Enabling Role

Discoms made nodal agencies under Phase II of the rooftop solar programme

By Ashay Abbhi

The total rooftop solar capacity installed in the country is insignificant as compared to the ground-mounted capacity. While ground-mounted solar capacity reached 26.4 GW as of March 2019, the rooftop capacity was only around 4.3 GW. That said, growth in the rooftop segment has started picking up with the government’s increased focus on the segment. Between April 2018 and March 2019, rooftop solar capacity grew by about 140 per cent to reach 4.3 GW. The Grid Connected Rooftop Solar Programme launched by the Ministry of New and Renewable Energy (MNRE) in December 2015 has been a primary driver for this growth. However, the segment is far from achieving its set target of 40 GW by 2022. Achieving 36.7 GW capacity or 90 per cent of the target in the next three years is certainly a tall order.

On August 20, 2019, the government released guidelines for the implementation of Phase II of the Grid Connected Rooftop Solar Programme. It outlines the roadmap for achieving 40 GW of rooftop solar capacity by 2022. A key highlight of this phase is the role assigned to discoms for developing a rooftop solar network across their user base. The following sections provide details of the programme and how discoms, which are typically wary of losing their customers, will play a role in promoting the growth of the rooftop solar segment.

Objectives and strategy

The programme aims to meet the 40 GW rooftop target by December 2022. It has been specified that only the residential segment (4 GW of the target) will be given central financial assistance (CFA). The remaining segments such as social, governmental, educational, public sector units, commercial and industrial will not get any direct financial assistance. For these segments, suitable incentives will be provided to discoms to promote installations.

Discoms have been made the nodal agencies for implementing the programme in order to provide ease of access to consumers. Discoms are required to introduce enabling regulatory provisions and smooth approval processes for setting up rooftop solar projects with state nodal agencies.

The programme covers all relevant business models including capex, renewable energy service company (RESCO), rooftop leasing, community, utility, and plug-in rooftop solar. In addition, hybrid systems such as solar rooftop-wind hybrid, and rooftop solar-solar thermal hybrid will be considered under the programme.

Implementation

Phase II attempts to address some of the major issues faced during Phase I of the programme. These include delays in tendering due to multiple tenders issued by different agencies, multiple stakeholder involvement, lack of uniform regulations, and lack of awareness at the beneficiary level. With discoms as nodal agencies for rooftop solar projects, these issues are no longer expected to cause delays. The programme has been bifurcated into two components – Component A for setting up 4 GW of rooftop solar projects in the residential segment with CFA; and Component B, under which discoms will be incentivised for the initial 18 GW of grid-connected rooftop solar capacity.

Component A

The residential segment has been provided with upfront CFA to encourage consumers to use rooftop solar instead of grid-based electricity. For projects with capacity of 3 kW and above, CFA of 40 per cent will be provided. For projects with capacity between 3 kW and 10 kW, 40 per cent CFA will be given for the first 3 kW and 20 per cent for the remaining capacity. Projects with capacity higher than 10 kW will be eligible for CFA only up to 10 kW. Meanwhile, for group housing societies, the CFA will be limited to 20 per cent of the installation for the supply of power to common facilities. For individual houses, CFA will be limited to 10 kW per house, not exceeding 500 kW cumulatively.

The rooftop solar capacity to be installed for this sector will be allocated to discoms by the MNRE based on several parameters including the demand raised by discoms and capacity required to meet the state’s solar renewable purchase obligation. To this end, the discoms will have to submit yearly proposals to the MNRE by March of each year. Preference will be given to states or union territories that provide additional subsidy over and above the CFA. The discoms have also been given the task of inviting expressions of interest for the empanelment of agencies for the supply, installation, testing and commissioning of rooftop solar systems. Rooftop owners will have the option to employ any of the empanelled agencies by making payments after deducting CFA component. The project will be eligible for the CFA only if it uses domestically manufactured solar panels. The discom will be eligible to avail of advance CFA up to 30 per cent. In the case of private discoms, the CFA will be distributed on reimbursement basis.

Component B

The discoms are bound to incur additional expenses in the implementation of the rooftop solar programme for developing infrastructure and capacity, creating awareness, and employing personnel. To compensate the discoms for these expenses, the government will provide performance-based incentives for every megawatt of capacity added over and above the 10 per cent base capacity installed in the previous year. The discoms will be required to provide dedicated manpower for project implementation, undertake rooftop assessment and technical studies, manage the bidding process, create consumer awareness and publicity, ensure availability of net meters, and provide grid connectivity. They will also undertake inspection and online monitoring of rooftop plants, and online database management of the commissioned capacity.

The incentives available to discoms are progressive in nature, increasing with higher levels of achievement. For installed capacity that is 10-15 per cent more than the base installed capacity, the discom will receive 5 per cent of the applicable cost. For installed capacity beyond 15 per cent over and above the base, 5 per cent of the applicable cost for capacity between 10 per cent and 15 per cent of the installed base capacity plus 10 per cent of the cost for capacity achieved beyond 15 per cent of the base will be given to the discom. These incentives are only applicable for the initial 18 GW of solar rooftop capacity addition since the launch of the programme.

Role of discoms

As nodal agencies, the discoms will be required to create a rooftop solar cell at each division level. The cell will include an executive engineer as the head and a sub-divisional officer as the nodal officer for the implementation of the programme in the area. Besides empanelment of equipment and technology providers, the discoms will have to notify the cost of metering arrangements, connectivity components and other charges. The project commissioning timeline for the residential sector will be 15 months from the date of sanction by the MNRE. The benchmark cost prevailing at the time of commissioning of the project will be applicable for the calculation of the CFA. The implementing agencies will inform the MNRE regarding the capacity commissioned within the stipulated timeline and submit documents to the ministry within 45 days of project completion.

Outlook

Phase II of the rooftop solar programme is an attempt to address discom reluctance, the biggest roadblock in the adoption of rooftop solar. With performance-linked incentives, discoms will allow greater capacity addition and monitoring and will accurately report the same. This will also help raise public awareness regarding rooftop solar. An amount of Rs 660 million has been earmarked for capacity building and awareness activities under the programme. However, achieving the entire 40 GW target may require concerted efforts by the discoms, beneficiaries and all the relevant stakeholders.

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