Green

In a bid to encourage the growth of the rooftop solar projects, the Government has decided to offer customs duty and excise duty benefits to the rooftop projects minimum of 100KW capacity as a single project or bundled projects. This move is set to help bring down the cost of installation, making the financials of the project even more lucrative for the consumers to install solar on their rooftops. With barely 1GW of installed capacity achieved from rooftop solar and another 39GW set as a target over the next 5 years, measures such as these are only welcome.

The announcement for the grant of the benefit came from the Ministry of New and Renewable Energy (MNRE) on April 13, 2017, and can be read in detail here. The notice clearly states that the 'matter of extending the duty benefits to the Roof-top Grid connected Solar PV Power Plants has been under consideration’ for a few days, so it is not a measure taken in haste. Also added is that the Customs & Excise Duty Exemption Certificates or CCDC/EDEC's will be issued immediately following the order. In case of a bundled project the EPC or the RESCO contractor will have to apply for the end user to earn the benefit in a special category called "Bundling" project on the MNRE website.

On one hand, where the Government has made importing more economical, to encourage installation of rooftop solar, it has halved the size of the 1GW rooftop tender that was announced in December 2016. It is reported that the 1GW tender is now reduced to 500MW and the financial aid offered is also reduced. The developers who complete 80% of the project within 15 months of signing up will get an assistance of Rs 16,250 per KW in the general category and Rs 39,000/KW in the special category. This figure initially was at Rs 18,750/KW and Rs 45,000/KW for general and special categories respectively.

MYSUN's take: Benefits on customs and excise duty is a very important step taken by the Government to help a wider and faster adoption of rooftop solar. At the end of the day, consumers are always looking for the best and most affordable equipment and by allowing special grants for customs duty and excise duty on equipment the performance to price ratio will definitely improve for the good making going solar even more affordable. While the Government has tried to simplify the process of claiming the exemption, however, it still seems quite complicated in case, of bundled projects. Since the 1kW - 100kW systems are the most deserving for this exemption, it remains to be seen how the claim process for bundled projects is implemented. If done right, it would provide a strong push to the rooftop solar industry. It is also an interesting move from the point of view that to avail subsidy it was mandatory. By relaxing the duties, the Government has also embraced the international market, and that only bodes well for the end user.

Image Source: pvEurope

It is no secret that the timelines for subsidy driven rooftop solar projects are quite tight given that the installers or developers have to find the customers, close contracts, get net-metering approvals, install the project and get the inspection done, all in a short time-frame of approximately 12 months. However, often we see that due to one weak link in the chain, the project is stretched and the execution has to be hurried and last moment compromises are made to meet the strict deadlines, which has financial implications. This is one situation where the quality of the solar system can potentially be compromised, the other one being the very aggressive bidding solar companies do to win these projects. Another familiar tale is that the power generation from these projects is not up to the mark due to lack of proper maintenance.

In order to deal with these situations and ensure that all the small rooftop solar PV plants, both off grid and on grid are performing close to their potential, Central Government has announced that they will start monitoring the performance of the plants closely. In case the plants are performing less than 40% of the theoretical capability, irrespective of the reason, the financial incentives that were promised to the plants will not be given. All the consumers, including the government departments who are planning to install solar as mandated by several states, will have to take account of the new notice and ensure that at all times at least 40% efficiency of the plant is maintained. This is the first time that the Government has come down hard on the quality aspect and linked generation of the plant to the incentive.

It has been reported that the reason the government has taken this caution is that several institutes, while have installed rooftop solar as per the mandate, have not cared about maintaining the system and therefore the generation from these plants has been poor. This results in not only fewer savings, but also results in lower trust in solar amongst this category of consumers, thereby negating the core proposition of going solar. The mandate to maintain at least 40% efficiency has come into effect from April 4, 2017, and therefore it is now mandatory for all upcoming rooftop solar plants to abide by it. On the other side of the story, the Government is also promising to reward the plants that are well maintained and doing well. Maximum subsidy has been promised for plants that are consistently generating more than 80% of their theoretical strength. Below is the new incentive structure based on the plant performance that has been issued by MNRE.

At MYSUN, we believe this is a well-intended proposition from the Government but like many such initiatives, it has to be implemented well. Also, since the incentive is to be rolled out in the first couple of years from the date of installation and commissioning of the solar plant, this policy alone does not ensure the 25 year long term performance of the solar plant. To achieve that, one needs to ensure that the right quality standards for the system design and the critical components are defined and adhered to. However, this is a welcome step towards achieving that goal.

Credits: Deccan Chronicle.