Uttar Pradesh recently released its new solar policy after the state’s cabinet approved the draft policy brought out in June 2017. The Uttar Pradesh Solar Power Policy, 2017 will be effective for a period of five years or till a new policy is issued. The policy was approved in December 2017 with retroactive effect from November 6, 2017.
Uttar Pradesh has about 22,300 MW of solar power potential, of which about 600 MW of large-scale installations have been carried out as of October 2017, with about 350 MW installations in the pipeline. The policy has set a target of 10,700 MW of installed solar capacity in the state by 2022, in line with the state’s solar target set by the Ministry of New and Renewable Energy (MNRE). This includes 4,300 MW of rooftop solar capacity.
The policy aims to boost private sector participation in the state, provide investment opportunities for solar power development, provide affordable and clean energy to rural and urban areas, promote research activities and skill development in the state, and achieve the state’s 8 per cent solar renewable purchase obligation (RPO) target by 2022. While the achievement of these objectives will require a major transformation of the state’s power sector, the policy is expected to benefit prospective solar plant developers in the state.
Utility-scale solar projects
The policy covers utility-scale grid-connected solar projects, which include both solar parks and large-scale stand-alone solar projects.
Solar parks: As per the policy, wastelands will be utilised for solar park development. Further, the state government will promote solar parks through the provision of plug- and-play options to solar park developers, which will also increase private sector participation. The minimum capacity for setting up a solar park will be 100 MW. The state government will also provide incentives to solar park developers. These include connectivity to the nearest substation, support for strengthening the grid, and land on lease or a right-to-use basis for developing solar parks. In addition, UPPCL will offer purchase of 100 per cent of power generated from the solar parks.
Large-scale stand-alone projects: A large-scale ground-mounted project must have a minimum capacity of 5 MW at one location for selling power to discoms, and these projects will be awarded only through the competitive bidding process. The state government will partly bear the cost for the construction of transmission lines if these projects are being proposed in the Bundelkhand and Purvanchal region of Uttar Pradesh. Meanwhile, large-scale solar projects set up on canals or lakes for selling power to discoms will be awarded through competitive bidding. Developers may set up projects for captive consumption of power or for the sale of power to third parties. The state will grant 50 per cent exemption on wheeling or transmission charges to developers selling power within the state or using it for captive consumption. However, distribution losses and cross-subsidy surcharges as decided by the Uttar Pradesh Electricity Regulatory Commission (UPERC) will be applicable to all developers.
Rooftop solar projects
As per the policy, all rooftop solar projects in the state will be implemented as per the UPERC Rooftop Solar PV Grid Interactive Systems Gross/Net Metering Regulations, 2015. The state government will endeavour to get maximum benefits from the MNRE’s Achievement-linked Incentive scheme for installing rooftop solar systems on buildings owned by the state government or state PSUs. The state government will provide a subsidy of Rs 15,000 per kW of capacity to a maximum limit of Rs 30,000 in addition to central financial assistance to the first 100 MW of net metering applications to encourage rooftop solar deployment in private establishments.
Banking of energy will be permitted every year and electricity duty will be exempted for a period of 10 years for all solar project developers selling power within the state.
Besides, the state government needs to encourage the installation of solar pumps or solar street lights especially in rural areas, and disburse subsidy to promote these applications.
While the policy guidelines have provided a roadmap for solar power development in the state, these are not sufficient for the overall growth of the clean energy sector in Uttar Pradesh. The state government also needs to address concerns regarding ease of doing business. For instance, the state has been pushing developers for a downward revision of already committed power purchase agreements. Such practices must be avoided.