Towards a Bright Future: New Uttar Pradesh policy to promote solar energy expansion

Uttar Pradesh is one of the leading producers and consumers of renewable energy. As of September 2022, the state had 4.5 GW of installed renewable energy capacity, with about 2 GW of that capacity being operational solar po­wer capacity. En­dowed with abundant solar energy resour­ces, the state has the capa­city to produce several gigawatts of solar energy. The state has been promoting so­lar power generation through several initiatives such as es­ta­blishment of solar par­ks, commenceme­nt of solar rooftop pro­jects, introduction of solar irrigation pu­m­­ps, provision of flexible lo­an terms for solar projects, and grant of tax benefits for in­vest­ments in renewable energy. Recen­tly, the state government introduced the Solar Energy Policy, 2022 to promote the growth and development of the solar en­er­gy segment in the state and to meet the energy needs of the state. The Uttar Pra­desh New and Renewable Energy De­ve­lopment Agency (UPNEDA) will be the nodal agency for the implementation of this policy, which will be valid for five years from the date of issuance.

Objectives and targets

In addition to reducing the state’s dependence on fossil fuels, the objectives of the UP solar policy are to achieve an “optimal energy mix” of conventional and renewable power, provide a conducive environment for private sector investment, and generate employment opportunities in the field of renewable energy as well as awa­reness among the masses about solar en­ergy technology. As per the policy, a target of 22,000 MW of solar power projects has been set for 2026-27.

Uttar Pradesh Power Corporation Limited (UPPCL), through its distributors, will purchase the solar power generated under Component C of the PM KUSUM scheme and from solar rooftop systems. The de­ve­lopment of solar power projects for captive use or to sell to third parties will also be encouraged in the state. With the assistance of the district collector in the state, UPNEDA will develop a land bank of unsuitable agricultural land and waste­la­nd for solar power development. Fur­ther­more, a “Saurya Uttar Pradesh Yojna” is proposed to be put into place throughout the policy period to encourage the installation of grid-connected rooftop systems under net metering arrangements in the residential sector. In addition to financial aid from the central government, a state government contribution of Rs 15,000 per kW, up to a maximum of Rs 30,000 per consumer, has been approv­ed. Rooftop solar power plants will also be installed atop governmental buildings and educational institutions.

Under the Solar City programme, Ayodhya will be developed into a model solar city. Further, 16 municipal corporations as well as Noida will be transformed into solar cities. The policy includes a provision for viability gap funding of Rs 5 million per MW for the solarisation of separate agricultural feeders under PM KUSUM Component B. For the solarisation of private on-grid pu­mps, farmers from the Musahar, Van­ta­ngia and other backward communities have receiv­ed a 70 per cent subsidy while farmers from other communities have received a 60 per cent subsidy. Utility-sc­ale solar power projects with four hours of battery storage systems of 5 MW or above and standalone battery storage systems (powered by solar energy only) will be given a capital state subsidy of Rs 25 million per megawatt for the sale of power to distribution licensees and UPPCL. The state will promote and en­courage the installation of off-grid solar applications and hybrid systems for residential and commercial us­age. In order to extend the sh­elf life of agricultural products and en­hance farmer revenue, the installation of solar cold storage will also be encouraged.

Outlook

The new policy will focus on increasing the use of solar energy in the state and promote a shift towards the use of renewable energy sour­ces, through the creation of a conducive environment for investments in this space and the provision of a road­map for the expansion of so­lar energy infrastructure. How­­ever, a lack of technical expertise as well as bureaucratic hurdles are hindering the development of solar energy projects. Besides, the financial condition of discoms needs to be improved. It is import­a­nt to overcome these chall­en­ges to achieve the goals of the Uttar Pradesh Solar En­ergy Policy, 2022.

By Anusshka Duggal