The government of Andhra Pradesh today announced its solar policy. The policy does not specify any limit on the total capacity of solar power plants that can be put up under it. It also neither provides for a fixed feed-in tariff (like Gujarat did), nor does it make way for price discovery through a reverse bidding process (as in the case of the National Solar Mission).
However, the policy spells out the state’s stand on issues such as banking of power, wheeling and transmission charges, cross subsidy charges and open access.
In other words, a project developer may put up a project of any size in the State. He can either sell the power to the State’s electricity distribution company at the ‘average pooled purchase cost’ that is determined by the state electricity regulatory commission (which is today Rs 2 per unit), or can sell it to any other consumer directly, whether within or outside the State.
On banking of power (or, injecting power into the grid and drawing it back later), the policy says it allows 100 per cent banking. However, any energy injected into the grid will have to be drawn within that calendar year. No drawing of banked power will be allowed between February and June, and during the peak hours—6.30 pm to 10.30 pm. The developer will have to pay 2 per cent of energy as ‘banking charges’.
Further, if the energy is sold within Andhra Pradesh, the developer is incentivised with exemptions from wheeling and transmission charges and cross-subsidy charges, electricity duty and refund of VAT on inputs purchased for the project and the stamp duty on the registration of land for the project. However, for sales outside the state, wheeling and transmission charges, as determined by the state’s regulatory commission, applies.
A notable feature of the policy is that even the rooftop and off-grid plants will be eligible for the renewable energy certificates, under the ‘deemed injection’ clause.
To avail themselves of these incentives, project developers have to commission their projects by June 2014, whereupon they would get the incentives for seven years from the date of commissioning.
Industry wants details
The solar power industry finds the policy very friendly in terms of being facilitative, without casting a burden on the state government’s finances. Large cement plants, for instance, can discharge their renewable purchase obligations by becoming shareholders of solar power projects and buying the power. As such, there is likely to be considerable interest from the industry.
However, the Government has made public only the ‘abstract’ of the policy. The industry is keen on the details.
For instance, the technical and financial criteria are still awaited. The industry wants to be clear as to who is eligible to apply. (Uttar Pradesh, for example, said that only those who had done a project in India previously could apply.)
Finally, the industry would like grid-related codes and assurances of availability of the grid. How much of renewable power can the grid take? At which point will the metering happen? What is the policy relating to forecasting and scheduling?
These are some issues that need to be cleared out before people begin to put down money in solar projects in the State.
"While the policy states that one of its objectives is to "promote investments for setting up manufacturing facilities in the state", the policy does not specify any domestic content requirement. This could make Andhra pradesh a very attractive market for the foreign PV module manufacturers who are backed by attractive financing options," says Madhavan Nampoothiri, Founder and Director of RESolve Energy Consultants.
Comments:
What has been issued by the AP Government is not the 'abstract' of the
policy as stated in the report, but the Government Order (GO)
announcing and describing the policy. The word "ABSTRACT" at the top
only refers to the two lines that follow, which are in the nature of a
short title of the Order. This practice is followed by Government
departments in Tamil Nadu and Andhra Pradesh. I am surprised that some
one as experienced as M.Ramesh has misinterpreted this to mean the
abstract of the policy. There is no implication that further "details"
will be released. Of course, it is open to the Government to issue
further GOs amending or clarifying the present GO.
The policy statement is deficient in some ways. It is disappointing
that there are no pro-active steps such as setting up solar parks or
inviting bids for atleast a first round of power projects, as has been
done in other states. Also, clear instructions need to be given to the
Discoms to actively facilitate evacuation of power.
It appears that there is an inherent contradiction in AP Solar Policy to CERC's REC
Regulations -
Clause 8 (f) of AP Solar Policy states "All projects developed with the above incentives
will also be eligible for REC benefits. Deemed injection into the grid for in-house
captive solar generation plant (in the same premises) will be considered for issue of
REC."
Whereas, CERC's amendment to Regulation 5 of the REC regulations vide No. L‐
1/12/2010‐CERC dt 29/09/2010 says "Provided further that a Captive Power
Producer (CPP) based on renewable energy sources shall be eligible for the entire
energy generated from such plant including self consumption for participating in the
REC scheme subject to the condition that such CPP has not availed or does not
propose to avail any benefit in the form of concessional/promotional transmission or
wheeling charges, banking facility benefit and waiver of electricity duty."
D V Satya Kumar
Shri Shakti Alternative Energy Ltd
We are at to see the detailed policy statement in Govt. official
websites before commenting on the policy so what ever the information
trickled down, the policy is not conducive to attract inverters in to
the sector. we expected fixed tariff regime for at-lest 7 to 8 years
from now onwards. It is not required to over emphasis for such policies,
particularly states like AP. Let us hope the Govt come forward with more
details and investor friendly policy.
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